MARKET TALK: More Downside Than Up In Masco: M. Stanley
14 Mar 10:07
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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10:06 (Dow Jones) Morgan Stanley cuts Masco (MAS) on valuation, saying
there's $2-$3 of upside potential and $6 of downside risk. Higher rates could
pressure the shares, given that stock price is inversely correlated with rates.
Firm raised 2002 EPS view on strong sales trends, but believes much of the
positive news is in the price. MAS off 1.7% at $28.10. (TG)
9:53 (Dow Jones) SEC Chairman Pitt says in letter this week that bill by Sen.
Feinstein and others to regulate derivatives contracts in certain energy
products "is premature at this time." He cites recently enacted CFTC
modernization law, as well as "absence of a determination about what role (if
any) over-the-counter derivatives played in the collapse of Enron or the
California energy crisis of last summer" and "ongoing federal investigations."
(JCC)
9:46 (Dow Jones) Restaurant names sold off Wednesday on rumors of foot and
mouth disease in Kansas, while the USDA not long after reported the cows do not
have the disease. Goldman Sachs says its investment thesis on the stocks and
sector is unchanged, noting that disease outbreak is an unforcastable risk that
can impact the group. While foot and mouth isn't considered dangerous for
humans, such news can impact demand. Firm says McDonald's (MCD) experience with
the disease in the UK showed a recovery in same-store sales within about six
months. Restaurants sector is the best acting Thursday. (TG)
9:30 (Dow Jones) Goldman Sachs hosted former Fed Gov. Laurence Meyer for
meetings Wednesday and says he sees significant monetary tightening in the
period ahead. According to Goldman, Meyer expects a rise in the federal funds
rate from 1.75% to about 3% by late 2002 and to 4.75% by late 2003, with the
first tightening step taken at the June 25-26 FOMC meeting and a neutral
"balance of risks" statement at next week's meeting. Goldman says its own view
on monetary policy in period ahead is "significantly more benign." (JCC)
9:16 (Dow Jones) Teva Pharmaceutical's (TEVA) court victory on the
invalidation of three patents on GlaxoSmithKline's (GSK) antibiotic Augmentin
bodes well for Teva, but UBS Warburg analyst Steve Valiquette is not changing
his estimates. The summary judgment ruling Wednesday paves the way for generic
versions of the antibiotic to hit the market in December, assuming no delays in
the appeals process. With the expectation of several generic competitors
entering at the same time, Valiquette remains comfortable with his 2003 sales
estimate of $50 million for Teva's generic Augmentin and his 2003 earnings
forecast of $2.80 a share. (BMM)
9:06 (Dow Jones) The rise in business inventories was due to a 1.4% increase
in retail inventories, which in turn was driven by a 3.3% increase in auto
inventories. That increase clearly looks like it was intended and bolsters the
view that inventory rebuilding in 1Q will be a powerful force behind GDP growth
this quarter, which most economists are currently putting between a 2% and 4%
annual rate. (JM)
9:00 (Dow Jones) More subdued capital markets activity and its impact on the
processing business prompted Pru analyst Mike Mayo to shave his Bank of New
York (BK) 2002 EPS estimate by a nickel, to $2.15, which is 4 cents below the
consensus forecast. Most of the reduction is due to expected weakness in the
1Q, he said, though he also cut his 2003 EPS forecast by a dime to $2.45 given
the delayed economic recovery. (TAS)
8:51 (Dow Jones) Nothing too exciting about the data just released, forex
traders say, and USD doesn't move, still soft on the day. EUR/USD is $0.8804;
USD/JPY is Y128.64; EUR/JPY is Y113.28. (JRH)
8:49 (Dow Jones) Morgan Stanley not feeling any better about ADP. Company is
hosting its semiannual analyst meetingThursday, and Morgan expects the tone to
remain cautious. Cites negative leading earnings indicators such as "pays per
control" (same-store sales), payroll processing sales, and brokerage volume.
Keeps underperform rating, and believes shares already discount expectations of
higher interest rates and employment growth. (TG)
8:40 (Dow Jones) Business inventories increased by 0.2% in January for the
first monthly increase since last January. The rise was due to an increase in
retailers inventories and is another sign of the end of the recession. Indeed,
the process of inventory rebuilding is expected to be a factor in an upturn in
production. (JM)
8:36 (Dow Jones) The current account deficit widened to $98.8 billion in 4Q
from $98.5 billion in 3Q. The 3Q deficit was subjected to a one-time narrowing
effect due to foreign reinsurance inflows due to the World Trade Center
disaster. (JM)
8:35 (Dow Jones) Jobless claims fell by 3,000 in the week ended March 9 to
377,000, but there was an upward revision for the prior week to 390,000 from
376,000 first reported. Claims seem to be stabilizing at present levels. So
far, Treasury prices aren't showing much a reaction to the data. The two-year
note is down 2/32 to a yield of 3.49%. The 10-year is down 5/32 to yield 5.31%.
As the positive growth implication of the inventories data sinks in, Treasurys
may well come under more pressure. (JM/MSD)
8:30 (Dow Jones) If the country can survive the national embarrassment that
was that boxing exhibition last night, then the stock market can survive
Wednesday's bout of selling. As of right now, it looks like most of the
excitement Thursday will be provided on the basketball court, but that said,
stocks are looking a little higher. There are a few notable profit reports to
keep an eye on, including Oracle's (ORCL) 3Q after the bell. The company
already warned earlier this month. Adobe (ADBE) also scheduled to report, and
Heinz (HNZ) earlier met expectations. The economic calendar also includes some
important entries in the form of weekly claims and business inventories.
Treasurys slipping as stocks looking up. (TG)
(END) DOW JONES NEWS 03-14-02
10:07 AM |
