MARKET TALK: The Lodging Industry Needs More Time
04 Feb 13:27
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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1:27 (Dow Jones) Expect things to get worse before they get better for the
lodging industry. A new Ernst & Young study, to be officially released Tuesday,
said the sector is facing its toughest period in 20 years in 2002, thanks to
the war on terrorism, pullback in the stock market and prolonged cutback in
business travel. Of the 21 major metro markets analyzed, the report predicts
San Diego will recover the fastest - likely within three months. Baltimore,
Chicago, Detroit and San Antonio will likely recover in five months, the report
predicted, while Atlanta, Boston, Dallas, Denver, Houston, Los Angeles, Miami,
Orlando, Philadelphia, Phoenix, Puerto Rico, Seattle and Washington will likely
take six to 12 months to bounce back. Hawaii, Manhattan and San Francisco trail
the group, as the report predicts these markets will likely take up to 14
months to recover. (JKM)
1:16 (Dow Jones) As the selling continues, there are now just three DJIA
members - Coke, P&G, and McDonald's - that are higher, and not by much. The
intraday charts don't look too good - a series of lower lows as the day
progresses. Confidence, technicals, and actual business conditions all weighing
on stocks. DJIA drops 181 to 9727, Nasdaq Comp sheds 49 to 1862, and S&P 500
falls 24 to 1098
12:56 (Dow Jones) "Relative strength without absolute strength just means
your stock hasn't been hit yet." Of that we're reminded by Arnhold's John
Roque, who thinks investors are going to be hurt by deteriorating action in the
financials. When financials are strong they serve as the market's bodyguard and
market risk is generally contained, while when they weaken, market risk grows.
"Right here financials are more Potsie Webber than Fonzie," he says. (TG)
12:44 (Dow Jones) CSFB analysts see no evidence of housing market bubble in
U.S., UK and to some extent in the euro zone, arguing that the ratio of house
prices to per-capita disposable income is not at the extremes seen in previous
periods of sharply exaggerated house prices. (JNP)
12:35 (Dow Jones) "IRS has trouble providing minimally acceptable customer
service and ensuring that all taxpayers pay what they owe under the law," says
new Bush budget. (JCC)
12:20 (Dow Jones) Word that Williams Communications Group (WCG) might default
on its debt payments put pressure on the wireless communications sector Monday.
The news from Williams adds to a string of gloomy announcements from the
telecommunications sector. Just recently, Worldcom (WCOM) battled rumors that
its debt was being downgraded, Level 3 Communications (LVLT) warned it might
violate a debt covenant, and Global Crossing Ltd. (GBLXQ) filed for Chapter 11.
Williams Communications off 27% at $1.03, WorldCom off 17% at $7.92, and Level
3 down 9% at $2.73. (EGS)
12:05 (Dow Jones) The state of Connecticut may sue buyout firm Forstmann
Little to recover a $96 million investment used to help restructure telecom
companies McLeodUSA (MCLD) and XO Communications (XOXO), according to the
Washington Post. The state's treasurer hired a law firm to investigate after
Forstmann didn't respond to inquiries about the telecom investments, the paper
said. (JD)
11:52 (Dow Jones) Brokerage stocks were down Monday as the broader market
continued its decline. Analysts said there was nothing industry-specific that
they could see contributing to the downturn. Merrill (MER), Schwab (SCH) off
about 5% each, Goldman (GS) drops 3.7%, JP Morgan (JPM) sheds 3.2%, and Citi
(C) off 3.8% (LMC)
11:39 (Dow Jones) Some on Wall Street are boosting 2002 earnings estimates
for Lowe's (LOW) after the home-improvement retailer said 2001 ended up better
than expected, thanks to warm weather. Prudential's Wayne Hood raised his 2002
EPS view 3 cents to $1.50,while Parket/Hunter Inc.'s Steven Baumgarten boosted
his estimate 4 cents to $1.54 and raised his price target by $3 to $55. Hood
said sales momentum for both Lowe's and Home Depot (HD) could carry into the
spring, and inventories should be lean after both cleared slow-moving goods in
the 4Q. LOW up 2.3% at $46.77. (MEL)
11:29 (Dow Jones) Familiar theme from Merrill's chief quant, Rich Bernstein:
investors continue to appear unusually confident about effectiveness of
monetary and fiscal policy, and equity valuations remain extreme. If business
does pick up, then a flood of stock issuance might put a ceiling on the market.
