TheStreet.com's WEEKEND BULLETIN
November 20, 1999
Market Data as of Close, 11/19/99:
o Dow Jones Industrial Average: 11,003.89 down 31.81, -0.29%; up 2.2% for the week
o Nasdaq Composite Index: 3,369.25 up 22.14, 0.66%; up 4.6% for the week
o S&P 500: 1,422.00 down 2.94, -0.21%; up 1.9% for the week
o TSC Internet: 948.83 down 7.14, -0.75%; up 12.2% for the week
o Russell 2000: 461.27 down 0.77, -0.17%; up 2.6% for the week
o 30-Year Treasury: 99 13/32 down 1/32, yield 6.161%
Companies in Today's Bulletin:
In Today's Bulletin:
o The Coming Week: Highflying Stocks Set for Thanksgiving-Week Boost
o Smarter Money: Telling the Whole Truth
o Evening Update: Microsoft Shares Soar in After-Hours as Tech Giant and Government Hail Appointment of Mediator
o Bond Focus: Bonds Meander Through Friday, Finishing a Nasty Week
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This week on TheStreet.com: Are there still some screaming buys among the year's most sizzling tech stocks, or are price tags just too high? Get the "Word on TheStreet" from Jim Cramer, Herb Greenberg and guest Todd Eberhard of Eberhard Investment Associates. And, he's clobbering the S&P 500 with his two mutual funds, so what does Transamerica's Christopher Bonavico like right now? Find out this weekend on TheStreet.com.
"TheStreet.com" on Fox News Channel airs Saturdays at 10 a.m. and 6 p.m. ET and Sundays at 10 a.m. ET.
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Also on TheStreet.com:
Mutual Funds: Brandywine Quietly Putting Ill-Timed Move Behind It
Foster Friess' fund is up nearly 40% this year thanks to a technology-heavy portfolio.
Mutual Funds: Brandywine's Friess: 'We Felt Justified All Along'
A transcript of his email conversation with
Tech Savvy: *Extra* Judge Richard Posner Enters Microsoft vs. Justice Negotiations
And columnist Jim Seymour argues that Microsoft should view Posner as an ally in settling the suit.
Under the Hood: *Extra* The Not-Quite-Final Word on Charting Mutual Funds
Some of our readers have already sent in their opinions. Take our poll and tell us what you think.
The Coming Week: Highflying Stocks Set for Thanksgiving-Week Boost
11/19/99 6:55 PM ET
first law might argue otherwise, there's been a fair amount of talk on Wall Street about how stocks will likely come off their relentless pace. The market has covered a lot of ground in the month or so since the October lows -- more, in fact, than it covered from the ringing in of the year to the highs reached this summer.
So it seems natural that stocks -- the poor dears -- should take a little break, if only to work off the lactic acid that's built up in their overworked muscles. Right?
The Coming Week: Join the discussion on
"Everybody's saying that, everybody knows that," said Bob Dickey, managing director of technical analysis at
Dain Rauscher Wessels
. "Which means that it's not going to happen, because everybody is so complacent." So while Dickey thinks that things have gotten overdone, he expects the market will continue to rise in the coming week.
He's got history on his side -- Thanksgiving week is typically a very good one for the market. Obviously, that shouldn't matter. It's a bit like saying that because the two times this writer ate noodles for lunch in the past week the market shot higher, you should hope that he eats noodles more often.
But things change when people start talking about that correlation. Like a reverse Heisenberg Uncertainty Principle, it starts to matter for the markets. Soon, TV crews are staked outside the offices of
starts running a NoodleCam. And cheers erupt at the stock exchange when your cherished author ducks into the nearby ramen joint. Really.
Anyway, Dickey thinks the market probably has the momentum to carry it through at least one more week, though he worries that the ensuing pullback will be pretty violent.
"There is no doubt that at some point they will jerk the rug here," he said. "Everything is so extended that even some pretty normal pullbacks are going to look dramatic."
So far, a bit of a post-
falloff in the Treasury market has had little effect in stocks, and as long as yields remain in a range that investors have already seen, the bonds will likely stay out of the picture.
There is little out there to rile the Treasuries in the coming week. Data will be thin, and with Thanksgiving off and half-days on Wednesday and Friday, there's not going to be much trading.
