MARKET TALK: Midwest Manufacturing Still Sluggish
14 Jan 16:21
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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4:21 (Dow Jones) A December manufacturing survey by the Federal Reserve Bank
of Kansas City showed that, after improving in November, the net percentage of
regional firms reporting production increases versus a year ago dropped back to
Sept.-Oct. levels. But manufacturers expecting increases over the next 6 months
rose to the highest level since the spring. Year-over-year December production
was very weak in Colorado and western Missouri, slightly weaker in Nebraska,
and the same or better in Kansas and Oklahoma. (TNL)
4:08 (Dow Jones) Here's a theory behind the plethora of Fed appearances: The
December FOMC blackout ended in time for Christmas, and nobody wanted to talk
during the holidays. The late January FOMC blackout looms, so if you've got
something to say, you say it now. As for the common theme of the economy, it's
the new year and a time for the Fed presidents to offer up their respective
takes on the outlook. (MSD)
4:04 (Dow Jones) The Dow Jones Industrial Average made it six losers in a
row, as talk heats up of a false start in the economy and soft 4Q results, and
the market digests sharp gains that were made in the hope that neither was
true. And now, the fun really starts, with huge names reporting Tuesday and the
technical condition of the major equity averages coming under attack. Greenspan
essentially told us what happens on the rate front at the end of the month, but
tomorrow's retail sales numbers still worth a look. DJIA drops 96 to 9891,
Nasdaq Comp falls 31 to 1990, and S&P 500 drops 7 to 1138 (preliminary). (TG)
3:51 (Dow Jones) Robertson Stephens analyst Eric Rothdeutsch said Monday that
Intel's (INTC) Pentium 4 shortage is continuing, which will aid in
"better-than-normal" seasonality in the 1Q. Rothdeutsch, who expects Intel to
report 4Q revenue in the mid-to-high end of Intel's target Tuesday, said there
is limited average selling price pressure as well. Nevertheless, Rothdeutsch
remains cautious on the stock due to its valuation, which is 64 times his full
year 2002 EPS estimate. Intel recently up 1.2%. (DLF)
3:40 (Dow Jones) The performance of the S&P 500 was nothing to write home
about last year, and the decline can largely be attributed to the Information
Technology sector. Salomon Smith Barney notes that, of the 11 S&P 500 sectors,
the IT group experienced the largest move (up or down) in all four quarters
last year. Nice gains of 12.4% in the 2Q and 34.8% in the 4Q couldn't offset
the 25.9% and 34.1% drops in the other two quarters. (TG)
3:25 (Dow Jones) Moody's says most indicators of corporate credit worth
remain stronger than in the late 1980s and early 1990s. Lower leverage, higher
interest coverage, stronger liquidity and fewer downgrades relative to upgrades
suggest the U.S. can avoid a broad-based credit crunch. Importantly, bank and
financial institution credit worth also much healthier than in the early 1990s.
(MCG)
3:16 (Dow Jones) Perfect Storm? Concord Coalition Executive Director Robert
Bixby, assessing reasons for vanishing surplus, sees "no single culprit" and
says it's several different things--including tax cuts, economic downturn, and
9/11--coming together to form a "perfect storm" phenomenon for the budget.
(JCC)
3:12 (Dow Jones) The Argentine currency slid again in its second day of
trading after a prolonged market closure to ARS1.75 to the dollar, but so far
has not reached the lows - above ARS2 - projected in worse-case scenarios.
EUR/USD is at $0.8938; USD/JPY is Y131.86; EUR/JPY is Y117.87. (JRH)
3:02 (Dow Jones) Magna International (MGA) is down 7%, as investors show
their disappointment with the resignation of COO and President Jim Nicol.
Belinda Stronach, daughter of Magna founder and controlling shareholder Frank
Stronach, will assume Nicol's role as president in addition to maintaining her
position as chief executive. Merrill Lynch analyst John Casesa described the
"abrupt" management change as "startling" and "disappointing" because of
Nicol's strength as a COO and his success at strengthening Magna's strained
relationship with investors after Magna's diversification out of the automotive
sector in the late 1990s. (BED)
2:54 (Dow Jones) Bank of Tokyo-Mitsubishi, commenting on Greenspan's speech
last Friday, says "every statistic or idea which had been used to make the case
for the Fed to stop cutting rates was shot down by the Fed chairman." (JCC)
2:45 (Dow Jones) Stock prices of large Wall Street firms have largely bounced
back from their post-Sept. 11 lows, but Salomon Smith Barney's Guy Moskowski
still sees room for 6% to 26% growth over the next 12 to 18 months depending on
the firm. He raised his price target Monday for Morgan Stanley (MWD) to $65
from $55, while affirming his targets for Merrill Lynch (MER), Goldman Sachs
(GS), Lehman (LEH) and Bear Stearns (BSC). (CWM)
2:36 (Dow Jones) Look for network equipment makers Cisco Systems (CSCO),
Extreme Networks (EXTR) and Redback Networks (RBAK) to meet or top estimates
for the December quarter, says ABN-Amro analyst Kenneth Leon. Meanwhile, tight
capital spending continues to create risk for optical equipment makers like
Tellabs (TLAB) and Ciena (CIEN), he adds. (CBN)
2:28 (Dow Jones) Hilliard Lyons technician Dick Dickson notes a rare
occurrence: All four of the sentiment surveys he follows - Investors'
Intelligence, AAII, Bullish Consensus, and Market Vane - recorded bullish
sentiment over 50%. That's only happened 11 times since 1993, and if 50%+
readings are included on three of the four surveys, the number of occurrences
rises to 17. "What is important, however, is the market has responded poorly
every time a four of four or three of four reading has occurred," he says. In
every instance, the market subsequently either declined or, at best, traded in
a range for an average of five to seven weeks. (TG)
2:17 (Dow Jones) Hewlett-Packard (HWP) Director Walter Hewlett missed three
of the first four board meetings held to discuss merger negotiations with
Compaq Computer (CPQ), H-P said Monday. Hewlett, who supported the merger as a
director but as a shareholder is soliciting proxies against the deal, missed
board meetings on July 10, July 19, and July 30, 2001. H-P's board held eight
meetings between June 24 and Sept. 3, the day the companies announced their
proposed merger. The only other directors to miss a meeting related to the
merger were Philip Condit, George Keyworth, and Robert Knowling Jr., who all
missed a June 24 meeting. H-P first raised the matter of Hewlett's attendance
at board meetings in a letter to him last week, and Hewlett acknowledged
missing the meetings, but the company and the director didn't specify which
meetings were missed. (RG)
2:09 (Dow Jones) It's discouraging enough that, even after the bloodbath that
was (is?) the bear market, stocks are at all-time high valuations relative to
the S&P, surpassing even the then-record relative to P/Es of the 2000 1Q. But,
Prudential's Ed Keon says even if tech earnings jump sharply over the next
three years, valuations will still look high. He's reversing a previous
recommendation to overweight tech stocks, suggesting a 3% underweight is more
prudent, as is a slant toward value stocks. "We are tech supporters, but at
some point even high-quality merchandise may be overpriced," he says. (TG)
(END) DOW JONES NEWS 01-14-02
04:21 PM |
