MARKET TALK: Dollar Weakness Doesn't Have To Hurt Stocks
07 Mar 13:50
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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1:49 (Dow Jones) A few days after bumping up his target on the DJIA, Salomon
Smith Barney's Tobias Levkovich out with another bullish note, saying stocks
can do well if the dollar weakens (that's good news for bulls, because the
dollar is getting hit further Thursday). Essentially, the economic prospects of
the country tend to overwhelm bouts of dollar strength or weakness, he says.
"Dollar weakness could further stoke the Industrials names as they become more
competitive globally," he adds. (TG)
1:38 (Dow Jones) Expanded by popular demand: With the recent big rally and
with more stocks approaching and testing resistance levels, the Seidman/Skupp
options team at Miller Tabak & Co. had produced a list of 34 stocks trading
near 52-week-highs but whose defensive puts nonetheless are reasonably-priced.
Today they added more names to that list, including Ann Taylor (ANN), Applied
Materials (AMAT), Bank of America (BAC), Citigroup (C), Lockheed Martin (LMT)
and Maytag (MYG). Just in case you were looking for downside protection and
needed some ideas. (KT)
1:29 (Dow Jones) Stocks have a softish tone to them, though things were a
little worse earlier. Greenspan's comments didn't help because they were widely
expected, and more positive economic data - in the form of productivity and
jobless claims - can only do so much in the near term for a market that has
been on fire. Dick Dickson, who watches the charts at Hilliard Lyons, says the
majority of his short-term indicators are at overbought extremes. On the flip
side, the market appeared to take a "so what" attitude to overbought readings
yesterday. "This is usually the case in the early stages of strong rallies, so
we will be carefully watching what happens in the market over the next few
days," he says. (TG)
1:13 (Dow Jones) "The New Era strikes back," proclaims GKST economist Brian
Wesbury, who says real GDP could grow at a rate approaching 5% during the
second half of this year. (JCC)
1:01 (Dow Jones) Office superstore retailers are well set for current stage
of the economic cycle, Goldman says. Its analysis suggests same-store sales
growth for Staples (SPLS) and Office Depot (ODP) is much more closely tied to
industrial production than to consumer spending, contrasting with the likes of
Home Depot (HD) and Wal-Mart (WMT). Sees operating margin expansion for both
Staples and Office Depot without sales upside, and anticipates some
acceleration in same-store growth off depressed levels. The stocks should
continue to benefit from this cyclical dynamic as production growth picks up.
(TG)
12:48 (Dow Jones) Calpine (CPN) and other power producers are having another
fine trading day. Goldman Sachs' Jonathan Raleigh admits there has been an
improvement in sentiment, as investors begin to recognize that liquidity issues
aren't as dire as feared. Also helping: both power prices and economic
indicators are strengthening, he said. Still, Raleigh notes investors shouldn't
overlook short-covering, which has been a key factor in driving prices higher.
For example, the short interest in Calpine recently peaked at more than 70
million shares; compare this with 300 million shares outstanding. CPN up 8.6%
at $11.80. (CCC)
12:34 (Dow Jones) Most notable about today's 3.5% jump in the JPY is the
relative calmness of the European currencies vs. the dollar, says Ashraf Laidi,
at MG Financial. "This is quite different from the Oct. 1998 collapse in
USD/JPY, which was accompanied by a decline in the USD against the European
currencies," he says. This lends some support to the notion that this is
strictly a Japan-driven play, rather than a global growth-driven play. USD/JPY
127.05, EUR/USD $0.8796. (GMM)
12:23 (Dow Jones) Mortgage rates rose modestly this week on news of economic
strength, Freddie Mac says. For the week ending March 8, 30-year fixed rate
mortgages averaged 6.87%, up from 6.80% last week. The average for 15-year
mortgages rose to 6.37% from 6.28% last week, and the average for 1-year ARM
rose to 5.07% from 4.94% a week ago. Fees and points for all mortgage types
remained unchanged at 0.7%.
12:11 (Dow Jones) Americans hitting the road is good news for Cendant (CD),
which provides travelers with rental cars and lodging at any of its several
hotels. So when J.P. Morgan got a whiff that that travel is improving that's
enough for the firm to raise its 2002 EPS for Cendant. "Based on proprietary
research and anecdotal data, we believe travel volumes for the first half of
the year will be substantially higher than we previously expected," said
analyst Amanda Tepper, who repeated her buy rating on the stock yesterday.
(CCW)
11:52 (Dow Jones) May fed funds are indicating a 50-50 chance of a 25-BP hike
at May's FOMC, up from 20% at Wednesday's close, observers say. Meanwhile, July
contract level suggests a quarter-point hike fully priced in plus a roughly 50%
chance of an additional quarter-point tightening if Fed doesn't act in May. The
chance of an additional 25 BP in June is up from roughly 25% Wednesday. (ZHS)
11:47 (Dow Jones) Changes in Greenspan's testimony indicate "recovery is
coming faster and more clearly than he thought," which is a conclusion that
interest-rate markets have already made, Banc One analyst says. But with Fed
chairman's remarks, the market is now "more confident that the Fed tightening
process will emerge." (SPC)
11:39 (Dow Jones) February same-store sales figures for apparel retailers
generally weren't pretty, declining more than 5%, according to Bank of
Tokyo-Mitsubishi. But in many cases, declines in those numbers belie improved
profit margins, says Eliot Laurence of Jefferies. While Abercrombie & Fitch
(ANF) reported a 9% same-store sales decline, the company's inventory per
square foot was 30% lower. "Clean inventory allows full-priced spring goods to
emerge from the sea of clearance," Laurence said. "If you look at the
composition of the (February) sales performance, strong sales of new goods and
total sales were held back by sharply lower figures for clearance items." (JMC)
11:28 (Dow Jones) Following the ratings downgrade of its commercial paper to
A-2 from A-1-plus by S&P Thursday morning, Hewlett-Packard (HWP) will still
have access to the commercial paper markets, says a commercial paper trader.
But it will have to pay more, and the maturity profile of its paper will
change. HWP will no longer have "access to the full maturity spectrum," says
the trader. It previously could issue paper with a six-month maturity, but will
now be limited to three months and under, said the trader. The company retains
a P-1 commercial paper rating from Moody's. (MCG)
11:13 (Dow Jones) USD/JPY keeps falling, hitting another low at 127.31 - down
over three JPY on the day. "What stops it here is the question," said Larry
Kantor, head of forex at JP Morgan. "Our technical guys keep saying 'Here's a
line' and then it goes through it and they say 'Here's another line."' EUR has
also broken back above the key 88-cent threshold; a close above there sets it
up for more gains. USD/JPY 127.60. EUR/USD $0.8802. (GMM)
11:04 (Dow Jones) When it rains it pours for the Treasurys market. News that
a $51.2 billion fiscal stimulus package is likely to pass is another piece of
the puzzle that will help substantiate an economic recovery and further
pressure Tsys, says analyst. Two-year at 3.32%, 10-year at 5.14%. (MM)
10:56 (Dow Jones) The Financial Markets Center headlines its assessment of
the Beige Book as follow: "The Economy Firms--But Hold the Champagne." It says
manufacturing continues to face serious problems nationwide and that commercial
real estate is emerging as economy's greatest source of weakness. (JCC)
(END) DOW JONES NEWS 03-07-02
01:50 PM |
