daily11-07-99

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TheStreet.com's DAILY BULLETIN

November 8, 1999

http://www.thestreet.com

Market Data as of Close, 11/5/99:

o Dow Jones Industrial Average: 10,704.48 up 64.84, 0.61%

o Nasdaq Composite Index: 3,102.29 up 46.34, 1.52%

o S&P 500: 1,370.23 up 7.59, 0.56%

o TSC Internet: 814.87 up 18.06, 2.27%

o Russell 2000: 442.41 up 2.51, 0.57%

o 30-Year Treasury: 101 00/32 up 23/32, yield 6.040%

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Market Update: Weekend Report: Heartening News on Cholesterol, but No Word Yet on Warner-Lambert Deal
o The Coming Week: Not the Fed's Week, So Relax, Kick Back and Read the Microsoft Report
o Europe: The Coming Week in Europe: Looking Forward to an Undivided Europe

Also on TheStreet.com:

Tech Savvy: The Microsoft Decision: Think of It as a Head-Fake...

What Judge Jackson is really up to.

http://www.thestreet.com/comment/techsavvy/814413.html

This Week in IPOs: Wild Dogs, Vultures -- and a Fallen Gazelle

Ben Holmes takes a look at the Cobalt IPO and this week's comers.

http://www.thestreet.com/comment/ipoweek/814395.html

Asia/Pacific: The Coming Week in Asia: Miyazawa at Reins of Tentative Recovery

Japan's 10th economic stimulus package in seven years is expected to look more generous to central bankers.

http://www.thestreet.com/int/asia/813903.html

Marc Chandler: Global Briefing: ECB Foibles and the Euro

The ECB rate hike displays an antigrowth bias; stronger economic growth will do more to reduce Europe's budget deficits and debt than any austerity measures.

http://www.thestreet.com/comment/currency/813651.html

Editor's Letter: The Coming Week on

TSC

By

Dave Kansas

Editor-in-Chief

11/7/99 2:22 PM ET

It was no ordinary Friday. Late on the East Coast, a judge handed down a finding:

Microsoft

(MSFT) - Get Report

is a monopoly and has unfairly used that position to its advantage. Tough words from a tough judge.

What does this mean to investors? Mister Softee is one of the most important stocks, if not the most important stock, in this highflying market. We at

TheStreet.com

covered the decision on

Friday night with a roster of stories and analysis, including a

sharp

look from technology expert

James Seymour

. Our message boards are humming and we've got more coverage in store.

It's likely that the Microsoft story will continue to develop in the coming days and weeks. Already whispers of settlement talk are in the air. We'll continue to devote resources to figuring out what exactly this all means to Microsoft and other stock investors. We'll have personal finance and other explanatory stories on the site Monday morning as we keep track of what's happening with the software colossus of Seattle.

Another story we're tracking is the

AHP

(AHP)

-

Warner-Lambert

(WLA)

-

Pfizer

(PFE) - Get Report

fandango. With

stories by reporters like

Jesse Eisinger

and

Alex Berenson

and

analysis from arbs like

David Brail

, we'll keep track of this high-profile, high-priced takeover struggle.

Through all this big-company news, IPOs continue to play an important role in the stock market. Last week online grocery store

Webvan

(WBVN)

went public and performed strongly. We've seen some other IPOs shoot up even higher. Who's next on the hot IPO horizon? Chat with our IPO expert

Ben Holmes

Tuesday on

Yahoo!

. The chat is at 5 p.m. ET, but does require registration at

chat.yahoo.com.

Finally, as the market swirls, we'll continue to track its every movement. Our markets team, through the Briefing Room and its stock and bond market updates, is here to make sure you don't miss a thing. October may be gone, but November is providing little rest as the markets continue to gyrate actively. We'll stay on top of it!

And, of course, if you have any questions or concerns, feel free to email

members@thestreet.com, or, of course, you can email me at

dkansas@thestreet.com. We'll make sure your issues get addressed.

L'Etoile du Nord

Dave Kansas

Editor-in-Chief

Market Update: Weekend Report: Heartening News on Cholesterol, but No Word Yet on Warner-Lambert Deal

By

David Rheingold

Special to TheStreet.com

11/7/99 7:40 PM ET

While there's no word yet on the fate of pharmaceutical giant

Warner-Lambert

(WLA)

, one of its corporate suitors is learning more about one of its products.

Pfizer

(PFE) - Get Report

is finding that its potency-enhancer

Viagra

does not have as strong of an effect on women as it does on men, a company consultant tells

Newsweek

.

Pfizer and

American Home Products

(AHP)

are jostling to buy Warner-Lambert, which makes the cholesterol-fighting drug

Lipitor

.

Speaking of cholesterol, one of Warner-Lambert's competitors received some heartening news Sunday about one of its own products. The drug pravastatin not only lowers cholesterol but cuts the risk of a stroke, researchers from

Wake Forest University

reported.

