Street LifeFriday, September 11, 1998, 7:00 p.m.Markets Rally on Starr Report
By Bethany McLeanTitles of the day: Sex, Lies and The Tape. Close But
Just a Cigar. Starrs and Stains, Sinners and Stocks.
Repentance, Relief and a Rally. Anyway, a contrite
Clinton and a seamy but unsurprising Starr report did
what an optimistic Intel couldn't: Made this market go
up. Despite Intel's happy speech last night, the market
sold off almost 100 points at the opening bell. But it
recovered after the President begged for forgiveness.
("I have sinned," he says.) And after Starr's 445 page
whatever-you-want-to-call-it (the House voted
overwhelmingly in favor of releasing it) was
published--oh boy! The market soared 200 points before
closing up 179.96, at 7795.50. More mea culpas,Clinton!
WAITING FOR STARR.... Just doesn't have the right ring,
does it? But that's what we did today. So take pity on
the poor soul--interns, do you think?--whose job it is
to copy those 445 pages. Anyway, THE report details not
just one, but 11 reasons for impeaching Clinton. But it
contains no nasty surprises (other than the fact that
the dress tested positive, which I guess isn't really a
surprise, but which is definitely nasty). And Clinton's
lawyers issued a 73-page rebuttal, saying among other
things that Clinton did not carry on an 18-month affair
with Lewinsky. Rather, he had "improper conduct" with
her on "certain occasions" in early 1996 and once in
early 1997. So what wasn't really sex only happened a
few times anyway, so it doesn't count. What Wall Street
really wants to know: Was the cigar Cuban?? Oh, and the
report contains not an incriminating word about
Whitewater. Imagine that. After all that angst.
FINANCIAL FOLLIES.... The reason for the big selloff
first thing this morning was a rumor that Lehman
Brothers was going bankrupt. There was talk on the
London International Financial Futures Exchange that a
U.S. investment bank would seek Chapter 11. Wonder why
everyone decided Lehman was the most likely candidate?
Anyway, a Lehman spokesperson vehemently dismissed the
rumors, and said that Lehman has disclosed its losses.
(Last week, Lehman said trading losses in Russia and
other emerging markets would cut its third-quarter net
income by $60 million.) Which is not a big number, as
these things go. Lehman fell as low as $32 7/16, but
closed down just $2 13/16, at $35 13/16. Still, Lehman
is down over 60% from its high. You have to wonder why
the market is worrying so much.
NUMBER GAMES.... So Intel closed up $5 7/8, at $84
15/16, following its positive preannouncement last
night. Gruntal upped its earnings estimates for Intel;
Warburg Dillon Read raised its rating from "hold" to
"buy." No word from Kurlak The Grinch. But we all know
who's really happy. Nelson, of course. Nelson says he's
"like, SO excited." But Intel is still expected to earn
less--some 20% less--this year than it did in 1997.
Does that really justify a PE multiple of 26? While
we're naysaying, let's pick on Oracle, too. Oracle
soared $3 3/8 today after announcing that it beat
analysts' estimates by 4 cents! Yay! But the 20 cents a
share that Oracle reported is LESS than the 27 cents a
share Oracle was supposed to earn this quarter BEFORE
it guided estimates downwards a few months ago. Oh
well. Goldman upgraded Oracle to "market outperformer";
the Pru went from "accumulate" to "strong buy"; Merrill
went from "near term accumulate" to "near term buy."
But Everen DOWNGRADED Oracle to an "immediate term
market perform." Hmmm. Maybe the source of the
disagreement is that the immediate term is not the sameas the near term.
Loose ChangeMy mom says that some kind of poll conducted in Duluth,
MN, showed that while women wanted the Starr report
made public, men didn't. What's that about?... Hong
Kong says it will maintain its currency board system
and the current link to the U.S. dollar. Hong Kong also
says that its market intervention was NOT a breach of
free market principles. Okay, whatever.... Japan's
economy contracted for the third straight quarter for
the first time since 1955. GDP fell 3.3% on an
annualized basis, more than economists' predictions.
And the Nikkei broke 14,000, closing down more than 5%,
at 13,917. Hey, at least we may get a new textbook
example of a "deflationary spiral.".... After the
close, the not-so-Magic Kingdom, a.k.a. Disney, warned
that fourth-quarter earnings will be below last
year's.... At least Dell still says the world is a
wonderful place.... Goldman Sachs cut its 1999 growth
forecast for the U.S. economy to 1.7%, versus 2.7%.
Wonder if that will make Abby any less bullish?... The
August PPI (Producer Price Index) came in weaker than
expected, which may push the Fed toward easing. But CAN
the U.S. cut rates enough to make a difference to the
rest of the world?... S&P revised its foreign and local
currency outlook on 11 Brazilian entities from stable
to negative. So far this month, some $11 billion has
fled Brazil, versus $12 billion in all of August. But
Brazilian stocks rebounded some 13% today on optimism
that a rate hike to almost 50% would stem further
capital outflows.... Primakov becomes the new Prime
Minister of Russia! What a great job, don't you think?
Might be just a wee bit stressful, though....
Treasuries got hammered today.... OfficeMax says it's
in talks for a business combination, but would not
specify with whom it wishes to combine.... Northworst
was up $2 1/8 after reaching a tentative agreement with
pilots to end their strike. But what if the mechanics
strike? I don't want to fly without mechanics,
either.... Venator Group and Sports Authority called
off their almost $1 billion merger because of market
conditions. Who's next? Travelers and Citicorp still
say they're committed to each other, despite the
painful declines in both stocks. Guess misery really
does love company.... Merck was up today on news of a
new drug that may fight depression. And we may all need
it.... So the market went up today. Think we've broken
the Bethany curse? Now THAT would be exciting.
Actually, what's more exciting is that we can all
ignore the stupid market for a WHOLE TWO DAYS!!! Happyweekend!! |
