(COMTEX) B: Moment of Truth (long but worth reading-DG)
Mar 4, 2001 (JAGfn.com via COMTEX) -- March 5-9, 2001 Before I launch into the
week, allow me to mention the lawsuit against Henry Blodgett and Merrill Lynch,
because it relates so well to the one against Wayne Angell, mentioned last week,
and because it concerns accountability, which tech investors would, surely
agree, has been sorely lacking on Wall Street. (And thanks to Alan Abelson for
not jumping all over this and beating me to the coining of a phrase. ANGELLED:
accusations or a lawsuit brought by an investor when the advice of a Wall Street
economist or analyst is so suspect and wrong.)
Seems a female dentist alleges that she invested some half a million bucks in
InfoSpace when it was priced around $120 a share, and lost most of her money
because, she claims, Blodgett's positive recommendations of the shares the whole
way down failed to warn her or suggest they may land somewhere around $4, about
where they are now. Furthermore, her suit alleges, investment banking
considerations determined Blodgett's views, benefiting the firm at the expense
of retail investors. I'll freely grant, this is just one investor, who might
have thought better about putting so much money into a single internet company.
However, should this suit bear fruit for the plaintiff, the issue of
accountability and the propensity of analysts to avoid sell recommendations
could change, for good--and the good. The changes wrought by Reg. FD "Full
Disclosure" will pale in comparison.
About this week: First, remember I've long called for Jonestown-like depression,
in March (The full March Outlook is available here.). Second, though Thursday's
late day turn around made for many hopeful bulls, Friday's reaction to Oracle's
warnings sapped the strength and hope. I believe the markets, this week, could
rally just as easily as they could experience an October, 1987, type
capitulation crash. Though even former bears, like Doug Kass, have turned
bullish, at best, I'm neutral, in the truest sense of the word. While I'd almost
rather have the capitulation crash and slingshot rally arrive and be done, with
guys like Brian Jones, an economist at SalomonSmithBarney, positing that a
really weak Employment Report for February (to be announced this Friday) could
"raise expectations of more than a 50 basis-point interest rate cut " at the
March 20th FOMC meeting, the talking heads are setting the markets up for
another rate hope rally which could be followed by rate cut disappointment. At
the least, talk like that sets the market up to ignore the many Fed Presidents
and Governors talking before Friday, and to discount the NAPM Index (which
Greenspan watches carefully), Challenger, Christmas & Gray's Lay-off
Announcement, Treasury Secretary O'Neill's Tuesday speech,), Alan Greenspan's
speech to a banking Group (Wednesday), and Feb Chain Store Sales (Thursday). On
the other hand, if the markets get out of hand to the downside, I, for one,
wouldn't be surprised if the Feds cut rates this week. Wouldn't that be the
perfect slap in the fact for Wayne Angell, who first placed a 60% chance of an
intermeeting cut, than upped it to 80%, then retracted, saying there was a zero
percent likelihood for an intermeeting cut?
For hope springing eternal, no Conference can beat this week's Genomic
Tri-Conference, which started Saturday, out in San Francisco. Applied
Biosystems, CuraGen and Incyte Genomics, along with Molecular Devices, Orchid
and Invitrogen are some of the headliners, with the first of the three segments
devoted to the Human Genome Project. As long as we're talking medical
conferences, Monday launches Interventional Cardiology, in Aspen. Though it's
more sympoisum than trade show, the medical journals will be full of comment.
London hosts Superdrugs and Superbugs, with presentations by Glaxo, Aventis,
Cubist, Abbot, Nabi, Quorex, Xoma, Millinnium, AstraZeneca, Merck, and
Hoffman-LaRoche. While Pfizer's last superbug antibiotic proved too dangerous
for widespread use, Lilly and Merck have others in the wings. By the end of the
week, SalomonSmith Barney presents Specialty Pharmaceuticals, with Alza, Elan,
Teva, Sepracor and Inhale Therapeutics presenting. Note I didn't mention any
large pharma with regard to this last conference. There are none. While I don't
think any of the group can withstand a capitulation crash in NASDAQ and other
major averages, Elan (ELN) has had the best recent news and could shine, on the
strength of a drug that produced remarkable dissolutiong of the plague related
to Alzheimer's--in mice, at least. The drawback? Israel suffered another car
bombing, on Sunday. Regional tension has weighed on Israeli companies, lately.
