Some Big Boys Start Selling March S&Ps
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
2:21 (Dow Jones) Lehman, Prudential and Merrill are players known to have
started selling March S&Ps recently, Merrill beginning selling at 1350, and
down to current levels. Through much of the rally though, brokerage houses
were buying, with buying activity topped by Merrill and Goldman at the onset
of the Fed decision to ease rates, floor traders said. Traders believe that
the contract should hold at 1330-1325 level. (ZHS)
2:18 (Dow Jones) Ford Motor Co. (F) blames the slowing U.S. economy for its
14.1% drop in sales last month. In 1999, the economy grew 6% and consumer
confidence was high. By the third quarter last year growth had slipped to
2.2% and confidence had slipped, says George Pipas, U.S. sales analysis
manager for Ford. That means cars and trucks are not on American consumers'
"To Get" lists. Still, Pipas expects economic growth for the next six months
to remain near 2.2%, a rate he says that is good. (CEG)
2:16 (Dow Jones) The rate cut should give investors some comfort that now
the Fed knows that the economy is in a major slump and is willing to do
something about it, said Charles Pradilla, chief market strategist at SG
Cowen. "We're not free from the earnings warnings, but it's now clear we
have the big guy on our side, in the way of Greenspan," he said. (RJH)
2:13 (Dow Jones) Merrill's Chris Callies says rate cut is uniformly bullish
for stocks over intermediate-term, and says residual profit taking after a
Fed easing is generally minimal. Broadest rebounds in equity groups that
occur in soft landings are consumer cyclicals, financial services, and
technology. Meanwhile, colleague Bruce Steinberg, Merrill's chief economist,
is trying to discern why Fed took such action today, and reminds that
economy will not turn around suddenly. (TG)
2:09 (Dow Jones) Policy gurus mixed on whether surprise 50 basis point
easing helps or hurts Bush plans to press for mega tax cuts. Some say move
shows Fed can handle macro-economic adjustments without a big fiscal policy
assist, while others say Fed move shows things worse than many assumed and
underscores need for dramatic action. (JC)
2:06 (Dow Jones) Interesting that the Fed's rate cut came during Bush's
economic forum in Austin, where he and Larry Lindsey are meeting with
business executives. Greenspan hadn't been invited. (SV)
2:04 (Dow Jones) The decision to cut the funds rate by 50 basis points has
to be viewed as very aggressive and a change from past Fed policy. The FOMC
only voted for a "risk assessment statement bias toward ease" at the Dec. 19
meeting. That meant that Greenspan had discretion to cut by 25 basis points.
(DOW JONES) DJN: DJ MARKET TALK: Some Big Boys Start Selling March S&Ps
DJN: DJ MARKET TALK: Some Big Boys Start Selling March S&Ps
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
2:21 (Dow Jones) Lehman, Prudential and Merrill are players known to have
started selling March S&Ps recently, Merrill beginning selling at 1350, and
down to current levels. Through much of the rally though, brokerage houses
were buying, with buying activity topped by Merrill and Goldman at the onset
of the Fed decision to ease rates, floor traders said. Traders believe that
the contract should hold at 1330-1325 level. (ZHS)
2:18 (Dow Jones) Ford Motor Co. (F) blames the slowing U.S. economy for its
14.1% drop in sales last month. In 1999, the economy grew 6% and consumer
confidence was high. By the third quarter last year growth had slipped to
2.2% and confidence had slipped, says George Pipas, U.S. sales analysis
manager for Ford. That means cars and trucks are not on American consumers'
"To Get" lists. Still, Pipas expects economic growth for the next six months
to remain near 2.2%, a rate he says that is good. (CEG)
2:16 (Dow Jones) The rate cut should give investors some comfort that now
the Fed knows that the economy is in a major slump and is willing to do
something about it, said Charles Pradilla, chief market strategist at SG
Cowen. "We're not free from the earnings warnings, but it's now clear we
have the big guy on our side, in the way of Greenspan," he said. (RJH)
2:13 (Dow Jones) Merrill's Chris Callies says rate cut is uniformly bullish
