MARKET TALK: Goldman Sees Weak Economic Data Coming
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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10:24 (Dow Jones) "We expect a distinctly weak tone in the economic data to
be released over the next four weeks," say economists at Goldman Sachs. (JC)
10:15 (Dow Jones) Monday's action in stocks was not capitulation and did not
represent climactic selling, says Dick Dickson of Scott & Stringfellow. Why?
"Not enough volume," he says. Watch the quality of today's rally (if we get
one) as an indication of whether we get an oversold bounce or something
longer-lasting - several weeks at least. "Be careful of an early rally that
fails, though, because that could mean the market is going into a
capitulation phase," he says. (TG)
10:00 (Dow Jones) Only 10% of global fund managers expect a swift "V" shaped
U.S. recovery, the latest Merrill Lynch/Gallup survey shows. Some 64% of
those questioned in all the regular surveys expect a gradual "U" shaped
recovery, with 18% looking for sustained slow growth for 12 months. Fed
funds are expected to be cut by 89 BP over next 12-months to 4.61%. A total
of 222 institutions with $8,644B under management took part in the surveys,
from March 2-7. (NK)
9:54 (Dow Jones) Prudential Vector analyst Peter Drake notes the near-term
prospects of Biogen's (BGEN) flagship multiple sclerosis drug Avonex may be
stronger than he had thought. Seeing a 5.8% rise in prescriptions for the
first nine weeks of this quarter, he believes U.S. Avonex revenues for the
1Q could range between $150 million to $160 million, compared with his
previous view of $139 million. As a result, he increased his 2001 earnings
estimates to $1.85 a share from $1.80, and his 1Q estimates to 49 cents from
44 cents. Despite this near-term gift, Drake continues to hold long-term
concerns for the biotech and did not change his "sell" rating. (BMM)
9:45 (Dow Jones) The wide split between Jan. and Feb. retail sales fits with
view that sharp Jan. gain was an aberration and payback for excessively weak
Dec. Uncertainty over consumer outlook in line with expectations of 50 BP
rate cut March 20. (BB)
9:35 (Dow Jones) Alan, really, we're not thinking of ourselves. The stock
market's plunge is sure to cut into consumer spending and that could easily
send the economy into a tailspin, says Salomon Smith Barney analyst Tobias
Levkovich, suggesting the Federal Reserve act sooner instead of later to
reduce interest rates. "This is no longer an issue of sustaining portfolio
managers' performance," Levkovich said. "It is becoming an issue of
sustaining the economy!" (KJT)
9:29 (Dow Jones) Nymex crude futures are expected to open 15c-20c a barrel
lower, with traders awaiting API inventory report and a clearer indication
of the size of OPEC's expected output cut. Trading is expected to be quiet;
downward bias seen. April crude, down 18c at $27.82 in overnight trade on
ACCESS, has support at $27.67; resistance is seen at $29.05. (MXF)
9:21 (Dow Jones) Stock futures look good in front of New York open. GE just
backed 1Q views (no word from Honeywell), and snap-back rally is typical for
day like today. Sustainability is bigger question. Dow futures up 70, S&Ps
up 6. (TG)
9:14 (Dow Jones) Prudential's David Trone is pasting sell recommendations on
nine banks - First Virginia Bancorp (FVB), AmSouth Bancorp (ASO), Hibernia
(HIB), Regions Financial (RGBK), Union Planters (UPC), UnionBanCal (UB),
Compass Bancshares (CBSS), Huntington Bancshares (HBAN) and Pacific Century
Financial (BOH). Mayo is, in fact, drawing a line in the sand - banks are
either very well positioned or very challenged. He gives strong buy
recommendations to Mercantile Bancshares (MRBK), City National (CYN),
SouthTrust (SOTR), National Commerce Bancorp (NCBC), Cullen-Frost Bankers
(CFR) and First Tennessee National (FTN). (KJT)
9:10 (Dow Jones) Following retail sales, April Fed funds futures contract
has ticked up to 95.085, pricing a full 50 BP Fed rate cut and a 34% chance
of an additional 25 BP. Since Fed rhetoric has seemingly ruled out
inter-meeting moves, the bets would likely be for the March 20 Fed meeting,
though the contract doesn't specify whether part of those cuts would come in
an inter-meeting move. (SV)
9:06 (Dow Jones) Redbook below expectations, with sales up 0.4% from
February and 2.2% from a year ago. Retailers cited poor weather in the
northeast, the earthquake in the northwest, but most of all plain-old
consumer apathy. But retailers hope warmer temperatures and the Easter
holiday in early April will boost consumption later this month. (BB)
9:04 (Dow Jones) Merrill says remain aggressive on high-quality retailers,
with its buy list focused on RadioShack (RSH), Lowe's (LOW), Best Buy (BBY),
and Home Depot (HD). The firm's models suggest the slowdown in retail sales
growth is over and stabilization lies ahead. (TG)
8:52 (Dow Jones) CSFB's downgrade of Phelps Dodge (PD) comes on lackluster
outlook for copper, rich valuation and near-completion of typical period of
seasonal strength, firm says. (TG)
8:45 (Dow Jones) HFE economist Ian Shepherdson says because of Jan.
revisions, "the level of February sales was as expected." But notes that
decline in consumer confidence has yet to impact spending. "Q2 will be
awful; Fed will keep easing to 4%," according to Shepherdson. (BB)
8:40 (Dow Jones) Barclays economist Henry Willmore says Jan. and Feb. retail
sales data suggest consumer spending growth of 2% to 2.5% in 1Q. Forecasts
0.5% gain in overall 1Q GDP. (BB)
8:38 (Dow Jones) EUR/USD moved up to 92 cents on weaker-than-expected U.S.
February retail sales, but the uptick is unconvincing as the pair continues
to dip under 92 cents. AUD/USD hit new low of $0.5026. USD/JPY at Y119.96,
little changed since pre-data. (JEN)
8:35 (Dow Jones) The combination of upward Jan. revision and weak Feb.
retail sales still points to decent gains in overall consumer spending in 1Q
and a slight gain in overall GDP. Many economists have inked in 1Q GDP of
about 1%, but say inventory swings will be key. (BB)
8:32 (Dow Jones) The weaker-than-expected Feb. retail sales due largely to
sharp upward revision to January. Jan. sales revised to + 1.3% from 0.7%,
offsetting the weak 0.2% drop in Feb. (BB)
8:30 (Dow Jones) No one can say for sure when the bottom in stocks will be
hit, but we can say one thing for sure: We're closer today than we were
yesterday. Equities are going to get back a fraction of Monday's losses in
the early going, but as of right now the reversal isn't looking dramatic.
And after the initial bump, it's anybody;s guess as to where we're headed.
For the second straight day there's a big takeover, with Tyco Intl (TYC)
acquiring CIT Group (CIT) for about $9 billion. Kmart (KM) topped views by a
penny, and Wall Street is waiting on a key economic reading in the form of
February retail sales. A strong showing could signal that consumers remain
confident - despite sentiment readings. Fed chief Greenspan is also a big
fan of retail sales data. Overseas markets soft, stock futures modestly
higher. (TG)
(END) DOW JONES NEWS 03-13-01
10:25 AM
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