On the tech and investment house side, Morgan Stnaley hosts a Semiconductor &
Systems conference, in California, Name the chipmaker and they'll be there. But
with estimates still coming down and zero visibility, the group will need the
markets' help to lift, especially with Wednesday's Semiconductor Shipments
report for January due out on Wednesday, likely to show another decline.
CSFirst Boston's Global Telecom conference, in New York, faces not just the
market action but falling prices and the heavy debt load that's kept the
telecoms from ordering needed equipment, the cause of so much pain for Cisco,
Nortel, Lucent and Motorola. For competition, there's Telecom Trends, in Austin,
on Thursday. mEntertainment, in San Jose, is about emerging Wireless
Entertainment technology, where Openwave (the merged Phone.com & Software.com)
the leader and a stock on my buy list when the ongoing correction is over and
the price is about a third lower. Clear across the country, in my backyard of
Boca Raton, Bear Stearns hosts Media/Entertainment/Information, where AOL is
surely a leader but facing an advertising slowdown that may (or may not) be
offset by cost cutting and fat trimming at the newly merged company.
Merrill Lynch's fall Internet & eCommerce Conference, postponed last November,
appears on this week's schedule, for Wednesday through Friday, with a focus on
e- and m- Commerce. Ignore the commerce sites and focus on the facilitators,
like Ariba (ARBA), Microsoft (MSFT), Comverse Tech (CMVT), and the
aforementioned Openwave (OPWV). (I, for one, wonder how long CMVT's stock price
can stay so high.) Or better yet, forget this group, altogether, and mine
Lehman's Storage at the Edge, in San Francisco, where the storage biggies, like
EMC (EMC) will be joined by the caching companies, like Akamai. (Veritas also
holds a mid-quarter Update Conference Call, on Monday, but no one's prepared to
believe good news, even if there is any.)
Don't think you have to own any tech, right now. Neither the i2Tech (ITWO) nor
Scietific Atlanta (SFA) Analysts Meetings will help much, either, though i2
could undo some of the damage by association done by Oracle, even if it doesn't
last long. Tech is under a cloud and will likely stay there for another couple
of months--bear market rallies notwithstanding.
Outside tech and healthcare, GITA, in San Diego, starting Sunday, is about
Geophysical Info Tech, which could boost Schlumberger (SLB) and Seitel (SEI),
both leaders in mapping for the energy sector. The SAE World Congress involves
900 automotive and truck components and parts makers. Manufacturing Week, in
Chicago, boasts 2100 exhibitors, where robotics and automated inspection is the
advancing area. Update 2000, held concurrent with the Reggie Awards, is for
advertising and marketing. Finally, Merrill Lynch holds a Retail Conference, in
New York. With a winter storm of monstrous proportions on its way, and a very
late Easter, this year, this group may not have much farther to go to the upside
for the next month--or at least until the next rate cut. The February Chain
Store Sales, out Thursday, should be considered a trailing indicator, not a
predictor.
For the power starved West Coast, TechAdvantage, in St. Louis, features 400
exhibitors with products intended to boost Utilities' efficiency. Last, there's
the show that features suppliers to my favorite holiday: National Halloween,
Costume & Party Show, in Chicago. Of course, if you or your portfolio have been
hanging out on Wall Street, you already know the ghouls of October haven't left.
Hershey (HSY) could get interesting since Valentine's Day candy sales fell into
the month just ended, and Halloween is quickly gaining on V-Day for candy sales.
For those who fear that trade shows and conferences ain't what they used to be,
courtesy of Reg. FD and the pre-show pre-announcements of material news, the
earnings calendar is weighted to retailers, like BJ's Wholesale, Kroger, Target,
Michaels Stores, Toys 'R Us, Zale, Ann Taylor and Costco. Healthcare companies
are represented by Henry Schein, HealthSouth, Sunrise Assisted Living, and
Genzyme General. But for entertainment, there's Krispy Kreme, soon subject to
lock-up expiration, and National Semiconductor, the system-on-a-chip maker that
already warned.
In sum, with the market averages hanging on by a spider's web hair, the Middle
East a cauldron, insurers faced with a Nor'easter following a major earthquake
in the Northwest, and OPEC talking about cutting production at their next
meeting, on March 16th, the place to be, other than cash, may just be the energy
complex.
{c} Sandi Lynne, 2001 Nothing contained in this commentary should be construed
as a recommendation to buy or sell any security. A full schedule of the week's
events is always available, free, at www.wallstreetinadvance.com.
By Sandi Lynne |
