MARKET TALK: Only Doubt About Rate Hikes Now Is When
07 Mar 11:48
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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11:47 (Dow Jones) Changes in Greenspan's testimony indicate "recovery is
coming faster and more clearly than he thought," which is a conclusion that
interest-rate markets have already made, Banc One analyst says. But with Fed
chairman's remarks, the market is now "more confident that the Fed tightening
process will emerge." (SPC)
11:39 (Dow Jones) February same-store sales figures for apparel retailers
generally weren't pretty, declining more than 5%, according to Bank of
Tokyo-Mitsubishi. But in many cases, declines in those numbers belie improved
profit margins, says Eliot Laurence of Jefferies. While Abercrombie & Fitch
(ANF) reported a 9% same-store sales decline, the company's inventory per
square foot was 30% lower. "Clean inventory allows full-priced spring goods to
emerge from the sea of clearance," Laurence said. "If you look at the
composition of the (February) sales performance, strong sales of new goods and
total sales were held back by sharply lower figures for clearance items." (JMC)
11:28 (Dow Jones) Following the ratings downgrade of its commercial paper to
A-2 from A-1-plus by S&P Thursday morning, Hewlett-Packard (HWP) will still
have access to the commercial paper markets, says a commercial paper trader.
But it will have to pay more, and the maturity profile of its paper will
change. HWP will no longer have "access to the full maturity spectrum," says
the trader. It previously could issue paper with a six-month maturity, but will
now be limited to three months and under, said the trader. The company retains
a P-1 commercial paper rating from Moody's. (MCG)
11:13 (Dow Jones) USD/JPY keeps falling, hitting another low at 127.31 - down
over three JPY on the day. "What stops it here is the question," said Larry
Kantor, head of forex at JP Morgan. "Our technical guys keep saying 'Here's a
line' and then it goes through it and they say 'Here's another line."' EUR has
also broken back above the key 88-cent threshold; a close above there sets it
up for more gains. USD/JPY 127.60. EUR/USD $0.8802. (GMM)
11:04 (Dow Jones) When it rains it pours for the Treasurys market. News that
a $51.2 billion fiscal stimulus package is likely to pass is another piece of
the puzzle that will help substantiate an economic recovery and further
pressure Tsys, says analyst. Two-year at 3.32%, 10-year at 5.14%. (MM)
10:56 (Dow Jones) The Financial Markets Center headlines its assessment of
the Beige Book as follow: "The Economy Firms--But Hold the Champagne." It says
manufacturing continues to face serious problems nationwide and that commercial
real estate is emerging as economy's greatest source of weakness. (JCC)
10:48 (Dow Jones) Most major retailers have reported February sales data this
morning and the big winners appear to be the discount chains, with Wal-Mart
(WMT), Target (TGT), Dollar General (DG) and Family Dollar (FDO) all topping
estimates compiled by First Call. Apparel companies, didn't do poorly (Gap
(GPS) numbers were brutal, but expected) - with Kohl's (KSS), TJX (TJX) and
Ross Stores (ROST) beating numbers - but department stores struggled in
February. Of the eight largest companies in this group, only bellwether J.C.
Penney (JCP), whose comp sales rose 12.5%, soundly beat estimates. (CRW)
10:37 (Dow Jones) One junk bond not helped by Greenspan is Conseco (CNC),
which is off 2-3 points due to ongoing financial concerns. The insurer
announced Wednesday its CFO was resigning, bad timing considering that company
is in the midst of a turnaround effort and its year-end audit. Moody's warned
it could downgrade its B2 rating by 2 notches or more if the auditors don't
give an unqualified opinion. Conseco 10 3/4% notes due '08 were quoted at
57-58, while the 8 3/4% notes of '04 were at 55-57. Shares off 22% at $2.91.
(RTB)
10:22 (Dow Jones) No surprise that the Street is coming down hard on Sepracor
(SEPR). JP Morgan notes none of the safety issues raised by the FDA were
apparent in publicly presented data. "We downgrade not just due to the delay
but also for the unanticipated nature of the event," firm says. Sees no upside
in stock for the next year. SEPR off 60% at $18.52. (TG)
10:16 (Dow Jones) The range in Treasurys is broken. The renewed verve in
Greenspan's assessment of the economy has caused Treasurys to plow through
previous support levels, such as the 3.25% level on the two-year note, which it
failed three times to break in the past three sessions. Two-year is currently
at 3.33%. 10-year note has also broken higher to 5.13% after failing to break
above 5.05% for the past three sessions. (SV)
10:07 (Dow Jones) Currencies aren't impressed by the changes to Greenspan's
prepared testimony that appear sunnier than the House report. Instead, the
counter-intuitive effect happens: USD/JPY drops to its low of the day at
Y128.30. EUR/USD unmoved at $0.8787. (JEN)
10:02 (Dow Jones) Greenspan indicated he was substantially more optimistic
about the near-term economic outlook than he was just a week ago. Speaking to
the Senate Banking Committee, he revised comments he delivered last week to a
House committee last week, when he had been more subdued about the state of the
recovery. In his testimony last week to the House Financial Services Committee,
he described a "firming in economic activity" but did not characterize it as a
recovery. (SV)
10:00 (Dow Jones) The Fed chairman, in no uncertain terms, has acknowledged
recent strength in the economy, saying that he sees signs that a rebound is
underway, sees tentative signs the recession is over, and sees final demand
strengthening. This sets the stage for a move to a neutral bias at March 19
FOMC meeting. (SV)
9:56 (Dow Jones) Rumors that BOJ was ringing around checking rates during
Asian trade had prompted fears of intervention and helped to arrest USD/JPY's
slide a bit, but, "I still believe the yen could power stronger," says Jeremy
Fand, at UBS Warburg. Verbal intervention overnight hasn't been specific enough
to stop the fall either, he says. "They're going to have to say something firm
in verbal intervention and repeat it twice." USD/JPY 128.67, EUR/JPY 112.97.
(GMM)
(END) DOW JONES NEWS 03-07-02
11:48 AM |