Perhaps that's just as well for a market that's shifting gears. Tuesday's rate hike is likely the last one for at least three months -- because of year-end concerns, nobody expects the Fed to hike at its Dec. 22 meeting. "Policy becomes a secondary influence on the market in the period ahead," said Bill Sullivan, chief money-market economist at
Morgan Stanley Dean Witter
. "The most dominant factor will be perceptions surrounding the economy. That means we go back on the data hunt."
The key factor in the months ahead will be whether the economic reports begin to show real signs of moderation. "You should still assume the next move is a tightening unless the numbers slow down," said Don Fine, chief market analyst at
Chase Asset Management
The bond market will also be keeping a pretty close eye on oil prices, which recently broke to their highest levels in nearly three years. "Some of this backing and filling to higher yields has been in reaction to higher oil prices," said Sullivan. Moreover, in the minutes of its Oct. 5 meeting, released on Thursday, the
Federal Open Market Committee
While oil prices, which had increased sharply this year, had changed relatively little recently and could move down in the future, secondary effects of the earlier increase on costs and prices in other sectors of the economy seemed likely.
Now that it jumped again, one imagines that there are fresh worries at the Fed that energy prices will fuel higher inflation.
Smarter Money: Telling the Whole Truth
James J. Cramer
11/19/99 12:35 PM ET
"Mr. Cramer, I don't think it's wise to be at the head of the lunacy pack for the good of
. Most of your subscribers operate at 10% of your speed, will get burned badly when this market breaks and will end up blaming you and
for their losses."
Smarter Money: Join the discussion on
Message Boards. Believe me, there isn't a day that I don't think about just this concept sent in by a devoted reader, John. But it is not my conscience that worries me. It is that I am not truthful to the readers. When we started
, I knew the thing I could do best, that would be most exciting and most enlightening, is the living, online diary of a professional trader. Think about it: The synergies are overwhelming. You can use this new fabulous medium to show, in real time, what is going on at the turret of a high-performance hedge fund. Nobody else is going to give you that except
. If someone wants to, I know I would be happy to share the spotlight with him.
You can't lie to your diary. You can't tell your diary, "I don't give a darn that I am spending all my time learning about
, I am going to tell the readers about the tribulations of owning
New Milford Savings Bank
. Or I am going to give them the skinny on stocks I don't follow closely, like the utilities or the real estate investment trusts."
From the beginning of this company, I have been adamant that there is only one thing that matters: Tell the truth about what you are doing. You blew the
by selling too early and it is on your mind? Say it. You rode down
in a nasty fashion. Talk about it. You want to learn a new group? Talk about it. You want to vent frustration that you don't know B2B, talk about it and show how you will learn. I plead guilty to trying to make that process fun and interesting. I plead guilty to the sportification of it (perhaps because I used to be a sportswriter).
But I can't start lying. I can't pretend that I am not interested in
. I can't play that. I am recommending nothing. I am not trying to get a transaction from you. I am not urging you to buy anything. We created the
Red Hots because we wanted to learn these and because we wanted a relevant benchmark. The
is not that index. We didn't create it to market it, to buy it, to buy a call on it, to short it, to sell it, to bet against it, to bet with it. We did it to follow it.
In other words, the Red Hots and the articles about it are all part of the package as I see it. To edit it, to give you something less than what I am seeing at my turret, is to compromise everything. When I am scared or confused, I say it. When I am confident, I say it. When I am right, I say it. And when I am wrong, I say it. That's my promise to you, John, and to everyone else who reads this column. I will never deviate from it.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Broadcom, BroadVision, Conexant, JDS Uniphase, Sycamore Networks, VeriSign, VerticalNet, Redback, Qualcomm and Phone.com. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at
Evening Update: Microsoft Shares Soar in After-Hours as Tech Giant and Government Hail Appointment of Mediator
11/19/99 7:19 PM ET
The judge in the
antitrust trial referred the case for "voluntary mediation" to Judge Richard Posner, the head of the U.S. Court of Appeals in Chicago.
Thomas Penfield Jackson
, who is presiding over the trial, recently found that Mister Softee played hardball, using monopoly power to harm consumers, competitors and customer companies.
Both the U.S.
Department of Justice
and Microsoft reacted positively to the referral to a mediator. The case is set to continue with arguments on Feb. 22, but is subject to change if the mediation is successful and produces a settlement acceptable to the judge.
