TheStreet.com's DAILY BULLETIN
November 1, 1999
Market Data as of Close, 10/29/99:
o Dow Jones Industrial Average: 10,729.86 up 107.33, 1.01%
o Nasdaq Composite Index: 2,966.43 up 91.21, 3.17%
o S&P 500: 1,362.93 up 20.49, 1.53%
o TSC Internet: 750.79 up 30.97, 4.30%
o Russell 2000: 428.64 up 5.83, 1.38%
o 30-Year Treasury: 99 15/32 up 1 06/32, yield 6.149%
In Today's Bulletin:
o Editor's Letter: The Coming Week on TSC
o Market Update: EgyptAir Flight Crashes Off the Coast of Massachusetts
o The Coming Week: Spirits Soar as Fed Clouds Clear
o The Coming Week in Europe: Markets Expect ECB to Hike Rates
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: State of the Web: Dot-Com Big Spenders Leave Analysts Cold
The downgrades of MarketWatch.com and Amazon.com mark a return to sanity.
This Week in IPOs: Cobalt Networks Looks Hot This Week
Ben Holmes is back with some obvious winners.
Jim Griffin: Conservation of Uncertainty
How do markets deal with a reduction in uncertainty? Jim Griffin has a new theory.
Middle East/Africa: Oil-Rich Nigeria Sees the Glimmerings of Economic Potential
Resolution of pressing problems in this troubled country could help a new leader take advantage of opportunities.
Editor's Letter: The Coming Week on
10/31/99 2:55 PM ET
Walking through the canyons of Wall Street this weekend, it's hard not to notice what had everyone's attention on Friday. Scraps of newspapers and shredded documents still float through the strange updrafts, last signs of the
New York Yankees
World Series parade, a seeming annual event in these parts.
Being on Wall Street, we give you the straight scoop from the heart of the action. We fight through parade crowds to help you feel on top of the trading day. And when big events occur, we're right there for you. Former Treasury Secretary
striding through the trading floor at
Salomon Smith Barney
this week was big news on Wall Street. And if you haven't read Peter Eavis's
story on that moment, you really should. It's an example of how we can take you right into the heart of the action.
And there's plenty of action to track. Scary October has come and gone, and we're still standing. The
Dow Jones Industrial Average
(old version) started the month at 10,337 and ended it at 10,729. Not exactly the harrowing decline that many were expecting, though the middle part of the month hardly felt easy.
Now we open November with a new Dow Jones Industrial Average but with some old fears still lurking. With the earnings season largely out of the way, focus will once again turn to the
& Co. take action? Will they sit back? That debate, along with more chatter about Y2K exposure, is likely to make the market ride a little tougher. We'll be there every step of the way, with our markets team combing the action for each important detail in both the Briefing Room and in the bond and stock updates and roundups.
Away from the hurly-burly, we are settling into our recently updated design. While most of you have expressed appreciation at the subtle and important changes, we have also noted some performance problems. We're working on those issues aggressively, making sure that we can get you precious information as quickly as possible. If you have additional comments about the design or functionality, don't hesitate to email our customer service group at
For those of you scrambling for something interesting on the weekends, we continue to add to your options. First, "TheStreet.com" television show, under the direction of
, comes at you three times over the weekend on
Fox News Channel
. It's on at 10 a.m. and 6 p.m. ET on Saturdays and again at 10 a.m. ET on Sundays (this Sunday's show was pre-empted by news coverage of the tragic crash of an
flight off the coast of Nantucket, Mass.). Check out the Fox
page on our site for details, polls and video of the show.
In addition, the weekend coverage continues to surprise with new ideas. Last week we added a
contest that tests every market maven's expertise. And, of course, there are all kinds of goodies and prizes for participants. In addition, we're adding to weekend personal finance coverage. Check out
www.thestreet.com/free to get the answers to your personal finance questions and other investment education and guidance.
From the weekend throughout the entire week, we're hustling to bring you more of the news and information that helps make you a wiser investor. Sharp stories about your favorite stocks and insightful commentary that can't be found anywhere else. It's a combination of news, information and data that we're always trying to make better.
Have a great week!
L'Etoile du Nord
Market Update: EgyptAir Flight Crashes Off the Coast of Massachusetts
Special to TheStreet.com
10/31/99 8:16 PM ET
By now, you've no doubt heard about the tragic
jetliner bound for Cairo that went down off the coast of Nantucket.
A full list of the more than 214 people feared dead has not yet been released, but the passengers on board included
, assistant publisher of Montreal's
newspaper, and his wife, the newspaper told
. You can read the latest on the crash at
The plane itself was a Boeing 767, which has been involved in two other fatal crashes since 1982,
, meanwhile, said a 1980 report of fuel tank problems in its military E-4B jet did not appear relevant to the aircraft's commercial cousin, the 747. A 747 was carrying the 230 people killed in the 1996 explosion of
Flight 800. The
National Transportation Safety Board
said Saturday it was dismayed that it did not get a copy of the report until this year.
