Greenspan and Rubin Heading to the Hill, and Stocks Look Higher

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This afternoon,

Federal Reserve

Chairman

Alan Greenspan

and

Treasury

Secretary

Robert Rubin

will climb the Hill to speak before the

House Banking Committee

. The subject: international market turmoil.

The signals are mounting that the

Group of Seven

rich nations is prepared to stage a significant, coordinated effort to help subdue what has become the world economic crisis. There was Greenspan's speech in Berkeley, Calif., followed by his meeting with Rubin and Japanese Finance Minister

Kiichi Miyazawa

. There was

President Clinton's

speech Monday, with its suggestions of not just an effort to spur growth, but of changes in the architecture of global finance. Despite accusations that the embattled president was just wagging the dog, this was truly significant.

There was the communique from G7 finance ministers that coincided with Clinton's speech, with its statement that "the balance of risks in the world economy had shifted" and its suggestion that the member nations would work closely together. There was the report in today's

Nihon Keizai Shimbun

that the G7 would likely come up with a coordinated plan for stabilizing world markets and the global economy by early October, according to

International Monetary Fund

Managing Director

Michel Camdessus

.

And there was the speech in Tokyo today by British Chancellor of the Exchequer

Gordon Brown

, who told bankers that "you will see a great deal more discussion of cooperation in weeks to come."

In all likelihood, Rubin and Greenspan will back up the message that the market has been getting in recent days.

"I think it is going to be very much an effort to reinforce the G7 communique," said Dana Johnson, head of capital markets research at

First Chicago Capital Markets

. "Basically an understanding that there is a large amount of stress on the world economy and that the risks are more to the downside for the U.S. economy and the global economy."

While the market will take that as an implication that the Fed will ease, Johnson notes that "as always, Greenspan will remain very vague about when and by how much." The main message, however, will be one of soothing nerves in what has become a crisis of confidence. "It really reflects an effort to reassure people that the major economies are not going to stand idly by and allow anything like a 1930s-style global depression to emerge," said Johnson.

These are the kinds of things that Wall Street wants to hear. This is a big part of why stocks were able to gain three days running. And while even in the best of times, it is common for the market to pause for breath, this morning the market looks fairly firm on the open. At 9 a.m. EDT, the

S&P 500

futures were up 4.9, about 4 above fair value and indicating strength at the bell. With global tensions continuing to ease, the 30-year Treasury bond was off 5/32 to 103 17/32, lifting the yield to 5.26%.

Tokyo stocks were mixed on a day when many investors rode the pine ahead of the speeches on the Hill today. A report in the

Nihon Keizai Shimbun

that

Long Term Credit Bank

and

Union Bank of Switzerland

were ending their relationship hurt some bank stocks. Furthermore, it appears that whatever agreement that the ruling

Liberal Democratic Party

comes to with opposition lawmakers on banking reform, weak banks will not get off scot-free. There will be winners and losers. The

Nikkei

shed 29.67 to close at 14,197.70.

In Hong Kong, the notion that world leaders are working to lend stability to emerging markets continues to be a positive. The

Hang Seng

climbed 127.21, or 1.6%, to 7860.68.

European markets were all higher. In Frankfurt, the

Dax

was up 87.38, or 1.8%, to 4918.60. In Paris, the

CAC

was up 52.98, or 1.4%, to 3750.98. In London, the

FTSE

was up 45.9, or 0.9%, to 5327.60.

Wednesday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

  • General Electric (GE) - Get Report should see a nice jump today. Merrill Lynch raised GE to near-term buy from near-term accumulate, maintained its long-term buy rating and made GE its Focus One selection for the week. Meanwhile, Salomon Smith Barney maintained its buy rating on GE, which closed yesterday at 78 1/16.
  • The Ciena (CIEN) - Get Report saga, painful for many investors, took a puzzling new twist today. The optical-network supplier says it is investigating whether a rival, possibly Lucent (LU) , worked in a "legally questionable" manner to scupper Ciena's now defunct proposed linkup with Tellabs (TLAB) . The Washington Post reports this morning that Ciena suspects sabotage of the deal, referring to items in a routine document Ciena filed with the Securities and Exchange Commission earlier this week. "The company has not reached any conclusions regarding this evidence," according to the filing. -- Kevin Petrie
  • Host Marriott Services (HMS) predicted third-quarter earnings will fall short of analysts' expectations at 50 cents to 51 cents per share. It blamed the recent Northwest Airlines (NWAC) strike and the slowdown in Asia for the shortfall.
  • Building Materials (BMHC) expects third-quarter earnings to come in above Wall Street expectations at 53 cents per share, up from 35 cents last year.
  • In an effort to regain a 30% market share in light-vehicle sales, General Motors (GM) - Get Report is launching a huge marketing push including financing deals and cash rebates of up to $3,000 per vehicle, The Wall Street Journal reported. GM also is raising its stake in Suzuki Motor to 10% from the current 3.3% level.
  • Intel (INTC) - Get Report will to license technology to RealNetworks (RNWK) - Get Report to boost video quality online and help the small company fend off a challenge from Microsoft (MSFT) - Get Report, the Journal said.
  • Sallie Mae (SLM) - Get Report earnings in recent quarters have increasingly come from asset securitizations. That has produced steadily rising gains, but those gains lately are being reduced by disruptions in the asset-backed securities market, the Journal's Heard on the Street column reports.
  • ADC Telecommunications (ADCT) - Get Report will buy Teledata Communications (TLDCF) for $15.75 a share in cash, or roughly $200 million.
  • Rawlings Sporting Goods (RAWL) said yesterday it expects to post a fourth-quarter loss of 23 cents to 28 cents per share, worse than Wall Street expectations.
  • Servico (SER) will issue an added 2 million shares plus $15 million in cash to acquire Impac Hotel Group in the wake of the decline in Servico's stock after the companies signed their merger agreement. The original agreement had Servico issuing 7.4 million shares in forming the combination, called Lodgian, but was subject to adjustment if Servico shares fell below 14 for a certain period. Servico closed yesterday at 8.