MARKET TALK: Data Good, But Recovery Has To Be Global
07 Mar 09:46
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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9:46 (Dow Jones) This year should bring the start of the first synchronized
global recovery in two decades, says UBS Warburg's Ed Kerschner. Because of
past excesses, recoveries in individual economic won't be notably strong, but
by occurring in unison across the globe, they will drive an impressive recovery
in world growth. '"Whether or not recoveries are synchronous matters for stock
selection - in strong synchronized recoveries, economically sensitive sectors
have tended to outperform," Kerschner says. He also adds that regional cost
advantages give companies in developing economies an edge over competitors in
developed countries. (TG)
9:37 (Dow Jones) Weakening Tsys falling prey to a host of factors, says
analyst, including data that keep surprising to the upside ahead of Friday's
employment report, a vulnerable dollar, signs of another strong session for
stocks, and concerns that Greenspan's testimony could acknowledge the strong
data over the past week. 2-year down 5/32 to yield 3.30% and 10-year down 14/32
to yield 5.11%. (MM)
9:27 (Dow Jones) The downside may be limited in fiber-optic maker Corning's
(GLW) stock, but UBS Warburg analyst Joseph Wolf sees little near-term
catalysts for sustainable gains in the near-term. The telecom business will
"continue to suffer across the board in 2002," Wolf says, reiterating his hold
rating. Long-term investors may be looking for non-telecom business to provide
earnings support. (JDB)
9:18 (Dow Jones) Bank One chief economist Diane Swonk, who expects real GDP
to rise 2.9% in 1Q and 3.6% in 2Q, says Fed could begin tightening before
unemployment rate actually falls. "This would be radical given the political
pressures against such a move, but Greenspan has proven his prowess at being
responsive when necessary," she says. (JCC)
9:10 (Dow Jones) Prudential analyst Barbara Dreyfuss thinks a number of
issues will form part of the debate when hearings get underway to renew the
Prescription Drug User Fee Act, which levies a fee to ensure marketing
applications receive a speedy review. The law expires this fall. She thinks
lawmakers might discuss drug pricing, limits on direct-to-consumer advertising,
and subpoena power of the FDA for clinical studies not voluntarily made
available. She said another possible topic could include whether pediatric
exclusivity should be withheld until studies on children are completed. (BMM)
9:03 (Dow Jones) Lehman's Jeff deGraff notes that one of the few indicators
not reflecting economic vitality is the two-year yield. He says the correlation
between the two-year yield and the S&P 500 is decent, and he'd prefer seeing a
close above 3.30% on the two-year to signify a breakout. "These price series
tend to follow one another; the fact that it's bumping up against its
resistance level is encouraging, but we prefer a breakout," he says. (TG)
8:53 (Dow Jones) Hey, this dot-com IPO thing might have legs. The market
didn't have an IPO price with a ".com" at the end of its name since August 2000
(it was ServiceWare.com, for those keeping score, and even that changed its
name right before pricing). Now, IPO investors will get two more. Netflix.com,
an Internet movie company, filed to sell $115 million worth of stock through
Merrill Lynch. That followed a proposed IPO by retailer Overstock.com. The last
time we had this many dot-com IPO filings was...maybe that's not something we
want to revisit. (RJH)
8:48 (Dow Jones) The ability for productivity to rise at a 5.2% pace is
exceptional, say economists. Some rise was to be expected, given declining
payrolls, but the strength in the number is testament to the fact that output
in the 4Q was stronger than anybody had thought at the time. Unit labor costs
fell at a 2.7% pace. (SV)
8:45 (Dow Jones) In big call on GM, Merrill says improvement in North
American product mix is driving company's accelerating earnings momentum, while
the stock continues to trade at low end of its historical multiple range.
Merrill expects this improvement to "overwhelm" difficult market conditions for
the foreseeable future. There are two risks: a traditional cyclical downturn in
U.S. auto sales, and GM's balance sheet. GM has many calls on its cash,
including pensions, retiree health care, and Fiat's put option, Merrill notes.
(TG)
8:39 (Dow Jones) Tsys little changed after bullish initial claims and
productivity data, with market still mildly lower and awaiting round two from
Greenspan. (MM)
8:37 (Dow Jones) Stocks take in latest batch of data with a smile, and why
not? Weekly claims drop, right in line with views, productivity in 4Q revised
sharply upward, continuing claims fall, and unit labor costs show impressive
decline. It's all good for the economy and hopefully, the bulls say, corporate
profits. S&P futures higher by 5, Dow futures climb 35. (TG)
8:30 (Dow Jones) Some positive developments for at least a couple of Dow
components has the blue-chip index looking up, as if it needed any sort of
specific help. GM raised at Merrill, and Wal-Mart's (WMT) February comps are up
better than 10%, well ahead of views. Other retailers are posting their
February numbers and, not surprisingly, they're mixed - they can't all be good
and they can't all be bad, right? Leading up to these numbers, Thomson
Financial expected major retailers to post a 3.3% overall gain, the highest
estimate since November of 2000 (and that was before Wal-Mart's blowout
number). More big doings on the economy front: final 4Q productivity, weekly
jobless claims, and more talk from Greenspan, with some suggesting his outlook
may be a tad different given the strong data out just since his last
appearance. Tsys soft. (TG)
(END) DOW JONES NEWS 03-07-02
09:46 AM |
