John J. Edwards III Chats on AOL

<I>TSC's</I> markets editor talks about AT&T, the Fed, bonds, oil prices and more.
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John J. Edwards III chatted on AOL MarketTalk on Monday, Aug. 30. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live). As with all chats, this transcript is unedited.

Comment:

Live from New York, NY, Sage is proud to introduce John Edwards, markets editor at

TheStreet.com.

John can answer your questions about the markets and investing.

Jedwards:

Thanks for having me. Great to be here!

Question:

What is your opinion on the price war between AT&T and Wcom?

Jedwards:

It'll be very interesting to see if the long-distance giants are able to maintain strong profit margins as price competition once again heats up. I can't offer direct buy/sell advice, but I would say you should watch AT&T carefully here.

Jedwards:

CEO Michael Armstrong has shown he's willing to take significant risks and incur significant expenses to lock up market share in various areas, so the price war could get pretty ugly if he's pushed.

Question:

Was the drop in Dave & Busters last Friday overdone? I was there this weekend and it was packed!

Jedwards:

I don't really know much about the company myself, but I believe our columnist

Jim Cramer has had some comments on the stock. Take a look on TheStreet.com.

Question:

What does this weak volume mean? Is it a bearish sign?

Jedwards:

It's certainly not particularly bullish. The extremely low volume suggests that a lot of smart money is scared of this environment, hanging back until we see what this week's economic data look like.

Jedwards:

Despite significant gains in the market, solid catalysts for further assaults on records appear to be lacking for the short term.

Question:

Progressive was hit hard today, BankOne was hurt last week, and financial stocks have been weak. Do you expect the downtrend to continue in the financial sector?

Jedwards:

Yes, I think we'll see continued nervousness about the group. Despite the Fed's expected rate hike last week, it's still possible we'll see another tightening move in October or later this year.

Jedwards:

The economic data, again, will be key here. Watch the NAPM survey on Wednesday and the August employment report on Friday.

Question:

Abby J. Cohen said today that there might be another rate hike. Did this cause a selloff in the tech sector and is a rate hike factored into the market?

Jedwards:

I didn't see Cohen's comments, but I think they feed right into the kind of lingering nervousness I was just mentioning.

Jedwards:

I don't think another rate hike is factored into the market, because the recent rally we've seen was based on last week's tightening being the last one of the year.

Jedwards:

If concerns grow that the conventional wisdom was wrong on that, we could see a lot of the August gains given back in a hurry.

Question:

Speaking from a sector standpoint, what looks more attractive: drug or tech stocks?

Jedwards:

Really depends; I'd be wary of making a broad sector bet like that. Overall, I'd lean toward companies in either area that have been beaten down more than you think their fundamentals warrant.

Question:

Bonds took a hard hit today? Is it a good idea to buy this latest dip?

Jedwards:

I think it might be prudent to stand back and wait for the data, unless you're a long-term investor. If you're trying to play the bonds for a short-term trade, you could get hurt if the data look like they could lead the Fed to tighten again.

Question:

Do you see further upside to the oil sector?

Jedwards:

I think the oil sector is in a tough spot. There's talk of an OPEC member, perhaps Venezuela, violating the production curbs and selling more than the group's quota allows. That kind of influx of supply would be bad news for the sector.

Question:

Will precious metals ever have a future as a financial asset?

Jedwards:

They may, but I wouldn't bet the house (or the kids' education) on it. There could be some buying pressure in precious metals as we get closer to the end of the year and Y2K concerns get into the currency markets.

Jedwards:

But I don't think any pop in metals will last long. I think their time as a serious financial asset has passed.

Comment:

Thank you for joining us today John! We appreciate your insights!

Question:

We have been speaking with John Edwards, markets editor at

TheStreet.com.