A spokeswoman for the Justice Department said it "has always been willing to seek a settlement that would promote competition, innovation and consumer choice," according to
. Shares of Microsoft were up 4 7/8 to 90 3/16 in after-hours trading on
. (see table)
For more on the recent Microsoft decision, check out the
story written this evening by
In other post-close news (earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified):
Mergers, acquisitions and joint ventures
Chase Manhattan Bank
again extended its tender offer for
Hambrecht & Quist
as it awaits regulatory approval of the $1.35 billion deal. Chase extended the offer to buy Hambrecht shares for $50 each until Nov. 29 from Nov. 19. Chase made a similar move earlier this month as well.
said talks with
for a wireless expansion deal in Mexico have been terminated.
Delaware Court of Chancery
scheduled a hearing on Jan. 24 to consider
lawsuit challenging the $68.7 billion merger agreement between
American Home Products
Pfizer contends that certain antitakeover provisions in the merger agreement, including a breakup fee of up to $2 billion and an option for American Home to acquire 14.9% of Warner-Lambert stock if the agreement is broken, are "onerous and unlawful." Pfizer said the hearing will rule on its claim that the stock option granted to American Home and other lock-up provisions are violations of Warner-Lambert directors' fiduciary duty.
Earlier this week, Pfizer asked the court to expedite its lawsuit so a trial could begin by Dec. 13, and said it would begin soliciting shareholders to remove Warner's board of directors. Shareholders of Warner and American Home are scheduled to vote on the merger May 15.
Westinghouse Air Brake
said they completed their merger after shareholders approved the deal.
Offerings and stock actions
said its board set a 2-for-1 stock split.
said it approved the repurchase of up to $2 billion in stock.
Bond Focus: Bonds Meander Through Friday, Finishing a Nasty Week
David A. Gaffen
11/19/99 4:39 PM ET
Be careful what you ask for, bond market -- you might just get kicked in the head for it. Heading into this week, the market was expecting a Fed rate hike. They didn't expect to have their worldview turned upside down.
This week Treasuries gave back almost half of the gains attained in the three weeks leading to the
Tuesday rate hike, and with the selling came a reassessment of the current market outlook. Sentiment now among participants is that the Fed may very well raise rates early next year, a direct contrast to many who believed the Fed would be finished after Tuesday's rate hike, which pushed the fed funds target to 5.5% from 5.25%.
Today there was little to focus on, so the losses were limited. After selling off in the morning, the market recovered and finished virtually unchanged, but it's still chafing. The 30-year Treasury bond was lately off 1/32 to 99 13/32, leaving the yield at 6.16%.
"There has been some reassessment
of the Fed," said Jim Kochan, senior bond market strategist at
Robert W. Baird
. "Prior to the announcement Tuesday, people felt if there was a tightening move that would be it, and it seems to me they're having second thoughts."
It's one of the chief reasons why investors sold almost continuously since the Fed announced its rate hike, the third of the year. It's still highly unlikely the Fed will raise rates Dec. 21, the last meeting of the year, but the market is now more worried about the prospect of continued tightness in the labor market and rising oil prices than it is excited about the potential for a pre-Y2K safety rally.
Join the discussion on
Message Boards. Oil rose again today. The price of the December oil futures contract traded on the
New York Mercantile Exchange
rose to $26.35 per barrel today, up from $25.80 yesterday. The current worry is that rising oil prices will translate to rising heating and fuel costs for consumers.
"The price is so high you'd have thought it would have done more damage than it has," said Kochan. "But it's another element that suggests it's too early to assume the Fed is done tightening for this cycle."
Regardless of the oil surge, very little of the market's frustration was on display today. Tracker
reported $34 billion in securities traded, just 83% of the usual when compared to the average Friday this past month.
In fact, analysts called today's activity a look at what December is going to be like -- when people get out of town and go on vacation. Next week's got very little in the way of market-moving data, and the bond market will close early on both Wednesday and Friday, before and after Thanksgiving.
"We're in a situation where there's not much data for a week-and-a-half," said Joel Kent, economist at
. "The revision to GDP should be interesting, but there's going to be a lot of early closes and then in December, I think people think it's going to be quiet."
The first revision to the third-quarter GDP figure is released next Wednesday morning. Economists polled by
are expecting the rate of GDP growth to be revised downward to 4.7% from the first estimate of 4.8%. But with the fourth quarter more than half-over, the market isn't holding its breath for a revision to third-quarter figures.
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