You, of course, do understand the treasury is at war with the Federal Reserve:
(e'mail)
Bloomberg News: Business & Finance
Top stories for February 14, 2000
1. Crude Oil Rises Above $30/Barrel to 9-Year High on Low Supplies
2. Healtheon/WebMD to Buy Medical Manager, CareInsite
3. Computer Associates Buys Sterling Software for $4 Bln
4. Corning to Buy NetOptix for $2.14 Billion in Stock
5. U.S. Stocks Gain; Alcoa, Caterpillar Lead Rally in Dow Average
6. Diversa Shares Triple After Genetic Sampler's IPO
7. SBC Communications Long-Distance Phone Bid Set Back by Justice Department
8. 3Com Shares Rise 7.5% on Optimism for Palm Unit's IPO
9. Merrill Lynch Names CFO O'Neal to Run U.S. Brokerage
10. U.S. Treasuries Rise on Expectations for Tame Inflation
11. Dollar Strengthens Against Euro as U.S. Stocks Rebound
12. Can Greenspan Trump Treasury and Steepen Curve?: Caroline Baum
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Bloomberg News: Business & Finance
Top stories for February 14, 2000
1. Crude Oil Rises Above $30/Barrel to 9-Year High on Low Supplies
2. Healtheon/WebMD to Buy Medical Manager, CareInsite
3. Computer Associates Buys Sterling Software for $4 Bln
4. Corning to Buy NetOptix for $2.14 Billion in Stock
5. U.S. Stocks Gain; Alcoa, Caterpillar Lead Rally in Dow Average
6. Diversa Shares Triple After Genetic Sampler's IPO
7. SBC Communications Long-Distance Phone Bid Set Back by Justice Department
8. 3Com Shares Rise 7.5% on Optimism for Palm Unit's IPO
9. Merrill Lynch Names CFO O'Neal to Run U.S. Brokerage
10. U.S. Treasuries Rise on Expectations for Tame Inflation
11. Dollar Strengthens Against Euro as U.S. Stocks Rebound
12. Can Greenspan Trump Treasury and Steepen Curve?: Caroline Baum
1. Crude Oil Rises Above $30/Barrel to 9-Year High on Low Supplies
New York: Crude oil soared, rising above $30 a barrel for
the first time since the Persian Gulf War in 1991, on speculation
that producers may not boost output enough to avert shortages.
Some oil exporters such as Venezuela now propose raising
production after an output-cutting agreement expires at the end of
March. Still, U.S. crude oil inventories are close to a 23-year
low, and that could translate into scarce gasoline supplies in
coming months, traders said.
``Even if we get some additional output, there's an imbalance
and it could take some time to get new supplies into the market,'
said Tom Bentz, a broker at Paribas Futures Inc. in New York.
Crude oil for March delivery rose 81 cents, or 2.8 percent,
to $30.25 a barrel on the New York Mercantile Exchange, the
highest closing price since January 1991. Oil is up 18 percent
this year and has more than doubled from a year ago.
2. Healtheon/WebMD to Buy Medical Manager, CareInsite
Santa Clara, California: Healtheon/WebMD Corp., the biggest
Internet company linking doctors, patients and insurers, agreed
to buy rival CareInsite Inc. and its parent Medical Manager
Corp. for about $5.4 billion in stock.
Holders of Medical Manager will get 1.65 shares of Healtheon,
or $90.75, a premium of 40 percent based on Friday closing prices.
Medical Manager owns 69 percent of CareInsite, whose other
shareholders get 1.3 Healtheon shares, or $71.50, a 5 percent
premium.
The acquisition eliminates Healtheon's largest rival in
providing doctors with online links to check insurance coverage,
process claims, buy supplies, read new medical studies and access
lab reports. Adding Medical Manager, the largest maker of software
used to run doctors' offices, links the combined company to about
455,000 physicians.
``There's now one 800-pound gorilla in this space, and that's
Healtheon,' said Bill McKeever, a PaineWebber analyst with a
``buy' rating on Healtheon.
3. Computer Associates Buys Sterling Software for $4 Bln
Islandia, New York: Computer Associates International Inc.,
a maker of software that improves computers' performance, will
buy Sterling Software Inc. for $4 billion in stock, gaining
computer-storage management products.
