The Brazilian central bank has let the real fall out of the new trading band it set for the currency, and that is making for a bizarre morning on Wall Street.
Not that the bank's move was a surprise. From the outset, Brazil's ability to defend the currency with reserves that might in a time of capital flight make it to mid-February, seemed doubtful. And this, according to
The New York Times
is something that the U.S. government and the
International Monetary Fund
have been telling Brazilian president
Fernando Henrique Cardoso
: Trying to shore up the real would just be a colossal waste of money. What happened in Asia in 1997 would seem a case in point.
Though the real's dropping out of the band was first met with horror, the perception that the Cardoso government still listens to the U.S. and the IMF and that it will not be throwing away its money has calmed investor fears of Asia redux. Brazil's
was up 14%, and U.S. stocks look set to move higher at the bell.
"I think you're going to have a sigh-of-relief rally at the open based on the perception that Latin America is stabilizing," said Jim Volk, co-director of institutional trading at
futures, up in the early going, collapsed on the news that the real broke its band and then rebounded. At 9 a.m. they were up 14, about 12 above fair value and indicating a jump at the open. Earlier, they were down 14.
"I'm hard pressed to figure out how they go up 14," said Todd Clark, head of listed trading at
, who would not chase the morning rally. He points out that when stocks gap higher at the open after closing at their lows, they usually give back some of their early gains. He's been impressed, however, by the futures' ability to bounce off the lows they hit on Wednesday.
Indeed, trying to figure where stocks will go today looks more and more like a mug's game. Ask people on Wall Street these days what's moving the market these days, and they'll probably just scratch their heads. More than one trader has compared the movements in the stock market these days to what you usually see in a hog pit.
Adding to the confusion, today is the monthly expiration of stock and index options. The recent rockiness of the market will make that less smooth than it could be; there is much more open interest today than is usually the case on expiration. And that in turn will make for more volatility.
"Expirations are crazy anyway," said Clark. "Given the fact that we have this uncertain backdrop, it's going to be even crazier."
The 30-year Treasury bond was off 28/32 to 102 2/32, lifting the yield to 5.11%.
Hong Kong rebounded off an early Wall Street-inspired drop to close only slightly lower. In the morning, the
three times dipped below 10,000 -- a level where bargain hunters were happy to step in. The index closed down 35.73 to 10147.40. Elsewhere in the region, stocks in Singapore and South Korea both bounced back after selloffs yesterday, but Thai stocks saw fresh declines.
Japan's stock market was closed for Coming of Age Day.
European stocks clawed their way back from earlier losses. In Germany, the
was down 15.69 to 4897.06. In Paris, the
was up 26.33 to 4023.39. In London, the
was up 18.7 to 5838.9.
Friday's Wake-Up Watchlist
received preliminary indications from the
Securities and Exchange Commission
that it may use a favorable accounting method in its bid for
The Wall Street Journal
reported, citing people close to the company.
antitrust division has requested additional information about the proposed merger of
reported, citing people familiar with the situation.
has acquired a nearly 13% stake in
. Volvo said it "welcomes a discussion with Scania's shareholders regarding the potential combination of Scania and Volvo." Volvo also said it has had discussions with Scania's main shareholder,
concerning a potential marriage of Scania and Volvo. Volvo said, however, it isn't making a public offer for Scania, but added it is "interested in pursuing a constructive dialogue with Scania's shareholders."
(Earnings estimates are from
reported fourth-quarter earnings of 21 cents a share, beating the 12-analyst view of 15 cents, but down from the year-ago 40 cents. The company also reported full-year results and said the annual and quarterly results were disappointing due to declining prices for many of the company's coated and supercalendered printing papers.
reported fourth-quarter earnings of 54 cents a share, in line with the 13-analyst forecast and up from the year-ago 52 cents.
unit together with GE's
division jointly bought 1.2 million shares of
in a private placement for $7.70 a share, which represents almost 10% of Telescan shares outstanding.
reported first-quarter earnings of 86 cents a share, beating the five-analyst consensus estimate of 83 cents and up from the year-ago 70 cents.
(MKTW:Nasdaq) 2.75 million-share IPO was priced top-range at 17 a share by
BT Alex. Brown
yesterday, and shares will begin trading today. Marketwatch.com, a business news Web site, is a joint venture between
reported a first-quarter loss of 10 cents a share, down from the year-earlier earnings of 14 cents.
Now this week's items from the
oft-wrong Inside Wall Street Column in
is likely to get back on the acquisition trail, the column said, but with one condition, however. Ed Crutchfield, First Union chairman and chief executive officer, was quoted as saying: "No expensive or high-premium super-acquisitions for us." He also is quoted as saying: "We will only go for a merger of equals." The column said some of the equals showing up on radar screens at First Union include
. The column said Crutchfield declined to comment on whether he has approached those banks.
The column also offers up positive articles on