The only hopeful news within the aviation industry this weekend was that
pilots union had agreed to sit down at the bargaining table, ending a dispute over the airline's acquisition of West Coast carrier
. An arbitrator will decide the status of Reno's pilots under American's labor contract, a controversy that prompted a pilot "sickout" earlier this year. American is a unit of Texas-based
-- a unit of Germany's
-- has made a $1.4 billion bid for
Air Express International
, the U.S.-based freight forwarder,
reported Sunday. The news came two days after a report that Air Express had rejected a $1 billion takeover offer by Danzas.
In an effort to break into the U.S. asset management business, German insurer
is acquiring about 70% of
in a deal worth $3.3 billion,
reports. Pimco, based in Newport Beach, Calif., manages about $256 billion in assets.
Pacific Life Insurance
said Sunday it planned to maintain its 30% stake in Pimco, and welcomed Allianz as a partner.
Visitors to the Middle East may soon recognize two familiar franchises:
plans to open a Tel Aviv branch for corporate clients next year. Meanwhile, Saudi
Prince Alwaleed bin Talal
, who's trying to save Planet Hollywood, announced he was opening a restaurant in Amman, Jordan, with more to follow in the Middle East and Europe.
is taking a closer look at
planned acquisition of
, which makes technical drawing software. Visio said Saturday that both companies have been asked to submit more information about the $1.3 billion proposed merger.
In the Papers
Amid an investor selloff, home builder
Kaufman & Broad
is planning a partial IPO of its French division on the Paris
for the first quarter of next year,
reports. CEO Bruce Karatz tells the magazine his company would likely retain a 60% stake in the new venture.
The latest Big Money poll in
finds that more than half of the 165 money managers surveyed have either a "bullish" or "very bullish" market outlook for the next year. Some 69% also think
George W. Bush
will be the next president.
Speaking of presidential contenders ... If
is worried about his ex-wives dishing up any marital secrets, he may find some pleasure in
latest examination of some of the shady characters associated with
5th Avenue Channel
David Rheingold is a New York-based freelance writer. At the time of publication he had no positions in any of the securities mentioned, although holdings can change at any time.
The Coming Week: Spirits Soar as Fed Clouds Clear
David A. Gaffen
10/29/99 8:00 PM ET
The stock market brings out a lot of extreme emotions in people. A few strong sessions can rejuvenate one's spirits after weeks of slogging through the mud. Some try to convince themselves that a three-day rally means the frustrating, up-and-down range-trading may be over for a while.
This time, they ain't whistling Dixie.
Coming Week: Join the discussion on
Stocks may have bottomed out a few weeks ago, but there wasn't much confidence that the market would head higher -- until the bond futures price bounced off its yearly low a few days ago. Technicians, believing the Treasury market was oversold, started buying, and that was supported by several friendly economic releases. While the threat of
hikes still looms, and many are predicting a blowout
next Friday, analysts still see blue skies on the horizon.
"This has been an on-again, off-again market, so no one should be surprised if we have a down week
next week," said Hugh Johnson, chief investment officer at
. "The one thing that does seem to have turned the corner is the bond market -- which means the stock market might have turned the corner."
Greg Nie, chief technical strategist at
First Union Securities
, is also optimistic. A pullback next week below 10,500 on the
would signal a technical failure to him. But saving that, he said, "We've gone far enough to say we've reversed the downtrend."
Why the outpouring of free love in the market? For the first time since early this year, the Fed outlook is beginning to clear up. The majority is still betting on another interest-rate hike come Nov. 16, when the Fed next meets. Following that, though, the Fed could be out of the picture until at least next spring. It took only a few releases to generate that sentiment -- a strong
gross domestic product
report, coupled with a weaker-than-expected 0.8% increase in the
employment cost index
, an important measure of wage inflation, and the 12% drop in the September
new home sales
"My feeling is that it's 51 to 49 the Fed will hike, but when they do,
stocks will rally," says Al Goldman, chief market strategist at
in St. Louis. "It's the 'dropping the other shoe' syndrome -- people will conclude the Fed is out of our face."
There's still a full complement of economic reports on the schedule before the Fed meeting, including third-quarter
figures, employment figures and the
indices. But those reports will now be informing a bond market seeking to do better, rather than worse.
All this is good news for the stock market: Lower interest rates support higher valuations and decrease companies' cost of capital.
It's noteworthy that the
Philadelphia Stock Exchange/KBW Bank Index
was up 9.2% this week. Stocks of lending institutions react strongly to changes in interest rates (banks hold large portfolios of bonds, and as rates fall, their return on investment improves).
