Big Banks Take Another PunchBy Nelson Schwartz
Hoping for a reprieve from the market madness? Well,
Thursday wasn't your day. The market opened sharply
lower and stayed that way for most of the day. Latin
America was the worry du jour, which is why the big
banks got socked once again. The Dow closed down
100.15, at 7682.22, while the S&P fell 8.21, to 982.26.
Techs were mostly lower as well, with the NASDAQ down
20.99, at 1571.86. Here's what we've been following:
THE MOODY'S BLUES.... Moody's investment agency poured
more fuel on the emerging-markets fire when it
downgraded its rating Thursday on Venezuela and
Brazil's debt. It's well-known that the big U.S. banks
have far greater exposure to Latin America than Russia,
and those institutions went into a dive. Citicorp, the
poster child for emerging-market banking, fell 10 1/4,
to $98 1/2. Just six weeks ago, it was at $175. Wow.
Chase Manhattan fell 5 5/8, to $49 1/4. J.P. Morgan
lost another 6 1/2, to finish at $88 3/4. I wonder what
Sandy Weill is thinking now.RAY OF LIGHT.... One prominent winner among the
technology stocks was beleaguered Intel. Morgan Stanley
bull (and Kurlak archrival) Mark Edelstone raised his
earnings estimates by a dime for fiscal 1998 and a
nickel for '99. It may not seem like much but it was
enough to lift Intel up 1 7/8, to $76 3/4. Be grateful,
because other techs weren't so lucky: Cisco dropped 1,
to $90 5/8, Microsoft sank 1 5/16, to $99 1/4, and
Yahoo! fell 2 9/16, to $75 3/16.
FEEL THE PAIN.... Think the banks have been hard hit?
Check out the brokerage companies. After the close,
Lehman warned that it's taken a $60-million hit from
Russia and elsewhere, and that Q3 earnings will come in
at $1.20, not the expected $1.45. Lehman fell 3 3/4, to
$38 3/8. Can you believe Lehman's 52-week high was $85?
If they drop much more, I bet someone's going to step
in and take them over. Other losers in the group
included Merrill Lynch, down 3 15/16, to $63 7/8, and
Morgan Stanley, off 5 3/8, at $53 5/8.Loose Change
I was talking to Elliot Scheier, a buddy of mine (and a
senior VP) at the firm of Oscar Gruss in New York. He
thinks Friday will be another down day because "no one
wants to be long over the weekend. It'll be a good day
to nibble at fallen angels, though, because some buyers
will come back in next week looking for values."... If
I were a holder of Telebras stock, I'd be panicking.
Just a few months ago, it was over $100 and analysts
were predicting it could rise to $180. It closed down 7
5/8, at $65 today.... Best Buy was among the few big
winners Thursday. It jumped 3 1/4, to $47 9/16, after
announcing better-than-expected sales and predicted a
sharp increase in Q2 profits.... I'm glad someone has
some good news. Talking to Wall Streeters at the big
firms has been pretty depressing lately. I think a lot
of them are beginning to realize that those big losses
in Russia may cause their bonuses to go up in smoke.
Steve--
I will talk to him, only problem is that Raj is very selective with his clients due to volume constraints, but frankly we do have input even with our man in pits- we discuss and he has great respect for our ideas, between 3-10 to 3-30 we go thru global markets and make our strategy, so it is a lot of work which involves my free thinking and their focussed approach, if I am left alone I will be stuck up with fifteen minutes monlogues.
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