Bristol-Myers Squibb

(BMY) - Get Report

markets pravastatin under the brand name

Pravachol

.

Bristol-Myers announced Sunday it plans to put Pravachol up against Lipitor in clinical trials next year to see how the two drugs work in tandem with antibiotics to fight heart disease.

Elsewhere,

Redpoint Ventures'

maiden voyage into the realm of venture capital is one for the record books. The firm has raised $600 million for investors, the biggest start ever for a technology fund. Redpoint was formed earlier this year when

Brentwood Venture Capital

teamed with

Institutional Venture Partners

.

Deutsche Telekom

(DT) - Get Report

is reportedly planning a multimedia joint venture with

Microsoft

(MSFT) - Get Report

.

Focus

magazine in Germany reports that the venture, which may also involve

Time Warner

(TWX)

, would entail software and multimedia content development.

In Israel,

Discount Investments

is gobbling up

PEC Israel Economic Corp.

(IEC) - Get Report

for $124 million. Discount announced Sunday that its shareholders had approved the merger, which will remove PEC from the NYSE.

America Israel Paper Mills

is nearing a deal to jointly manufacture writing and printing paper with

Neusiedler of Australia

.

In the Papers

Whatever happens to Warner-Lambert,

Forest Laboratories

(FRX)

could gain from any sale,

Barron's

reports. Warner-Lambert helped launch and market Forest's antidepressant

Celexa

. Even after the two companies' deal ends in 2002, Forest still must pay Warner-Lambert an ever-dwindling royalty. But a contract clause could dissolve the pact in the event of a sale, a source tells

Barron's

.

The Sunday

New York Times

reports that Microsoft was relatively late to the Washington lobbying game but has since tried to make up for it. The company spent $3.74 million on lobbying last year, nearly double its lobbying budget for the year before, the

Times

reports.

Move over

Martha Stewart

:

Barron's

reports that many analysts are more impressed by her less-glamorous competitor,

Meredith

(MDP) - Get Report

. Meredith publishes women's magazines and owns a dozen TV stations.

The

Times'

Money & Business section examines the woman at the center of the mess at

Mattel

(MAT) - Get Report

, CEO Jill E. Barad. Critics say her management style, which propelled

Barbie

into a billion-dollar enterprise, may be hurting the company now that the product line has hit a plateau.

Citigroup

(C) - Get Report

Co-Chairman John Reed acknowledges that the bank may not have been quick enough in enacting changes to determine whether account funds were legally obtained,

Time

magazine reports this week. Reed is set to testify this week before a Senate panel investigating accounts tied to international dictators.

David Rheingold is a New York-based freelance writer. At the time of publication he was long Pfizer, although holdings can change at any time.

The Coming Week: Not the Fed's Week, So Relax, Kick Back and Read the Microsoft Report

By

David A. Gaffen

Staff Reporter

11/5/99 8:21 PM ET

It's going to be one more week.

One more week before the market finds out if it's handicapping the

Fed

incorrectly and a rate hike shocks the markets into a free fall. One more week before everyone finds out if the market is Jake with a rate hike -- looking for that interest-rate increase as a jumping-off point for more euphoria.

Which means the market may take a breather next week.

The working theory among the investing community is to "Buy the last rate hike," figuring the Fed is done tinkering with monetary policy, interest rates are going to stabilize and growth will continue unfettered.

With the

Nasdaq Composite

at an all-time closing high and the

S&P

up 5.7% in the last two weeks, put a check mark next to that item on the list.

"There's a good chance that next week is going to be more compacted and flat heading into the Fed meeting," said Brian Belski, chief investment strategist at

George K. Baum

. "Stocks are near-term overbought, bonds are near-term overbought. Prices need to settle down here a bit."

Well, if the market wants something to slog through, there's lots of gristle in the harsh 200-page love letter delivered today by a Federal judge on

Microsoft

(MSFT) - Get Report

after a yearlong antitrust trial. The report says that the company has a monopoly in the manufacture of personal-computer operating systems -- not a surprising ruling. The judge also found that Microsoft was trying to monopolize the market for Internet browsers.

That's a lot of

monopolies.

"Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products," the report said.

Actions taken against Microsoft, or for that manner, any matter of bad news has traditionally just been an opportunity to buy the stock. In after-hours trading, Microsoft, which closed at 91 9/16 today, rose as high as 93 but was lately trading at 90 1/2 on

Instinet

.

But is all the good news already factored into the stock, which has doubled since the

Department of Justice

filed suit against the software company last year?

"If you had to give me a guess, there's more downside in this stock than upside, because the stock is up a ton since the beginning of the trial," said Jim Bianco, president of

Bianco Research

in Barrington, Ill. Today's release is simply a fact-finding release and not a final ruling on the trial.

