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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: YourKing who wrote (63385)	1/16/2000 9:16:00 PM
From: puborectalis	Respond to of 108040

Merrill Lynch will beat earnings this quarter and work its way back over $100.........U.S. brokers seen posting strong quarterly results By Jack Reerink NEW YORK, Jan 14 (Reuters) - Wall Street firms, including the No. 1 U.S. brokerage Merrill Lynch and Co. Inc. (NYSE:MER - news), next week are expected to post strong fourth-quarter results, powered by surging stock markets and fees from helping start-up companies sell shares to investors. ''I've always taken the view: 'This has been terrific, how much longer can it go on?''' said analyst Michael Flanagan of Financial Service Analytics on Friday. ''But this market is incredible -- it's nothing like I've ever seen.'' U.S. securities are on track to earn a record $22.1 billion in pretax profits this year, up 29 percent from last year. Most firms will turn in even bigger profit increases for the fourth quarter because their year-ago results were depressed by turmoil in global stock and bond markets. The Nasdaq composite index, which tracks the shares of some of America's best-known technology and Internet companies, rose 48 percent in the fourth quarter alone. Investors frenetically bought shares, pushing trading volumes up 27 percent to more than 80 billion shares. Internet brokers, such as Charles Schwab Corp. (NYSE:SCH - news) and E*Trade Group Inc. (NasdaqNM:EGRP - news), processed a record 700,000 to 750,000 stock trades a day in the fourth quarter, up almost 50 percent from the third quarter, analysts estimated. Heavy advertising spending will put most Web brokers into the red, though. While investors boosted commissions and stock trading activities at brokerages, companies helped fill the vaults of Wall Street's most prestigious firms. Investment bankers reaped fat fees from advising corporations on mergers and acquisitions (M&A), and helping start-up companies sell stock to the public. ''It's going to be a record retail quarter,'' Flanagan said. ''Investment banking is going to be strong because of new stock offerings and M&A activity.'' The global boom in investment banking helped Wall Street firms Morgan Stanley Dean Witter & Co. (NYSE:MWD - news), Goldman Sachs Group Inc. (NYSE:GS - news) and Lehman Bros Holdings Inc (NYSE:LEH - news) report record results for their fourth quarters ended Nov. 30. Those firms beat expectations by large margins, and analysts said the brokerages reporting next week are likely to repeat that feat. Analysts did not markedly raise their profit estimates for the firms reporting next week, and most have pegged the earnings lower than the firms' record results for the first half of 1999. The reason is, most experts had expected slack trading and few deals in December, partly because of fears over the possible disruptions by the computer millennium bug, or Y2K. In fact, the opposite happened. ''December was not only strong given the seasonal slowdown, but it was particularly strong given that we were heading into Y2K,'' said analyst Joan Solotar of Donaldson Lufkin & Jenrette. ''Trading volumes were at record levels and underwriting fees were up 36 percent'' from the third quarter. Merrill Lynch and investment bank Bear Stearns Cos Inc. (NYSE:BSC - news) gained market share in the business of underwriting stock offerings, which should bode well for their quarterly profits, Solotar said. Wall Street's trading profits are expected to be strong but not at record levels. Bond trading was relatively slack as U.S. interest rates rose during the quarter, but stock trading revenues climbed to record levels, analysts said. ''Trading is a toss-up,'' Flanagan said. ''We have seen some softness in fixed income, which could be partly offset by equity trading.''