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Failed Drug Merger Puts Wall Street in a Sour Mood

According to the "Aspirin Count Theory," a jump in the production of aspirin leads a downturn in the market. Aspirin is, of course, a drug, so by applying the same logic that says that all men are Socrates, it stands to reason that what's good for drug companies, is bad for the market. And vice-versa.

Ah, if only it were so easy.

News that

SmithKline Beecham

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and then Glaxo, is raising a few eyebrows in the City, though.

"You ever read

The Importance of Being Earnest

?", asks David Smith, managing director of

Cantor Fitzgerald

in London. "It's kind of like what Lady Whatshername -- Lady Bracknell -- says. 'To lose one parent is unfortunate; to lose two is careless.' I suppose one can sort of apply that sort of thing to SmithKline."

Other than the drug news, things in London are quiet, according to Smith. "I haven't seen a sector that's dominating," he says. "They all seem to have gone to sleep, so the market is tending to drift down rather than up."

It is, to quote Mrs. Rittenhouse,

a gala day

for the Treasury market. The January

consumer price index

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was unchanged for the overall number, while the core number, which excludes the volatile food and energy sectors, showed an increase of 0.2%. Both were in line with economists' expectations.

The big focus for Treasury traders, though, is

Fed Chairman Alan Greenspan's


testimony before Congress today, slated to start at 10 a.m. (To get a leg up on the Chairman's prepared statement before the first ahem, check out the Federal Reserve's

web site

at 10.)

The 30-year Treasury bond is up 5/32 at 103 8/32.

It was, perhaps, forgivable that Japan's ruling

Liberal Democratic Party

did not announce Monday a new economic stimulus plan on the heels of Friday's disappointing one. These things take time, and after the lambasting the government got from the G7 finance ministers in London over the weekend, perhaps

Finance Minister Hikaru Matsunaga

, who is, after all, new to all this, was a bit tired.

But today there were still no indications that the government plans to change its stance on the economy, and stocks fell badly. The


dropped 411.49 to 16,198.00.

Separately, in response to the alleged securities law violations of Diet-member Shokei Arai, who committed suicide last week, Hashimoto said that banning lawmakers from trading is not necessary. Given Friday's tepid stimulus plan, and the government's apparent unwillingness to come up with something more suitable, could the Prime Minister is short

Nikkei Futures


After spending most of the day down, Hong Kong stocks saw a bout of late-day, futures-led buying that brought them to nearly the break-even mark. The

Hang Seng

closed at 10,683.34, off 1.87.

German stocks, showing their nervousness above 4600, retreated. The


closed at 4599.54, off 58.00.

J.P. Morgan

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, hurt badly by Asian losses, is reportedly planning to lay off 700 people -- 5% of its workforce -- and is considering either merging with or acquiring another bank.