TheStreet.com's DAILY BULLETIN
November 8, 1999
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.
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.
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.
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.
Editor's Letter: The Coming Week on
11/7/99 2:22 PM ET
It was no ordinary Friday. Late on the East Coast, a judge handed down a finding:
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
covered the decision on
Friday night with a roster of stories and analysis, including a
look from technology expert
. 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
stories by reporters like
analysis from arbs like
, 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
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
. The chat is at 5 p.m. ET, but does require registration at
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
firstname.lastname@example.org, or, of course, you can email me at
email@example.com. We'll make sure your issues get addressed.
L'Etoile du Nord
Market Update: Weekend Report: Heartening News on Cholesterol, but No Word Yet on Warner-Lambert Deal
Special to TheStreet.com
11/7/99 7:40 PM ET
While there's no word yet on the fate of pharmaceutical giant
, one of its corporate suitors is learning more about one of its products.
is finding that its potency-enhancer
does not have as strong of an effect on women as it does on men, a company consultant tells
American Home Products
are jostling to buy Warner-Lambert, which makes the cholesterol-fighting drug
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
markets pravastatin under the brand name
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.
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
Institutional Venture Partners
is reportedly planning a multimedia joint venture with
magazine in Germany reports that the venture, which may also involve
, would entail software and multimedia content development.
is gobbling up
PEC Israel Economic Corp.
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,
could gain from any sale,
reports. Warner-Lambert helped launch and market Forest's antidepressant
. 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
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
reports that many analysts are more impressed by her less-glamorous competitor,
. Meredith publishes women's magazines and owns a dozen TV stations.
Money & Business section examines the woman at the center of the mess at
, CEO Jill E. Barad. Critics say her management style, which propelled
into a billion-dollar enterprise, may be hurting the company now that the product line has hit a plateau.
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,
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
David A. Gaffen
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
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.
at an all-time closing high and the
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
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
"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
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
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,
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.
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
"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
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
, 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
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
applicants from Eastern Europe in Helsinki. Last week, ECB President
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
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
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