MARKET TALK: Merrill Not Optimistic About Semi Inventory
07 Feb 10:14
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
10:13 (Dow Jones) Merrill says the inventory situation in semiconductors is
worse after 4Q than it was after 3Q, and stands by conclusion that brunt of
invetory correction still to come. Firm believes weaker demand environment will
exacerbate inventory correction, and believes it will take at least two
quarters for inventory to be worked down. No semi company will be immune, and
notes PMC Sierra (PMCS) most exposed, as Cisco (CSCO) and Lucent (LU), "two of
the worst culprits in the inventory build," account for nearly 40% of PMCS
revenue. (TG)
10:06 (Dow Jones) Goldman Sachs economists say Fed's monetary policy stance
is "now approximately neutral." They expect central bank to "shift to a clearly
accomodative stance in coming months," and foresee "at least another 100 basis
points of cuts." (JC)
10:00 (Dow Jones) There is still disappointment with the failure of the euro
to take more advantage of the slowing in the U.S. economy. "A lot of bankers
are saying that they would have expected the euro to be aound 97 cents - or
even parity-- by now," said one trader. (JRH)
9:52 (Dow Jones) Probably a good day for this kind of news for Brocade
(BRCD). The stock is being added to the Nasdaq 100 Index, effective next
Tuesday, replacing SDL Inc. (SDL), which is being acquired by JDS (JDSU).
Brocade shares up 0.5% in weak tech market. (TG)
9:45 (Dow Jones) Given some significant selling in the tech group this
morning, where should investors redeploy their capital? Judah Kraushaar at
Merrill Lynch is recommending trust banks, a group that makes its money through
asset management and fiduciary services. Kraushaar likes Bank of New York (BK),
Northern Trust (NTRS), and Mellon (MEL). (KJT)
9:40 (Dow Jones) March Nasdaq down sharply,but so far is holding above
important support at 2426, Monday's low, one off-floor trader says. That's just
above the first limit down level of 2425, 65 points lower. Under there, support
not seen until 2330-40. Resistance comes in around 2640-50. (DMC)
9:37 (Dow Jones) Entrepreneurs can't get no respect, or at least not as much.
Study out Wednesday from Babson College and Kauffman Center for Entrepreneurial
Leadership says about 76% of Americans surveyed last year respect
entrepreneurs, but that's down from 91% in 1999. Other tidbits: Most
venture-capital money goes to - you guessed it - tech start-ups, and two-thirds
of that cash goes to only five states: California, Massachusetts, New York,
Texas and Colorado. Complete story to come under n/vcf. (GC)
9:32 (Dow Jones) March S&Ps and Nasdaq start lower, pressured by surprises
out of Cisco (CSCO). Traders will watch to see if it has a ripple effect
throughout tech. In overnight trade, March S&Ps made a new 2-week low at
1349.10. Focus is on technicals and earnings. Cash market soft: DJIA down 19,
Nasdaq off 52. (DMC)
9:26 (Dow Jones) Nymex crude futures seen opening 5 cents a barrel lower
after API, DOE both report a weekly increase of 3 million bbl in U.S. crude
inventories. Reaction to largely-expected stock build seen muted, with traders
focusing on technical factors for guidance, analysts say. March crude, down 3c
at $30.32 on ACCESS, has support at $30.10; resistance is seen at $30.60. (MXF)
9:24 (Dow Jones) According to Barclays economist Henry Willmore, the 6.6%
rise in 4Q compensation is fastest since 1Q 1992. It isn't a constraint to Fed
yet, since drop in confidence may trim wage demands. But if economy makes quick
recovery, Fed could be back in inflation-fighting mode by end of year. (BB)
9:20 (Dow Jones) More on the battle for the 30-year: A Ried, Thunberg survey
of over 950 fixed-income pros find 72% saying that killing the long bond is the
wrong way to go. (MSD)
9:15 (Dow Jones) Sometraders tend to downplay the reasons for the bounce in
USD/JPY and see it as primarily technical. "The repatriation story is a bit
stale and we should be through it by now," said one analyst. (JH)
9:07 (Dow Jones) Technical analysts believe they know why the Dow Jones
Industrial Average is being denied each time it gets close to closing above
11,000. Last November and January the index peaked at that point, only to fall
back. That has created a double dose of resistance that is going to be tough to
break through, technical analysts say. Meanwhile, the Nasdaq Composite Index
starts the day just 375 points away from its 52-week closing low of 2291.86,
and the outlook from a number of technical analysts points to more softness.
(KJT)
9:03 (Dow Jones) The dollar bounced higher against the yen on suggestions
that easing by BOJ might be a viable option. The BOJ meets on Friday and the
Japanese government seems to be putting pressure on the central bank. USD/JPY
is trading 1.5 yen above the overnight lows.
9:00 (Dow Jones) HFE economist Ian Shepherdson says though productivity
better than consensus, "the bad news is that the jump in unit labor costs
reflects a huge 6.6% rise in compensation per hour." While recent ECI and
hourly wages point to lower labor cost pressures, if uptrend continues, "it
will eventually constrain the Fed - but not yet," he adds. (BB)
8:58 (Dow Jones) Support at $30 should provide some relief for Cisco (CSCO),
but the stock has risk to the $20 area, says Arnhold's John Roque. Here's how
the technicals work: peak price of 82 less 50 (the former support level/or the
breakdown level) equals 32. 50 less 32 equals 18. "We'll fudge it a bit and go
with $20, but it's not hard to see $18 as legit target because it was the
spilt-adjusted breakout level in late '98," Roque says. He knows many will
snicker at call of $20, but he points out few thought the stock could go below
$50. He also adds the stock may not work down to $20 level immediately, or even
near-term. (TG)
8:54 (Dow Jones) Productivity data minor factor for Treasury futures, where
players are more concerned about direction of Nasdaq and corporate performance
after Cisco released results, strategist says. Market also eyeing 10-year
auction later. March bonds last up 14/32. (SPC)
(END) DOW JONES NEWS 02-07-01
10:14 AM |
