TheStreet.com's DAILY BULLETIN
December 13, 1999
Market Data as of Close, 12/10/99:
o Dow Jones Industrial Average: 11,224.70 up 89.91, 0.81%
o Nasdaq Composite Index: 3,620.24 up 26.07, 0.73%
o S&P 500: 1,417.04 up 8.93, 0.63%
o TSC Internet: 1,129.50 up 22.88, 2.07%
o Russell 2000: 466.71 up 1.81, 0.39%
o 30-Year Treasury: 99 13/32 up 21/32, yield 6.161%
In Today's Bulletin:
o Editor's Letter: The Coming Week on TSC
o Market Update: Weekend Report: Nike Steps Up to the Plate as Reebok Withdraws From Olympics
o The Coming Week: The Bulls Keep Running, and Things Get Frothier
o The Coming Week in Europe: German Markets Looking to U.S. to Lead Them Into Record Territory
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: State of the Web: Cramer's Take on the Incubators
Also a look at Primedia's new winning formula.
This Week in IPOs: Sniffing Out the Stinkers as Well as the Sweet Deals
Pay attention this week to offerings, especially since next week is an IPO ghost town.
The Coming Week in Asia: Sony Plans Corporate Stocking Stuffer -- an Internet Bank
The company's plans to build an Internet bank by 2001 sent its stock up 3.7% Friday.
Jim Griffin: Bad Theory? Or Bad Practice?
Griffin dissects Byron Wein's valuation model in the framework of the market now.
Editor's Letter: The Coming Week on
12/12/99 3:50 PM ETIt's hard to imagine, but the year-end holiday season is quickly approaching, with the highly anticipated calendar rollover into Y2K now less than three weeks away. Sure, you can see the lights, and the malls are stuffed, but it's hard to tear your head away from the stock market's Yule season action.
You read more and more about fundamentals -- or the lack thereof. You hear more chatter about parallels to the Japanese market of the late 1980s. And there's a greater sense of dislocation than in the past. Is it an investment revolution, or just a run gone too far? The doubters have been with us for some time now, but their numbers have grown markedly in the past few weeks.
No question, it's an almost mystical time in the market. Every morsel of information matters more than ever before. We're very intent on bringing this seeming chaos into sharper focus. In the coming days we'll continue to dig into the so-called
Red Hot stocks and study the action in the e-commerce stocks, all of which are betting on a whopping online Christmas. On top of that, we'll keep bringing you every twist and turn in the stock markets. If you haven't already, check out the
Briefing Room -- it's an excellent way to find out what's happening in the market, not just at the macro level, but also down to the granular nitty-gritty of individual company action.
message boards continue to hop, and the intelligent discourse delivered by our readers continues to be impressive. Not a lot of dolts in the chattering classes of
, which is a welcome change compared with what goes on in other places. Along with the stock-specific conversations, we're also bringing people together to talk about specific topics.
To that end, we're about to launch a new feature on our message boards: a board about women and investing. Do women face their own particular set of investing issues? Do they approach the market with a different style than men? Maybe, maybe not. Rather than try to set forth a doctrine on this topic, we want your views. Please look for our message board later this week and join the discussion.
Finally, if you've got any problems, feel free to contact
firstname.lastname@example.org. Or, if you think there's something I ought to hear about, feel free to email me at
email@example.com. We'll keep hustling for you!
L'Etoile du Nord
Market Update: Weekend Report: Nike Steps Up to the Plate as Reebok Withdraws From Olympics
Special to TheStreet.com
12/12/99 7:52 PM ET
just can't get a break. First
takes liberties with the shoemaker's product-placement deal in
Now the Sydney Olympic organizers are accused of breaching Reebok's sponsorship agreement.
Reebok withdrew its multimillion sponsorship of the
2000 Sydney Games
last week, claiming the games' organizers struck deals with its rivals. Now
will step up to the sponsorship plate, the
International Olympic Committee
Two centuries after the U.S. declared its independence from Great Britain, defense contractors are narrowing the gulf between the two regions.
Alliance discussions are underway between
and the U.K.'s
of London reported, citing unnamed sources.
In British M&A news this weekend,
and broadcast media company
are said to be finalizing terms of a merger,
reports. Separately, the
has recently held talks with Spain's
U.K. supermarket group
is said to be mulling a bid for retailer
Marks & Spencer
newspaper reports. And Dutch-Belgian banking group
is seeking an alliance with the U.K.'s
Mail on Sunday
Speaking of British Telecommunications, the
says the carrier is preparing a $1.6 billion white knight bid for Ireland's second-largest telecom,
. Esat is said to be in talks with a number of parties following an unwanted approach from Nordic telecom group
, formed by
Still no ruling on the proposed merger of
The Washington Post
provided more evidence this weekend that the government is taking a jaundiced view of the deal.
disclosed an Oct. 21
memo describing such consolidation as "intolerable." An agency representative told the newspaper that assessment was only preliminary.
Union workers in Canada on Sunday ended their occupation of the
plant in Barrie, Ontario, after reaching an agreement on their severance when the plant closes next year.
In the Papers
stock woes might, like allergies, be seasonal,
reports. The magazine says
, which supplies Pentium III 450-megahertz processors for Gateway's PCs, has had trouble meeting pre-Christmas demand.
Industry insiders are behind much of the recent buying spree in health-care stocks,
reports. One company,
, has seen insiders buy back more than $9.9 million worth of stock since August, the magazine says.
also features an interview with Jamie Dinan and Dan Schwartz of New York hedge-fund firm
York Capital Management
. Their investment picks include
Global Light Telecom
. They're short
Fouled-up deliveries are the most common complaint from customers shopping online this e-holiday season,
The Washington Post
reports. The newspaper says companies are racing to keep up with demand, often by having their own executives pack orders.
documented Amazon's problems in lining up helper elves earlier
David Rheingold is a New York-based freelance writer. At the time of publication he was long Intel, although holdings can change at any time.