Keeps allocation at 50% stocks, 30% bonds, and 20% cash. (TG)
11:20 (Dow Jones) Hewlett-Packard (HWP) has assigned "more than 450
professionals" to work out integration issues before the close of its merger
with Compaq Computer (CPQ). "We do agree that successful integration is
critical," Hewlett-Packard said. "That is why H-P and Compaq have a team of
more than 450 professionals dedicated to overseeing thorough pre-close
integration plans." In its set of written talking points created for the
company's communications staff, H-P emphasized the effort being expended in the
creation and execution of its plan to integrate with Compaq. "That plan was
developed based on a careful analysis of the successes and failures of prior
mergers," the company said, "and implementation of the integration effort is
already ahead of schedule." (TC)
11:10 (Dow Jones) Yield margins in the high-grade market have moved out three
to five basis points this morning, coming under pressure from sector specific
widening. Tyco (TYC), WorldCom (WCOM) and Williams (WMB) bonds have all been
quoted wider on negative news, which has pushed the rest of the market out with
it. (RAB)
11:01 (Dow Jones) Major averages are finding it difficult to get out from
under investor concern not only about corporate trust, but other business
issues as well. Financials are generally weak again, and techs overall soft
despite encouraging comments out of H-P. Big industrials worst performers,
wireless, brokers and pipelines also soft. Gold, drug retailers and heavy
machinery (we thought the latter two didn't go well together) are on top. DJIA
down 80 at 9826, Nasdaq Comp falls 33 to 1878, and S&P 500 drops 14 to 1108.
(TG)
10:50 (Dow Jones) Tyco (TYC) bonds got hit hard this morning, their 10-year
paper moving out as wide as 500 BP. Currently, the yield margin is trading
around 425 BP. Tyco started out last week around 165 BP. WorldCom (WCOM) also
saw their 10-year paper move out around 40 BP to 330 BP. TYC shares off 12%,
WCOM drops 10.6%. (RAB)
10:44 (Dow Jones) A shareholder group wants to dismiss Global Crossing's
(GBLXQ) Chapter 11 bankruptcy case and put forward an alternative financing
proposal, stating that the bankruptcy filing wasn't necessary. Through a
warrant offering, the company would be able to raise $1 billion now, and up to
another $2 billion if the warrants are exercised. David Mersereau, an associate
vice president of a small Hartford, Conn.-based investment firm, is leading a
small shareholder group's efforts to raise funds for the company under a
warrant offering - rather than through the bankruptcy proceeding and proposed
equity sale. Mersereau said his firm holds about 500,000 to 600,000 shares on
behalf of clients. The shareholder group is currently trying to retain counsel
in New York to assist it in its efforts to have the bankruptcy case dismissed.
(CM)
10:37 (Dow Jones) Lower capital spending by large phone companies has hurt
optical systems maker Ciena's (CIEN) chances of getting early product wins at
those carriers, ABN-Amro analyst Ken Leon said. That, coupled with weaker
results and outlooks from its competitors, caused Leon to cut his rating on
Ciena to hold from add. "Absent profitability in fiscal year 2002, we believe
management will have to capitulate and take necessary cost-cutting to achieve
breakeven," he said. Shares off 6% at $11.28. (JDB)
10:26 (Dow Jones) Despite continued pressure on corporate technology
spending, research firm Gartner Dataquest predicted the security software
market will grow 18% to $4.3 billion this year, spurred on by increased
security worries after Sept. 11. Defensive technologies, like antivirus
software, intrusion detection systems and firewalls, will receive particular
interest from corporations concerned about cyberattack. (RTR)
(END) DOW JONES NEWS 02-04-02
01:27 PM |