If next week proves to be a time of consolidation, it could be a hard week for Microsoft. On a long-term basis, however, some analysts

believe, whatever the outcome, that it will have little effect on the market's fortunes. For example,

AT&T's

(T) - Get Report

shareholders profited handsomely after the breakup of the company into the seven Baby Bells.

What Condition Is My Condition in?

The most interesting aspect of next week might be tracking the market's perception of what the Fed is going to do. Two weeks ago, this was an easy call. Bonds rallied partly due to the perception that the world would be a pretty friendly place following a Nov. 16 rate hike -- a bit of Y2K-related safety buying would mix nicely with buying related to the normal seasonal strength in the bond market. Equities owed something to the bond market's rally, even if, predictably, those in the equity market were less convinced of a rate hike.

But it's gotten more complicated than that. The November fed funds futures contract, listed on the

Chicago Board of Trade

was lately pricing in only a 34.2% probability of a Fed rate hike, compared with 72% on Oct. 28. So either the market's revised viewpoint is correct, or it's awfully mistaken in thinking the Fed is not going to do anything. Maybe the market just doesn't care.

Count

SG Cowen's

chief investment strategist Charles Pradilla among those who represents the market's version of triangulation: Rate hike or not, it just doesn't matter.

The market will probably pull back and digest some of these gains next week, but he's not worried that the stock market is making the same mistake it made before the June and August Fed rate increases. In those instances, stocks rallied when it appeared the Fed was done raising rates and investors were twice bitten.

What's different about this time, and the last two instances where the stock market mistakenly believed the Fed was finished raising interest rates, is that the bond market is a believer, too. Bonds have been chafing under a yearlong bear market and the continually antsy Fed. But the Treasury market turned it around, shaving 40 basis points off the 30-year bond yield, due to some friendly economic data and a confident sounding speech from Fed Chairman

Alan Greenspan

.

"I think two weeks after it happens, the markets won't even remember," said Pradilla. "If

the Fed were going to give some indication that they were really worried, they would have. They may tighten and go into a neutral mode, but it's becoming clear that they are near the end of what they have to do."

Europe: The Coming Week in Europe: Looking Forward to an Undivided Europe

By

Marc Young

German Correspondent

11/5/99 11:25 PM ET

BERLIN -- Tuesday will mark the 10th anniversary of one of the most influential events of the past century: the peaceful demonstrations of civil courage in East Germany that led to the fall of the Berlin Wall on Nov. 9, 1989, and transformed Europe's future overnight.

It is therefore fitting perhaps that Europe will not only celebrate the fall of communism and the end of the East-West conflict next week, but will also look forward to the more practical matters of extending democracy and free markets eastward.

Appropriately, the week will likely kick off with the fate of East Germany's last Communist leaders, to be decided Monday, when a court will rule on whether

Erich Honecker's

immediate successor,

Egon Krenz

, can be held accountable for the deaths of those killed trying to escape to the West.

Celebrations in the German capital will take the spotlight early next week, as former leaders such as

George Bush

,

Mikhail Gorbachev

and

Helmut Kohl

participate in a conference on the events leading up to the fall of the Iron Curtain. The same troika will figure in official parliamentary celebrations on Tuesday.

On Wednesday, the focus will shift to the future of an undivided Europe, as the

European Central Bank

holds consultations with the central banks from the prospective first wave of

European Union

applicants from Eastern Europe in Helsinki. Last week, ECB President

Wim Duisenberg

made a point of noting that all future members of the EU would have no choice but to join the

European Exchange Rate Mechanism

and would therefore almost certainly join the euro at some point down the road.

Financial markets will continue to mull over last Thursday's decision by Europe's monetary authorities to raise interest rates by half a point to 3%. Initial reaction to the aggressive hike was generally positive. Speaking at a press conference after the rate hike, Duisenberg said: "It is often difficult to contain market expectations. It's not our policy to try and surprise them. We want to be credible." The central banker did, however, say that if the ECB felt the need to surprise the markets in the future, it would not hesitate to do so.

"The irony of Mr. Duisenberg's remarks regarding the need to make a half-point move so as to calm market uncertainty is, of course, that it was the ECB which generated the uncertainty itself in the first place," says Alison Cottrell, an economist for

PaineWebber International

in London, referring to the changing language with which central bankers have discussed the economy over the past few weeks.

The rate move has plenty of Europeans grumbling about their mortgage costs. Imagine paying more for your chateau in Aix-en-Provence! And in dollar terms, even the

pastis

you'd like to drink while there will probably get pricier next week. Higher European rates will likely drag the euro higher against the greenback. The euro was recently trading near $1.042.

Then again, if you have a chateau in France, you probably don't have a mortgage and don't have to worry about the price of anise either.

Copyright 1999, TheStreet.com