The Coming Week: The Bulls Keep Running, and Things Get Frothier
12/10/99 7:17 PM ET
Jeff Applegate, the
strategist whose 80% stock allocation has led him to regularly top best-blend lists, may be Wall Street's best spokesman for the idea of the new economy. The rapid pace of information technology in an increasingly global marketplace means that this time really is different and the old valuation metrics don't work, he believes.
Which is not to say that he doesn't think valuations matter or that he doesn't approach his work with rigor. One of the things that's satisfying about talking to Applegate is that he isn't one of those lithium bulls one sometimes run into. He's not going to tell you the
should be at 36,000 or that price and earnings don't really have anything to do with each other.
He's incredibly positive about this market, but not blindly so. Things could happen to make him bearish -- though heaven knows they haven't.
So it probably means something that Applegate, in the incredible run tech stocks have recently had, is seeing some signs of froth.
"The broad indices have probably gotten a little ahead of themselves," he said. "The Internet indices have gone way ahead of themselves. Do you have a speculative bubble in some of these stocks? No question."
It's a common thought after another week of tremendous moves in things like the white-hot Linux sector and the stunning debuts of
"When you see these IPOs come out and go from 30 to 300," said Ned Collins, vice president of U.S. stocks at
Daiwa Securities America
, "that is a little frothy."
But a frothy market can always get more frothy, and that looks like the way it may go in the coming week. Fund flows have been tremendous this fourth quarter, and trading volume has surged. The lull that trading desks thought they'd see just hasn't come. Said Collins: "We've all been talking about how there was going to be a slowdown come the end of the year, but that isn't the case because volume goes higher every day. The market is just a momentum play right now." Which could be a bit of a problem later.
"We know what happens to parabolic price moves," said Applegate. "They correct -- and pretty sharply." When that happens in the latest group of darlings, he reckons it will probably affect the broader averages.
But Applegate is a self-professed horrible market timer, and because he doesn't think the selling would be enough to knock the market off its long-term trend, he's sticking with his bullish stance. Though the highfliers will come back down, "I don't think that augurs for more than a correction," he said, "so we remain fully invested."
While the big moves in stock land were grabbing the headlines this past week, Treasuries put on a not-too-shabby rally. Yields are back down around where they were right after last month's
Federal Open Market Committee
meeting. Whether that move has any staying power will depend greatly on how a couple of key economic reports -- November's
Consumer Price Index
-- are released on Tuesday.
"No doubt about it, the data we have next week are of greater importance and a greater magnitude than what we have seen so far," said Bill Sullivan, chief money market economist at
Morgan Stanley Dean Witter
. "I think they'll set the tone for the entire week's trading."
The CPI matters because it always matters -- it's the best read of inflation we have. So far, despite an economy that continues to go gangbusters, inflation has remained benign. Any unforeseen uptick in the CPI would set tongues wagging (again) about how the
is behind the curve and the "Goldilocks economy" is over and the whole damn thing is about to fall apart -- there's a reason economists are called dismal scientists.
The retail sales report is often a second-tier economic report, but this time around the bond market will be paying careful attention to it. Strong sales would suggest that the economy still isn't slowing -- and the Fed very much believes that the economy needs to slow, or inflation will come. "The Fed is willing to raise its target even if inflation is benign," said Sullivan.
The Coming Week in Europe: German Markets Looking to U.S. to Lead Them Into Record Territory
12/11/99 12:23 AM ET
BERLIN -- As the year comes to a close, a lot is being made in the U.S. of the renewed vigor behind the stock market. The
is stepping with a little more authority and the
is roaring ahead. Of course, U.S. indices aren't the only ones getting in on the action.
This fall, bourses across the Continent have been waging a multifront battle against Europe's bearish investors. Up 15% in the last three months, the coming week could see Frankfurt's
index break an all-time high set in July 1998.
The index consolidated its recent surge last week and will likely flirt with the long-awaited 6200 level as early as Monday. Market participants are expecting considerable volatility, however, until there is a convincing break above the old record. The
Nemax All Share Index
is also lurking just below its all-time high set back in February.
Whether the Dax and Neuer Markt can swing to a higher branch next week will partly depend on where the U.S., the alpha chimp of equity markets, leads. With the giddy abandon some U.S. investors have been showing lately, Frankfurt is hoping New York will clear a clean path to follow.
Sector-wise, telecoms will remain the flavor of the week in the wake of Friday's announcement that
attempt to buy German wireless operator
. With BellSouth's blessing, Dutch telco
will instead step in to buy 77.5% of E-Plus for more than $9 billion. The ongoing
takeover saga should also continue to stir up the cross-border telco fandango, as the companies sling a steady slew of rhetoric across the North Sea.
Economic data for Europe's largest economy could also bolster the bourses next week. The
index on November German business confidence is to be released on Thursday. Business sentiment has been surging in recent months as the country's recovery picks up and the weak euro has helped exporters send their goods abroad.
"Confidence in expected business
has been improving rapidly with output expectations climbing on the back of strengthening exports," says Nigel Anderson, an economist with
in London. That could lead investors to favor those shares expected to benefit from the economic upsurge in the months after the Ifo report is published.
That high-octane mix of cyclical and tech/telecom issues should fuel Frankfurt and other European bourses not only through the coming week but also into the new year and beyond. Assuming, of course, America's 800-pound gorilla continues to lead the pack.
Copyright 1999, TheStreet.com