John Edwards' Chat on AOL

<I>TSC's</I> Markets Editor discusses the future of Net stocks, the oil sector and more.
Author:
Publish date:

John Edwards' Chat on AOL

John J. Edwards III chatted on AOL MarketTalk on April 26. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live).

Sage Lion:

Joining us is John Edwards, markets editor for

TheStreet.com

, here to discuss market trends. It's nice to have you back, John!

JEdwards:

It's great to be back.

Sage Lion:

How long can this net ride last?

JEdwards:

Well, that's really the golden question here. Basically, this ride can go on as long as large numbers of investors continue to believe that the vast growth potential of the Internet outweighs concerns about the current valuation. So we might start to see some of the net heat cool off. If we start seeing things like market declines in the growth of Internet use.

Question:

Do your think that AOL will blow away Wall Street tomorrow?

JEdwards:

Well, certainly AOL's earnings are going to be a big focus for people on

The Street

and the company has been pretty solidly run and it does have a bit of a history of outperforming expectations. I think people would be very surprised to see a disappointing number from AOL and such a number might be one of the things that makes people sour on net stocks.

Question:

Where do you see SEEK in the Internet arena?

JEdwards:

Well, INFOSEEK and other portal companies are facing a challenge in aggregating large numbers of users and getting those large user numbers turned in to actual money. So in looking at companies in the net sector it's important to focus on which companies are doing best at not just getting large audience figures but also generating direct revenue from the people in the audience.

Question:

What do you think about C and are there others in the financials you would recommend.

JEdwards:

While I can't give direct recommendations on particular stocks, I would note that the strength in the economy in general and in the stock market in particular has benefited large diversified financial services companies like Citigroup and others. People on Wall Street are going to be watching economic data closely in the next few weeks to see signs of whether the economy is slacking off significantly from its very rapid pace.

Question:

What are your thoughts on the oil sector?

JEdwards:

The oil group has definitely been challenged in the last several months because supply has not been as scarce as many investors had expected it to be and as a result it's been difficult for oil companies to maintain aggressive pricing. The production cutbacks that OPEC companies agreed to seem to be holding for the time being but that's something to watch very closely if you are considering dabbling in oil.

Question:

What do you feel is the outlook for the Drug sector? MERK etc.

JEdwards:

Well, the outlook there is somewhat mixed. While the major drug companies have done well at managing their drug pipeline and at developing popular new products, many of the companies are facing patent expirations in the next few years.

Question:

As the current economy suggests that interest rate has no room to go down, what do you think that could imply to the stock market ?

JEdwards:

Well, if interest rates really do have no room to decline that would over time become more and more of a negative for the stock market. But, I'm not entirely convinced that that is true. While we may not see in the near-term declines in interest rates of the dramatic nature that we saw late last year I think it's possible that we will see rates expand their range down closer to 5%.

Question:

What are your thoughts on the Box makers?

JEdwards:

Well, we've seen that the PC sector is not actually doing as poorly as some people started to fear seeing Compaq's earning reports. It looks like Compaq's problems are mostly company-specific and it seems that other box-makers are doing a better job of managing the transition to lower-priced PC's.

Question:

Which retailer doing better ?

JEdwards:

The retail sector's fortune of course is very much bound up with the continuing strength of the economy. But it seems that consumers remain eager to spend and in the most recent retail sales figures we saw signs of continuing and even growing strength.

Sage Lion:

Thank you for joining us today John! Any parting shots?

JEdwards:

Get your wits about you out there when trading and good luck. Thanks for having me.