MARKET TALK: How Does A Mid-Year Rate Hike Sound?
08 Jan 10:44
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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10:44 (Dow Jones) With a quote of 98.325, Feb. fed funds see a 30% chance of
a 25-basis-point cut by January FOMC meeting. That's down from about a 32%
chance which was priced in at Monday's close at 98.33%. Down the road, fed
funds see about a 25 basis point tightening by July. (CMN)
10:38 (Dow Jones) This year should bring stability for the optical components
group, says UBS Warburg's Joseph Wolf, as opposed to the dramatic decline in
fortunes of 2001. The analyst likes Agere Systems (AGRA) for its valuation and
integration and JDS Uniphase (JDSU) for its market leadership. Finisar (FNSR)
is expensive, Wolf said, but he likes the company's position in the datacom and
metro sides of the industry. (JDB)
10:31 (Dow Jones) Motorola (MOT) will use Cirrus Logic's (CRUS) 802.11b WLAN
chips in its Wireless Enhanced TV Viewer. Cowen says the financial contribution
to Cirrus is unclear now, but the deal does help validate the company's
technology. Shares up 2.4% at $14.35. (TG)
10:21 (Dow Jones) Sharper declines in manufacturing shipments reported in
Richmond Fed index, at -25 in Dec., from -15 in Nov. Services revenues,
however, rose, +7 in Dec. vs. -6 in Nov. Despite manufacturers' recent declines
in activity, most were more optimistic about their future prospects, Richmond
Fed reports. (JNP)
10:11 (Dow Jones) Factory inventories declined a steep 0.9% in Nov. after a
0.7% decline in Oct. These sharp inventory declines represent a big drag on 4Q
GDP and likely will offset flat or slightly positive final sales to insure
another quarterly decline in real GDP. (JM)
10:04 (Dow Jones) Factory orders fell by 3.3% in November after a 7.0% rise
in October. The sharp swings in both months mainly reflect distortions due to
the first phase ofthe orders for the joint strike fighter boosting defense
aircraft orders fivefold. Nondefense orders rose by 0.8% in Nov. after a 2.9%
gain in Oct. (JM)
9:58 (Dow Jones) AOL is off 1.8% early after Monday's outlook. Despite softer
growth view from management, Goldman Sachs says its investment thesis remains
unchanged, and firm continues to recommend AOL as favorite
Internet/entertainment stock based on unique business mix, industry-leading
growth, and attractive valuation. New 12-month target is $40, with downside in
$30 range. Shares off 38c at $32.30. (TG)
9:45 (Dow Jones) The 16% decline in Gateway's (GTW) shares in early trading
Tuesday demonstrates what may be a common theme this earnings season -
punishing those that miss revenue forecasts. Making earnings estimates in the
final quarter of 2001 may prove easier than in past quarters because of
companies drastically cutting views and reducing costs after 9/11. And, because
the economy - in particular, the consumer - held up better than expected during
the quarter, many companies unexpectedly saw their margins improve nicely.
However, revenue figures are less manipulative and will be considered a truer
indication of a company's health this earnings season. (GS)
9:36 (Dow Jones) A Developers Diversified Realty (DDR) spokeswoman says it's
still uncertain how many, if any, shares the company will issue to Burnham
Pacific Properties (BPP) under a Dec. 17 purchase agreement. On Friday,
Developers Diversified registered 2.8 million shares of its common stock for a
transaction that includes the purchase of two California retail assets from
Burnham Pacific. Under the deal, Developers Diversified will acquire the two
properties for $65.4 million, of which $15.1 million will be paid in cash.
Developers Diversified will then have to decide whether to pay the balance of
the purchase in additional cash or by using the 2.8 million shares registered
Friday. (BC)
9:28 (Dow Jones) Lehman has mixed feelings about Lucent (LU) naming Pat Russo
as new CEO. The positives: she knows the communications service provider market
very well, knows Lucent inside and out, and is well-suited to implement the
restructuring plan already under way. The downside: Lehman sees the appointment
as a lost opportunity for Lucent. The firm sees Lucent as an extremely
attractive turnaround opportunity, but the senior management team, with one
exception, is composed of "lifers." Also, Russo's long-term vision is an
unknown. (TG)
9:17 (Dow Jones) Strong retail sales in the final week of the holiday season
helped lift sales above target for the month ended Jan.5, Redbook notes, but
monthly retail sales were still down 3.5% from November. (JEN)
9:10 (Dow Jones) Hewlett-Packard's (HWP) board said it was disappointed in
Walter Hewlett's recent proxy statement with the SEC and disputed his version
of some of the events leading up to the board's vote. "We know you to be an
independent thinker and an experienced board member who knows very well what
your fiduciary duties are - to vote as a director in the best interests of HP
shareowners," the board said in a filing Monday with the SEC. "We all assumed
that you were upholding those duties when you willingly voted in favor of the
merger as a director. To suggest that you were pressured into approving the
merger is inaccurate and inappropriate." (BS)
9:03 (Dow Jones) "We're seeing the end of europhoria," said Alex Beuzelin at
Ruesch International. EUR/USD is $0.8907, USD/JPY is Y132.62, EUR/JPY is
Y118.13. (JRH)
8:58 (Dow Jones) Morgan Stanley says new proposed EPA regulations for
noncompliant engines are a legitimate near-term issue for Caterpillar (CAT).
The regulations would call for $6,000-$10,000 penalty per noncompliant engine
sold after October 2002, toward the high end of previous estimates, and the
annual EPS impact on CAT could be 85c to $1.50. Keeps outperform rating, and
would be aggressive buyer in mid-$40 range. Shares closed at $53.15Monday.
(TG)
8:46 (Dow Jones) ABN-Amro's downgrade of Qualcomm (QCOM) the result of
concerns about the near-term slowdown in growth of wireless subscribers and
handset shipments, including results from China. Cuts 2002 EPS view to 99c from
$1.08 and 2003 to $1.13 from $1.22. Long-term, for both stock and wireless
industry, are compelling, but shares may face pressure with potential for
revised financial expectations in the near-term. Target goes to $56 from $65.
(TG)
8:35 (Dow Jones) Lehman downgrades VeriSign (VRSN) because of the firm's
increasing concern "in VeriSign's ability to maintain organic growth of 35%-40%
as the core domain registration business matures." Lehman sees the company
coming close to the firm's 4Q forecast; "however, we believe the quality of
those results is likely to come under investor scrutiny given the number of
acquisitions during the quarter." The firm also lowered VRSN's price target to
$40 from $60; VRSN shares closed Monday at $34.05. (GS)
8:30 (Dow Jones) AOL might not be counting on any economic recovery this
year, but most everyone else is. In fact, there are a couple of pieces of
economic data this morning - factory orders and a Richmond Fed reading - that
may show the economy is improving. Anyhoo, Wall Street will get its first 4Q
reading on a Dow component Tuesday when Alcoa (AA) reports, and Wachovia has
started coverage on a little outfit called GE with a buy rating. Monday's
equity action may have been a disappointment - a nice open ended in weakness -
but this morning at least has the chance to get off to another good start.
Treasurys easing. (TG)
(END) DOW JONES NEWS 01-08-02
10:44 AM |