Computer Associates will exchange 0.5634 share for each
Sterling share, or $39.05 a share and 7.7 percent above today's
close. The exchange is based on Computer Associates trading
between $77.12 and $63.10.
The purchase will give Computer Associates access to
Sterling's data storage management products, software to protect
and deposit corporate information and tools for creating Web
programs. Computer Associates is betting that businesses want a
full range of software to operate computers and databases.
``Storage and networks are coming together,' said Computer
Associates President Sanjay Kumar. ``You need broad offerings to
survive.'
4. Corning to Buy NetOptix for $2.14 Billion in Stock
Corning, New York: Corning Inc., the No. 1 maker of glass
fiber for telecommunications networks, agreed to buy NetOptix
Corp. for about $2.14 billion in stock to gain filters that
speed up fiber-optic systems.
NetOptix holders will swap each of their shares for 0.9 share
of Corning, which will issue 12 million shares. That values
NetOptix at $160.20 a share, 18 percent more than Friday's closing
price. Before today, NetOptix stock had surged 25-fold in the past
12 months.
Corning, which primarily makes the glass fiber for optical
networks, wants a bigger slice of the market for parts that help
increase capacity, such as filters. The demand for fiber is rising
by 20 percent a year, while demand for components is more than
doubling, boosting Corning rivals such as JDS Uniphase Corp.
``It's not fiber people are going to be replacing, it's the
optronics -- all the stuff that goes on the fiber that lights it
up,' said analyst Sanjay Mewada of the Yankee Group.
5. U.S. Stocks Gain; Alcoa, Caterpillar Lead Rally in Dow Average
New York: The Dow Jones Industrial Average rallied as investors
bought stocks that tumbled last week when the average had its
worst performance since October.
Alcoa Inc. and Caterpillar Inc. led the Dow average to its
biggest gain in two weeks. The Nasdaq Composite Index rose as
Intel Corp. offset declines in Cisco Systems Inc. and Sun
Microsystems Inc.
``We've been taught to buy the dips since 1987' when the
stock market plunged, said Vincent Farrell, chief investment
officer at Spears, Benzak, Salomon & Farrell, which manages $6
billion in investments.
The Dow average climbed 94.63, or 0.9 percent, to 10,519.84,
while the Standard & Poor's 500 Index rose 2.83, or 0.2 percent,
to 1389.95. The Nasdaq Composite Index rose 23.15, or 0.5 percent,
to 4418.60, erasing a 40-point decline as Intel Corp. rose in late
trading. About eight stocks fell for every seven that gained on
the New York Stock Exchange.
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6. Diversa Shares Triple After Genetic Sampler's IPO
New York: Shares in Diversa Corp., a company that collects
and stores genetic samples from tiny organisms for use in agriculture,
medicine and industry, tripled after the company's $174 million
IPO.
Diversa rose 51 to 75, and earlier reached 79 3/8, in trading
of 14.8 million shares.
Demand for stock in the IPO was strong enough that Diversa
raised the sale price to $24 a share, above the initial indicated
range of $20 to $22, and increased the size of the sale 4 percent
to 7.25 million shares. The company, whose partners include Dow
Chemicals Co. and Novartis AG, earlier this year increased the
sale price from an expected $13 to $15.
``A lot of big discoveries will be coming from biotechnology
companies, not the big pharmaceutical houses,' said Stephen
Flaks, whose $200 million hedge fund in Scottsdale, Arizona,
mainly invest in biotechnology stocks. ``They are the future.'
7. SBC Communications Long-Distance Phone Bid Set Back by Justice Department
This is a breaking news story. Please see www.bloomberg.com
for complete coverage.
8. 3Com Shares Rise 7.5% on Optimism for Palm Unit's IPO
Santa Clara, California: 3Com Corp. shares rose 7.5 percent
as investors bought the stock to get a piece of the company's
Palm Inc. electronic organizer unit, as 3Com prepares to sell
Palm shares to the public in two weeks.
3Com climbed 4 11/16 to 67 after touching 70, the highest in
three years. The shares have gained 43 percent this year. In 1997,
the stock was the second-worst performer in the Standard & Poor's
500 Index behind Cabletron Systems Inc.
The company is selling 23 million shares of Palm, maker of
the world's best-selling handheld organizer, with more than 60
percent of the market. By buying 3Com shares now, smaller
investors can avoid being shut out of the IPO, which some analysts
expect to be among the year's most successful.