Obviously, people still feel the need to
be careful out there.
Attempting to go long during the last six months has only gotten one burned.
In a bear market, investors are always looking for that "real bottom," be it a 20% decline, a
cover declaring stocks dead or a panicked day of selling that ends with you collapsed in a heap of paper, deciding which of the cars (or children) to put on the auction block.
Some technicians believe it didn't exactly happen in either stocks or bonds. Manager surveys haven't shown fixed-income investors aggressively short the market, so they believe this could be the beginning of a brief leg up -- that's a prelude to a leg down.
"We never got the capitulation expected in the market, but we've hit new lows, and that should be enough to send us back toward the highs," said Michael Krauss, fixed-income market strategist at
Both markets are likely to freak out temporarily when October's employment figures are released Friday. Seasonal adjustments and an expected turnaround after the 8,000 decline in payrolls due to Hurricane Floyd has economists predicting a 313,000 rise in payrolls for October. Chase Securities goes further, expecting a 400,000 rise, while
Salomon Smith Barney
is looking for a whopping 525,000 increase.
The Coming Week in Europe: Markets Expect ECB to Hike Rates
10/30/99 12:25 AM ET
BERLIN -- Although
European Central Bank
President Wim Duisenberg hasn't indicated what costume he'll be wearing on Halloween, he has certainly put quite a scare into the Continent's rate-hike phobic.
After hearing Duisenberg and his cohorts ratchet up their hawkish rhetoric over the past couple of months, conventional wisdom has Europe's monetary authorities hiking borrowing costs anywhere between 25 and 50 basis points after the ECB's
meets this Thursday.
However, the central bank's telegraphing to the markets has always been somewhat muddled, and whether it will treat financial markets to a full reversal of its 1/2-point cut last spring or trick everyone and hold off entirely remains far from clear. Accordingly, things on the Continent are likely to remain edgy during the coming week in the run-up to the ECB's decision.
Much of the recent hullabaloo has surfaced around the ECB-cherished M3 money supply growth figures. Running above the bank's 4.5% target rate for months, last week a report showed M3 for September surged 6.1% from a year earlier, compared with 5.7% in August.
Since the end of the summer, Duisenberg has harped on the "generous" liquidity situation in the eurozone, while pointing toward M3 as one of the bank's most important indicators. At the same time, ECB Chief Economist Otmar Issing, who sits on the Governing Council and is a renowned hawk, said in a recent interview that money supply wouldn't be the only consideration for the central bank to hike rates.
Issing's comments, however, were more likely a caution that the ECB would not blindly follow the bouncing M3 figure in making policy, rather than a signal of the bank's reluctance to hike rates.
With the latest money supply figures, "the ECB has all the ammunition it needs to lift 'the foot from the pedal' in the words of Duisenberg," says David Brickman, an economist for
in London. "It does not seem likely
the ECB would continue to talk in this manner without actually acting on interest rates, and the odds on a Nov. 4 tightening have clearly shortened."
Although Brickman expects the ECB to raise rates by only 25 basis points in order to give Europe's economic recovery a little more breathing room, other analysts point to the bank's reluctance to be seen as having an "activist" role in setting monetary policy, increasing the likelihood of a 1/2-point hike.
The argument follows the same logic as the ECB's quashing expectations of further rate cuts by "going large" on its April cut. A 50-basis point hike would thereby allow the markets to relax with the knowledge that borrowing costs were set for a while.
Europe's central bankers also will have the October
indices for Germany, France and Italy to peruse. Due to be released Tuesday morning, the reports are expected to highlight the eurozone's economic rebound.
For the equity markets, much of next week's focus will be on the megaflotation of Italy's state-owned electricity company
on Tuesday. The IPO, which could net upward of $20 billion, would make Enel Italy's largest company by market capitalization.
Also of interest may be this weekend's gathering in Berlin of top CEOs and government officials under the auspices of the
Trans-Atlantic Business Dialogue
. While the conference's leitmotif is rather broad, when people such as
Chairman Juergen Schrempp attend, investors are likely to perk up their ears.
Otherwise the Continent's bourses may get off to a slow start Monday as some European countries celebrate
All Saints Day
Vern Hayden on PowerLunch
Monday, November 1
Vern Hayden will appear on CNBC's Power Lunch on Novermber 1, at 12:00 p.m. EDT.
John J. Edwards III on MarketTalk
Monday, November 1
Chat with John J. Edwards III on AOL's MarketTalk at 3:30 p.m. EDT. MarketTalk is hosted by Sage Online. (Keyword: PF Live)
James J. Cramer Chats on Yahoo!
Tuesday, November 16
James J. Cramer will be chatting on Yahoo! at 5 p.m. EDT. Register for Yahoo! Chat at: chat.yahoo.com It's free!
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