for stocks over intermediate-term, and says residual profit taking after a
Fed easing is generally minimal. Broadest rebounds in equity groups that
occur in soft landings are consumer cyclicals, financial services, and
technology. Meanwhile, colleague Bruce Steinberg, Merrill's chief economist,
is trying to discern why Fed took such action today, and reminds that
economy will not turn around suddenly. (TG)
2:09 (Dow Jones) Policy gurus mixed on whether surprise 50 basis point
easing helps or hurts Bush plans to press for mega tax cuts. Some say move
shows Fed can handle macro-economic adjustments without a big fiscal policy
assist, while others say Fed move shows things worse than many assumed and
underscores need for dramatic action. (JC)
2:06 (Dow Jones) Interesting that the Fed's rate cut came during Bush's
economic forum in Austin, where he and Larry Lindsey are meeting with
business executives. Greenspan hadn't been invited. (SV)
2:04 (Dow Jones) The decision to cut the funds rate by 50 basis points has
to be viewed as very aggressive and a change from past Fed policy. The FOMC
only voted for a "risk assessment statement bias toward ease" at the Dec. 19
meeting. That meant that Greenspan had discretion to cut by 25 basis points.
Normally, the risk assessment statement would be changed toward ease and
then a 25 basis point cut would occur. Instead they have leap-frogged the
equivalent of two policy moves in only two weeks. (JM)
2:02 (Dow Jones) The Fed's decision to cut interest rates by 50 basis points
isn't surprising or inappropriate, said Edward Jones Chief Market Strategist
Alan Skrainka. The economy has cleary been showing signs of slowing, and
Tuesday's release of the National Association of Purchasing Manager's index
likely raised eyebrows at the Fed, he said. (DJH)
1:58 (Dow Jones) Convertibles are rallying across the board, riding the
stock market higher after the Fed cut. Telecom and tech names, in
particular, are higher. Trader says the move helps convertibles through both
the stock rally and by lowering the cost of funding, "so that may spur some
more activity." (RTB)
1:56 (Dow Jones) Rise in JPY vs USD, which goes against general dollar
strength seen in wake of Fed announcement, is being attributed to cross
trade with EUR/JPY dropping back to Y106.69 from around Y107.80. (CSE)
1:53 (Dow Jones) Not to be a downer, but..."What the Fed is saying is that
it's very concerned with the economy, more concerned than it had appeared to
be," said David Klaskin, president of investment firm Oak Ridge Investments
in Chicago. "There are definitely going to be more earnings warnings and
that's going to continue to hurt the market. None of that is going to go
away." (RJH)
1:47 (Dow Jones) The Feds' surprise rate cut sent options traders scrambling
to adjust their positions and to take up new strike prices as stocks zoomed
up and options volatility plunged. The CBOE market volatility index, or VIX,
most recently dropped a significant 5.29 to 28.91, bringing the market
sentiment indicator to within its more typical 20 to 30 range. Traders who
had loaded up on bullish call options in anticipation of the January effect
unloaded some of these positions, taking profits off the table. (KXT)
1:44 (Dow Jones) Fed Funds futures have made a big move, and have begun to
price in additional rate cuts. The January contract is pricing in a 60%
chance of another 25 BP cut at the month-end meeting. The April contract,
which includes the March 20 FOMC, is pricing in a total of 50 BP additional
easing (Funds at 5.5%). (SV)
1:40 (Dow Jones) Rate hike removes risk that Fed wasn't being proactive
enough to slowing economy, setting up corporate bond market for better
performance this year, stragetists say. (DA)
1:38 (Dow Jones) March S&Ps and Nasdaq are trading in "fast" market
conditions as the markets digest the surprise Fed move. One floor-based
analyst says that it's important to see how the markets react in the next
hour. "If they can hold these gains, it will look decent, but if not we
really have a problem," he says. Rate cut came during lunch hour in Chicago,
which caused traders to literally scurry back to the trading pits. (DMC)
(END) DOW JONES NEWS 01-03-01
02:21 PM
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