Weekend Report: Developments at Compaq and Texaco, and a Word on Bonds

An unsourced sentence in the <I>Washington Post</I> says the bond market misinterpreted Greenspan last week.
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In all, it's been a pretty sleepy weekend on the financial front thus far, with minor news items on

Compaq

(CPQ)

and

Texaco

(TX) - Get Report

providing some relief from the tedium.

Perhaps the most intriguing tidbit in the weekend wires and papers is outside the companies arena. In Sunday's

Washington Post

,

Fed

reporter

John Berry

has an unsourced characterization of last week's bond market selloff as reflecting "widespread misinterpretation" of Fed Chairman

Alan Greenspan's

remarks on inflation and the forces that have been keeping it so low.

"There was widespread misinterpretation of a speech by Federal Reserve Chairman Alan Greenspan in which he emphasized that large productivity gains are keeping costs and inflation low," Berry writes in his very short Sunday

column. "Most analysts seized instead on his usual warnings that a continued drop in unemployment could cause inflationary problems."

(Greenspan's warning, in Greenspan's words, was this: "Although productivity has accelerated in recent years, the impressive strength of domestic demand, in part driven by sharply rising equity prices, has meant that the substitution of capital for labor has been inadequate to prevent us from steadily depleting the pool of available workers. This worker depletion constitutes a critical upside risk to the inflation outlook because it presumably cannot continue without eventually putting increasing pressure on labor markets and on costs.")

Will the benchmark 30-year bond's yield retreat from its 11-month high yield of 5.81% tomorrow now that Berry has shown investors the error of their ways? Or will they steadfastly continue to commit vast sums of capital to such an obviously wrong take on the chairman's remarks? Only the Shadow knows...

In other news, Compaq is expected to announce four exclusive distributors for its products on Monday,

Dow Jones

reported. The distributors are

Ingram Micro

,

Tech Data Corp.

(TECD) - Get Report

,

Inacom

(ICO)

and

Merisel

(MSEL)

. The move is Compaq's latest effort to improve its distribution system to better compete with

Dell

(DELL) - Get Report

.

In the oil sector,

Bloomberg

says

Chevron

(CHV)

is in slow-moving talks to buy Texaco. If a deal ever results, it probably won't be for months, because of Texaco's refining alliances, which would have to be scrapped at huge expense,

Bloomberg

reports.

In other news,

Teleglobe

(TGO)

is expected Monday to announce a $5 billion plan to connect 160 cities around the world with high-capacity fiber for Internet and data traffic, the

Wall Street Journal Interactive Edition

reported yesterday.

In small-cap news, the Netherlands'

Royal Philips Electronics

announced today that it will buy speech technology company

Voice Control Systems

(VCSI)

for $4 a share in cash. VCSI closed Friday at 3 3/16.

Finally, U.S. Fortune 500 utility

(GPU)

is buying

Transmission Pipelines Australia

for $675 million,

Dow

reports.

In the Papers

The weekend financial press is fairly thin this week.

Barron's

has a bullish item on

Schlumberger

(SLB) - Get Report

, saying rising oil prices could put the company back on a fast-growth track, goosing the stock price.

There's a bearish item in the weekly on

Anheuser-Busch

(BUD) - Get Report

, saying that unless earnings are about to spurt (which no one's expecting), the stock looks toppy.

Humana

(HUM) - Get Report

is the subject of a negative feature in

Barron's

, for briefing its board last fall on the likelihood that contract negotiations with

Columbia/HCA

(COL)

would hurt the managed-care concern. A month before badly missing first-quarter earnings estimates in early April, the story says, Humana reassured shareholders and analysts about the contract in a meeting.

The weekly has a positive feature on S&Ls, saying that many newly public thrifts are undervalued. The favorably mentioned include:

CFS Bancorp

(CITZ)

,

Hudson River Bancorp

(HRBT)

,

South Jersey Financial

(SJFC)

,

Lincoln Bancorp

(LNCB)

,

First Place Financial

(FPFC)

, and

Mystic Financial

(MYST)

.

Fund managers profiled in the weekend press include Beth Cotner of

(PNVYX)

Putnam Investors, in

Barron's

, and Bernice Behar of

(TAEMX)

John Hancock Emerging Growth, in

The New York Times

.

Also in the

Times

Money & Business

section, a slap at

Salon Internet's

IPO, slated for next month, calling it "a flawed business model."