DJ MARKET TALK: Greenspan OK With Eliminating Long Bond
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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1:20 (Dow Jones) Greenspan says he supports eliminating the 30-year bond as
part of a strategy to reduce the national debt as quickly as possible. He
notes that the vastly curtailed issuance of the bond has reduced its status
as a benchmark, and that the private sector is likely to provide its own
solid benchmarks for 30-year debt. (SV)
1:15 (Dow Jones) Morgan Stanley strategist Steve Galbraith notes that, with
little earnings-estimate erosion over the last month, financials are now
expected to account for 80% of S&P 500 earnings growth. At the same time,
large-scale estimate cuts in technology names, combined with a rebound in
stock prices in January, created the largest one-month P/E multiple
expansion for the tech sector in the last 20 years. Valuations again look
extended, he adds. (TG)
1:01 (Dow Jones) EUR/USD continues to slide on market's view that the U.S.
economy looks more resilient than its European counterpart. Greenspan's
comments are also seen as friendly towards the dollar. (JRH)
12:44 (Dow Jones) Greenspan's positive remarks on the economy have reduced
Fed funds expectations for a full 50 BP of rate cuts at the Fed's March 20
meeting. While a 25 BP cut is still fully priced into April futures, the
odds of a second 25 BP is down to 60% from 72% just after his testimony
started, and 76% late Monday. Trader says players were looking for more
negative tone on economy from Greenspan and took some profits when their
hopes were dashed. (SV/SPC)
12:36 (Dow Jones) Mortgage-backeds are under "tremendous" selling pressure
with mortgage originators and total return fund managers dumping 6% and 6.5%
coupons to the market, traders say. Heavy selling was due to an increase in
implied volatility and a flattening Tsy yield curve after Greenspan, they
say. (JS)
12:29 (Dow Jones) EUR/USD at day's low of $0.9193, still well within
trader-quoted range of $0.9150-0.9450. USD/JPY heading closer to Y117, still
up from day's low at Y116.91. (JEN)
12:27 (Dow Jones) Penny drops for Treasurys market, as it absorbs
Greenspan's recent remarks that recession is low probability and that tax
cuts had better be sooner, rather than later. Fading confidence about extent
of upcoming rate cuts damages shorter dated Tsys, sending 2-yr Tsy yield up,
now up 6bps on session to 4.73%, its price down 4/32 on session to 100 1/32
(JNP)
12:24 (Dow Jones) Investors aren't quite sure what to make of the setback
Pfizer Inc. (PFE) encountered over the more powerful painkilling cousin of
its blockbuster anti-seizure drug Neurontin that it is developing. While
Pfizer has reassured it aims to file for approval of pregabalin this year in
epilepsy and neuropathic pain, there may be reason for worry if the halted
trials extends the clinical process and if the drug maker can't protect
Neurontin. Shares fell 2.6%. (BMM)
12:12 (Dow Jones) European fund managers have downgraded their GDP forecasts
for 2001 to 2.6% from 2.7% in January, the latest Merrill Lynch survey
shows. Fund managers expect roughly 50 BP off ECB rates this year. They are
sellers of foreign bonds and small buyers of domestic bonds. Euro remains
the favored currency. (NK)
12:02 (Dow Jones) Treasurys hardly blink immediately after Greenspan says he
sees recession as "low probability event." 2-year down 1/32 since this
remark, now down 3/32 on session at 100 3/32, yield up 4 BP at 4.71%. (JNP)
11:58 (Dow Jones) After weathering a critical Barron's story and news it was
being sued last week, PurchasePro.com Inc. (PPRO) shares jumped smartly
Tuesday after the outfit beat analysts' estimates for 4Q earnings.
Prudential analysts said much of the earnings upside stemmed from PPRO's
ability to control operating expenses. The analysts also said that revenue
growth was fueled by network access fees and license sales, but added that
new marketplace sales dropped in the quarter. PPRO recently up 11%. (RS)
11:51 (Dow Jones) Still have a hankering for all that sock-puppet
memorabilia you've been denied now that Pets.com is out of business? Run to
your local Tuesday Morning (TUES) discount store. Tuesday Morning, which
specializes in closeout inventories and resold Toysmart.com's goods last
year, said it won the $6 million bid for Pets.com's merchandise. The company
said it plans to sell the stuff for 50% to 80% below the defunct Web site's
prices. (RJH)
11:40 (Dow Jones) Deutsche Banc Alex. Brown analyst George Bicher is letting
Citigroup (C) slide on its planned purchase of EAB for $1.6 billion, but he
doesn't want to see more moves of this type. "The logic of the deal is
sound, as long as it is not a precursor to more regional banking deals,
something management does not currently support," Bicher said. So why did
Citigroup agree to buy EAB, which does not meet the banking company's goal
of at least 15% annual growth? Bicher sees it as a defensive play, keeping
EAB out of other hands and helping to maintain Citi's strong presence on New
York's affluent Long Island. (KJT)
11:36 (Dow Jones) Fed's Monetary Policy Report says Treasury debt buyback
operations last year "were generally well received and caused little
disruption to the market." (JC)
11:33 (Dow Jones) Retailers wrap: Stocks are mixed, some perhaps having
gotten ahead of themselves in Monday's rally. UBS-Warburg's Maury Harris has
an idea about why retail sales might not keep rising: Feb. and March sales
traditionally are aided by season tax refunds, but this year more of the
refunds will probably go to paying higher energy costs. A real-world
example: average 2000 refund was $1,652. Energy Info Agency sees typical
heating fuel costs this winter up by hundreds of dollars to as much as
$1,061 here in Northeast. Wal-Mart (WMT) down 1.5% after Monday's 6% gain.
(GC)
(END) DOW JONES NEWS 02-13-01
01:19 PM
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