``There's a continuing realization that Palm has real
value,' said Patrick Houghton, group head of technology research
at Sutro & Co. ``Given where Goldman, Sachs & Co. has priced Palm,
it's going to be pretty hard to get shares at that price.'
9. Merrill Lynch Names CFO O'Neal to Run U.S. Brokerage
New York: Merrill Lynch & Co. named Stanley O'Neal president
of its U.S. retail brokerage, making him the first non-broker
to get the job and boosting his chance to succeed David Komansky
as head of the largest securities firm.
O'Neal, Merrill's chief financial officer, is one of Wall
Street's highest-ranking black executives. He replaces John L.
Steffens, 58, named to a new post as the unit's chairman, after
serving as its president since 1985. O'Neal, an investment banker
before becoming CFO two years ago, will oversee 15,000 brokers.
The 48-year-old O'Neal is taking over the brokerage as
Merrill revamps the business to fend off competition from the
Internet. The company has been without a president and successor
to 60-year-old Chairman and Chief Executive Komansky, himself a
former broker, since July. That's when Herbert Allison quit after
the board told him he would never make it to the top spot.
``Merrill is giving O'Neal a chance to prove himself,' said
Timothy Ghriskey, a portfolio manager at Dreyfus Corp. ``This is a
key area, and it's undergoing significant change. If he shows he
can succeed, that would put him in great position to eventually
head up Merrill.'
10. U.S. Treasuries Rise on Expectations for Tame Inflation
New York: U.S. Treasuries rose for a second day on expectations
the Federal Reserve will slow growth and keep inflation from
accelerating.
``There's a sense that yields won't go up because the Fed is
on top of inflation, and even if it does pick up the Fed will kill
the rest of it,' said James Paulsen, who oversees $75 billion as
chief investment officer at Wells Capital Management in
Minneapolis. Wells favors corporate and mortgage debt, he said.
The 30-year bond rose 5/8, or $6.25 per $1,000 face amount,
to a price of 100 3/8. Its yield fell 5 basis points to 6.22
percent. The benchmark 10-year yield dropped 5 basis points to
6.55 percent while two-year yields fell 3 basis points to 6.6
percent.
``I like the level of yields,' said Eric Peterson, who
favors Treasuries in the seven-year maturity range for the $125
million he helps manage at Talon Asset Management in Chicago.
``Inflation is benign,' and the Fed is likely to keep it that
way, he said.
11. Dollar Strengthens Against Euro as U.S. Stocks Rebound
New York: The dollar gained against the euro and erased
losses against the yen as U.S. stocks rebounded from a plunge
Friday, boosting confidence in the currency.
The dollar's gains today also come ahead of U.S. economic
reports this week that are expected to signal further growth
without much pickup in inflation in January.
``The fundamentals still look very positive in the U.S.,'
said David Johnson, head of foreign exchange sales at Barclays
Capital. With a rally in U.S. stocks today, that's going to boost
the dollar against the euro, he said.
The dollar strengthened to 97.86 U.S. cents per euro from
98.75 cents in late New York trading Friday. It earlier sank as
low as 99.14 cents. Against the yen, the dollar traded at 108.89
yen, little changed from 108.82 yesterday, after earlier tumbling
as low as 108.05. The euro also slipped against the yen, to 106.58
yen from 107.445 Friday.
12. Can Greenspan Trump Treasury and Steepen Curve?: Caroline Baum
New York: There is only one event this week as far as U.S.
fixed-income traders -- maybe the entire universe of financial
market professionals -- are concerned: Federal Reserve Chairman
Alan Greenspan's Congressional testimony on Thursday.
Greenspan will traipse up to Capitol Hill Thursday morning to
deliver the Fed's semi-annual monetary policy report, known as the
Humphrey-Hawkins testimony, to the House Banking Committee.
As is their wont, our elected representatives will pepper the
monetary authority with questions about fiscal policy. They will
ask him to evaluate the Clinton administration's plan to pay down
the debt while initiating new spending. They will seek his counsel
on tax cuts proposed by presidential candidates.
For their part, bond traders will be listening for hints as
to just how much more tightening the Fed anticipates. Given the
huge bond rally in recent weeks at the expense of everything else,
anything less than a hawkish outlook from the Fed chief may give
the front end of the curve room to rally.
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