MARKET TALK: And You Never Cared About Utilization
31 Jan 13:27
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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1:27 (Dow Jones) Always one to watch, the next report on January capacity
utilization (Feb. 15) could be especially telling. Jack Schannep, of
TheDowTheory.com, says it's the best indicator to look at to find when a
recession is over. Four of the last five recessions ended the same month that
utilization bottoms (the other was a month late), and with December at 74.4%,
it has only been lower in two prior recessions. If January's reading is up,
then the recession ended in December, he believes. If it's down, then watch for
the mid-March report for February to know when the recession has ended. Either
way, he says the bull market is intact, and advises clients to stay fully
invested. (TG)
1:13 (Dow Jones) American International Group (AIG) recovered nicely Thursday
after its stock was hit hard by concerns about a relationship between one of
its units and PNC Financial Group (PNC). On Tuesday, PNC said it would have to
restate its 2Q and 3Q results after the Federal Reserve raised concerns about
its accounting treatment of three structured transactions. Keefe Bruyette &
Woods analyst Cliff Gallant upgraded AIG to buy from an outperform, citing the
recent stock decline as a buying opportunity since AIG said the transactions
won't have a "material" impact on its balance sheet. Shares of AIG recently
traded up $2.21, or 3.1%, at $73.50. (CUB)
1:05 (Dow Jones) Carolina Group's IPO after the close will be unusual for two
reasons. First, the company, which is the Lorillard tobacco tracking stock of
Loews (LTR), will be the first tracking stock since Alcatel Optronics came
public on Oct. 20, 2000. Second, it's a tobacco company. The last
tobacco-related IPO was back in May 1998, from Havana Group (HVGP), a cigar and
pipe retailer. (RJH)
12:58 (Dow Jones) Mortgage rates rose slightly this week but remained
affordable, Fredddie Mac says. Fixed-rate 30-year mortgages averaged 7.02%,
with 0.7 point, up from 6.96% last week. And 15-year mortgages averaged 6.51%,
with 0.7 point, up from 6.44% last week. (JSX)
12:40 (Dow Jones) The dollar is having a good day all around, with the yen
taking the biggest beating and Swissy falling in line with the sliding EUR. EUR
is $0.8591; USD/JPY is Y134.20; EUR/JPY is Y115.32. (JRH)
12:34 (Dow Jones) Publicly-traded hospital companies could report
higher-than-expected profits next year, depending how much Medicare
reimbursement rates rise in fiscal 2003. President Bush is expected to present
his fiscal 2003 federal budget proposal on Feb. 4. Sources cited by Merrill
Lynch analyst A.J. Rice said hospitals should be pleased, adding that the
proposal is not expected to include any effort to limit increases to the
Medicare inpatient reimbursement rate over the next few years. When the 2003
fiscal year begins on Oct. 1, it is possible that hospitals could receive as
much as a 3% increase in reimbursement rates. And since Rice's long-term
forecasts for investor-owned hospital chains call for a rate hike of 2%, a
better-than-expected reimbursement rate could lead to an upside earnings
surprise in 2003. (JJO)
12:21 (Dow Jones) The covered unemployment rate that measures the total
number of jobless receiving unemployment insurance benefits as a percentage of
all the workers covered by the program declined to 2.6% in the week ended Jan.
12 and stayed there in the following week. The Jan. 12 week was the survey week
for the January employment report and the rate was below the 2.9% level in the
December survey week and below the 3.1% peak recorded in the November survey
week. (JM)
12:09 (Dow Jone) Nymex heating oil bounces, lending support to rest of
complex, as ice storm plagues Midwest, and intense cold spreads in the northern
quarter of the Northeast and the deep South. Natural gas rise supportive, and
shortcovering and new buying cited. +94 pts to 51.85c/gal (MSX)
11:53 (Dow Jones) Utility Oklahoma Gas & Electric, an OGE Energy (OGE) unit,
has been hammered by a severe ice storm in the last 24 hours. About 185,000 of
its 700,000 customers are without power, and some could be off for a week. The
utility has also seen significant transmission damage, spokesman Brian Alford
says. "This is likely to be the worst storm in this company's history," he
says. OGE off 0.8% at $21.90. (JDK)
11:40 (Dow Jones) Interesting note from UBS Warburg, upgrading Accenture
(ACN) to strong buy from buy. The firm's research shows there could be as much
as $3.6B-$5.7B in revenue at risk for firms providing both consulting and
auditing services simultaneously to the same clients. The potential opportunity
to Accenture is between $100M-$1.4B. UBS also cites limited exposure to Enron
(ENRNQ), continued strong operating metrics, and valuation. Notes Andersen and
Accenture have been separate and independent legal entities for more than 10
years, and says ACN didn't perform any services related to audit of Enron or
the establishment of its partnerships. Shares up 3.7% at $25.88. (TG)
11:31 (Dow Jones) One little metric IPO analysts like to use to assess the
health of the new issues market is the founding date of the average company.
The more recent the vintage of the average IPO, the thinking goes, the more
speculative the investing is. Unfortunately, this metric won't be so reliable
this year. After the close, Carolina Group, which is the Lorillard tobacco
tracking stock of Loews Corp. (LTR), will price its IPO. It's founding date?:
1769. (RJH)
11:23 (Dow Jones) Japanese Government Bond market, with benchmark yield at
1.48% Thursday morning in NY, eyes S&P's directly worded statement that credit
quality in Japan expected to further deteriorate in 2002 in all sectors of
economy. Banking sector "weaker than ever before, and some form of government
intervention, especially for larger banks, appears to be inevitable." However,
S&P cites a few encouraging signs - structural adjustments in companies
expected to broaden and gather pace, says S&P MD for Asia Pacific region
Michael Petit - credit quality in corporate and banking sectors may take two
years to bottom out, however. (JNP)
11:15 (Dow Jones) With low of 98.04 this morning, June fed funds priced in at
least an 80% chance of a 25 basis point tightening by spring. That compares to
about a 60% chance priced in at Wednesday's close. (CMN)
11:10 (Dow Jones) Six Flags (PKS) says a purported class-action lawsuit
against it alleges that security and other practices at its park in Valencia,
Calif., discriminate against visitors on the basis of race, color, ethnicity,
national origin and/or physical appearance. The suit was filed on Nov. 27,
2001, and combines five previously filed complaints. The plaintiffs purport to
represent seven "subclasses" of visitors to the park and seek compensatory and
punitive damages in unspecified amounts, and injunctive and other relief. The
company has objected to the class allegations, arguing that the lawsuit cannot
appropriately be maintained as a class-action, and intends to vigorously defend
this case. Shares flat at $15.15. (DL)
11:00 (Dow Jones) Fired up about that surprising GDP reading Wednesday? Try
to contain your excitement. Bill Bruns, of Schaeffer's Investment, points out
the first-run number often looks much different than the final reading. In the
3Q, GDP first was reported as declining 0.4%, vs. expectations of a 1% drop.
The number got finalized at down 1.3%. Given everything facing stocks now,
including Tuesday's downside break of trading ranges on several major indexes,
caution is warranted. (TG)
(END) DOW JONES NEWS 01-31-02
01:27 PM |
