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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.

In all, it's been a pretty sleepy weekend on the financial front thus far, with minor news items on





(TX) - Get Ternium S.A. American Depositary Shares (each representing ten shares USD1.00 par value) 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




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.

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"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 Tech Data Corporation Report







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


(DELL) - Get Dell Technologies Inc. Class C Report


In the oil sector,





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,



In other news,



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


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

Finally, U.S. Fortune 500 utility


is buying

Transmission Pipelines Australia

for $675 million,



In the Papers

The weekend financial press is fairly thin this week.


has a bullish item on


(SLB) - Get Schlumberger N.V. 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


(BUD) - Get Anheuser-Busch Inbev SA Sponsored ADR (Belgium) Report

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


(HUM) - Get Humana Inc. Report

is the subject of a negative feature in


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



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



Hudson River Bancorp



South Jersey Financial



Lincoln Bancorp



First Place Financial


, and

Mystic Financial



Fund managers profiled in the weekend press include Beth Cotner of


Putnam Investors, in


, and Bernice Behar of


John Hancock Emerging Growth, in

The New York Times


Also in the


Money & Business

section, a slap at

Salon Internet's

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