Despite Earnings Season, Currencies Still Hogging Center Stage

The renminbi, the real. Will they fall? When? Who knows. But the market's still caught up in it all.
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Too nervous to buy, too nervous to sell.

The dynamic behind yesterday's listless trading is again with Wall Street this morning. Global investors are still keeping a pretty close watch on the Brazilian real, which, off 7.8% this morning, looks like it has entered the next round of selling. It's something that just about everybody expected to see, which is to say that its effect on markets will probably be muted -- or that markets might even have a gee-that-wasn't-so-bad reaction once it's all done with. But until the dust clears, nobody knows what the final effects will be. Investors remain cautious.

And then there is this China thing, this notion that mainland officials are mulling devaluing the renminbi. Officials were quick to say yesterday that they did not plan to devalue this year after an article in the official

China Daily Business Weekly

said that some analysts believed that "floating the renminbi would not definitely be a bad thing." Reached for comment by

The Wall Street Journal

, the reporter who wrote the article said that what she had written didn't in any way reflect an official position.

Case closed? Not really. Plenty of people still believe that the article was a government-placed trial balloon. Though most China-watchers don't believe a devaluation is in the offing, investors have not been wholly placated. So while it saw big declines yesterday, Hong Kong's stock market saw only slight gains today. One would expect a bigger rebound than that if those renminbi fears had really eased.

This global uncertainty makes it hard to determine if stocks have touched bottom or if they have further to go. It all makes it pretty hard to figure out what the market's going to do this morning.

"It looks like we're going to waffle around," said Bill Meehan, market analyst at

Cantor Fitzgerald

. "I wasn't terribly impressed with the action we saw yesterday, though it was a bit broader than what we have seen."

IBM

(IBM) - Get Report

might see a bit of a rebound off its recent selloff on expectations that it will announce a split today. Which makes Meehan seethe.

"I think that this mania over splits is just one more sign that this mindless herd mentality has strengthened its grip on this market," he said. "I even saw some well-respected analysts laying odds on the chances of an IBM split today -- what does that have to do with the price of rice?"

But since when did the price of rice have anything to do with the price of stocks? The

S&P 500

futures have wandered all over the place. At 9 a.m. EST, they were down 2.8, slightly below fair value, indicating a somewhat weaker open.

With stocks looking slightly lower, Treasuries were slightly higher. The 30-year was up 5/32 to 102 7/32, dropping the yield to 5.11%.

Japanese stocks continue to do well on hopes that the long-awaited shakeout of the nation's banks is finally at hand. The

Nikkei

climbed 173.20 to 13,382.01.

Hong Kong stocks saw volatile, futures-led trading. The

Hang Seng

climbed 10.33 to 9509.83.

European indices were under a bit of pressure. In Germany, the

Dax

down 10.52 to 4971.93. In Paris, the

CAC

was off 13.03 to 4037.77. In London, the

FTSE

was down 10.6 to 5870.3.

Tuesday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

    Compaq

    (CPQ)

    announced the creation of the

    AltaVista Company

    and plans to establish AltaVista as a publicly traded company. AltaVista, based in Palo Alto, Calif., is a wholly owned subsidiary of Compaq. The computer maker obtained AltaVista, an Internet search guide, last year when it acquired

    Digital Equipment

    . Compaq also said it has signed an Internet technology deal with

    Microsoft

    (MSFT) - Get Report

    to share communication and community capabilities between AltaVista and the

    Microsoft Network

    . Under one aspect of the agreement, AltaVista will make available to its users an AltaVista-branded version of Microsoft's

    Hotmail

    service as well as future Microsoft instant-messaging technology.

    TRW

    (TRW)

    is in advanced talks to buy British auto-parts concern

    LucasVarity

    (LVA)

    The Wall Street Journal

    reported, citing people familiar with the matter. Yesterday, LucasVarity rejected a takeover offer from

    Federal-Mogul

    (FMO) - Get Report

    .

    Coca-Cola

    (KO) - Get Report

    posted fourth-quarter earnings of 24 cents a share, in line with the

    First Call

    15-analyst estimate, but down from the year-earlier 33 cents.

    Tenneco

    (TEN) - Get Report

    is selling its containerboard business for $2.2 billion to

    Madison Dearborn Partners

    . As part of the deal, Tenneco will receive $2 billion in cash and keep a 45% stake in the containerboard business. Separately, the company posted fourth-quarter earnings of 2 cents a share, excluding charges, well below the First Call eight-analyst estimate for earnings of 8 cents and down from the year-earlier 44 cents, excluding charges.

    Broadcast.com

    said that three

    ABC

    television stations, WABC-TV in New York, WPVI-TV in Philadelphia and KTRK in Houston, have chosen the company to provide streaming media services for their content. Broadcast.com, under terms of the agreement, will deliver selected live and archived video broadcasts of news, sports and other locally produced programming from the stations. ABC is a unit of

    Disney

    (DIS) - Get Report

    .

    Downside Surprises

    Company

    Qtr

    EPS

    First Call View

    Yr. Ago EPS

    Number of Analysts

    Case

    (CSE)

    4Q

    -$1.37

    -$1.27

    $1.56

    15

    Tenneco

    (TEN) - Get Report

    4Q

    2c

    8c

    44

    8

    AlliedSignal

    (ALD)

    could lose a paper profit of $130 million from its failed buyout of

    AMP

    (AMP) - Get Report

    because it might qualify as a corporate raider under Pennsylvania law, the Heard on the Street column in the

    Journal

    reported.