John J. Edwards III Chats on AOL, Jun. 12 - TheStreet

John J. Edwards III chatted on AOL MarketTalk on Monday, June 12. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live).

OnlineHost:

Live from New York, NY, please welcome John Edwards, assistant managing editor, TheStreet.com. John can answer questions about the latest market-moving news.

OnlineHost:

John does NOT offer individual stock commentaries or recommendations.

SageMoola:

Good afternoon and welcome to MarketTalk, Mr. Edwards!

Jedwards:

Thanks for having me. As always, great to be here!

Question:

What are you predicting for this week's

Consumer Price Index and what reaction will the market have to it?

Jedwards:

I think it'll probably be up slightly, as the consensus expects. There's a slight chance it'll be unchanged again, which the market would really love.

Jedwards:

Basically, if we see a headline number in line with or below expectations, the market will lean toward the plus side as traders take that to mean there's less likelihood of further rate hikes. A higher-than-expected number could further the pullback we're seeing today in the

Nasdaq

, which has had a good run in the last couple of weeks.

Question:

Sir, what do you think of the biotech sector? thank you.

Jedwards:

Always a very risky area. There will be great -- and lucrative -- discoveries in the field of biotech and genomics, but the challenge is figuring out which companies will benefit most from those discoveries. As anyone who got caught up in the biotech bubble of 1994 can tell you, it's not easy.

Jedwards:

It's especially important in a highly speculative sector like biotech to do extensive due diligence before investing. Check out some medical journals, ask an experienced broker -- and, of course, you can read

TheStreet.com

, where

Dane Hamilton

of our news staff and outside contributor

Gabe Hoffman

write great stuff on the sector.

Question:

CPI on Wednesday, but what can we expect from tomorrow's retail sales?

Jedwards:

We're looking for more signs of moderation there, but the consumer can be tricky to keep up with. I do think we'll see a number the market can live with. But I must disagree with those who suggest that the

Fed

will back off of tightening because of the recent sluggish data.

Jedwards:

The Fed knows there's no danger but plenty of benefit in at least one more immediate tightening, and so we can expect a 25-basis-point increase at the late-June meeting.

Question:

Is it again time for defensive stocks ?

Jedwards:

It could be, yes. The momentum crowd wants to get things going, but I think disappointment is setting in there as the Nasdaq stalls out without a further break higher. More defensive sectors, such as consumer staples, should hold up decently through the summer even as tech encounters fresh volatility.

Question:

What's your view on the

America Online

(AOL)

/

Time Warner

(TWX)

deal?

Jedwards:

I think it says a lot about the economy of the future. We're hurtling toward the day when the distinction between New Economy and Old Economy companies will wither away (and for real, not the way the state was supposed to in Marxist theory).

Jedwards:

The AOL-Time Warner combination is typical of what we'll be seeing in the future, with strong Internet assets married to an effective old-media base. I think it has as good a chance of success as any company in the media business right now.

SageMoola:

Thank you very much for joining us today, Mr. Edwards. It's always a pleasure!

Jedwards:

And always a pleasure to be here! Thanks for chatting, and I'll see you at

TheStreet.com

!