(DOW JONES) DJN: DJ MARKET TALK: Fed Funds Rate Doesn't Tell Liquidity Stor
DJN: DJ MARKET TALK: Fed Funds Rate Doesn't Tell Liquidity Story
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
1:51 (Dow Jones) Morris Mark, founder and president of Mark Asset
Management, says don't look at the Fed funds rate for evidence of whether
the central bank is tightening or easing. Instead, he says, look at the
Federal Reserve's monetary base - the total of bank reserves and currency -
as the true gauge of liquidity in the financial system. Significant declines
last year in the monetary base helped slow IT spending. Although Mark says
the measure has stabilized in the early part of this year, he would like to
see further evidence that it's going to rise in a sustained fashion. "If
(the Fed) starts to expand their balance sheet, then at some point they'll
start to put money back into the system, and businesses will begin to
reinvest," Mark says. (RS)
1:41 (Dow Jones) Treasury's auction of 10-year notes went very well, awarded
at 5.185% with a bid to cover of 2.56. A good deal of buying was rumored to
be one firm covering rate-lock shorts on the Worldcom deal. (SV)
1:34 (Dow Jones) Morgan Stanley analyst Michael Happel upgrades Starwood
Hotel & Resorts Worldwide (HOT) and Host Marriott (HMT) to strong buy from
outperform as part of his upbeat view on the lodging sector. The analyst
raised his Host Marriott price target to $15 a share from $14 and his
Starwood target to $48 from $40. (DDO)
1:20 (Dow Jones) Even the rich may be bunking in budget hotels due to the
slowing economy. Goldman Sachs analyst Steven Kent expects Four Seasons
Hotels (FS) to lower earnings guidance for the year because of its focus on
the high-end luxury sector and its concentration in the underperforming New
York, Boston, and Atlanta markets. (DDO)
1:11 (Dow Jones) Dollar's average monthly value on the Atlanta Fed's
trade-weighted index rose 0.6% in April, indicating a strengthening dollar
overall against 15 other major currencies. USD's trade-weighted rise is its
third straight monthly gain following declines in December and January.
USD's average monthly value rose 1.8% in March. The overall index is up 7.4%
for the year.
1:01 (Dow Jones) As if to counter a published report that European
regulators would issue a formal statement of objections to its proposed
acquisition of Honeywell International (HON), General Electric (GE) issued a
positive earnings outlook this morning, which has helped to lift GE shares
marginally higher. GE narrowed the range of 2001 earnings guidance to
"solidly above $1.45" a share from between $1.40 and $1.50. GE also said
synergies from the Honeywell integration could more than double the original
expectations of $3 billion annually. Take that Europe! (CCW)
12:52 (Dow Jones) After road trip to Europe, Prudential's Hans Mosesmann has
more conviction in thesis that PC plays, Advanced Micro (AMD), ATI Tech
(ATYT), Intel (INTC), Micron Tech (MU), and Nvidia (NVDA) are best to play
in the short term given the good chance of recovery in PC sector in 2H.
Wireless handset plays should follow suit later in summer. Also says Nokia
(NOK) sounding positive on Europe in near-term and on 3G rollout over the
next 18 months. (TG)
12:42 (Dow Jones) WorldCom (WCOM) record-breaking deal proceeds to be used
mainly to refinance outstanding debt. Analysts see only a slight rise in the
company's total outstanding debt of around $26 billion at the end of 1Q.
Fitch says the company's decision to term out CP is positive for its A-minus
rating. (CSE)
12:32 (Dow Jones) It's back to the drawing board for Weyerhaeuser (WY) in
its bid to take over paper rival Willamette Industries (WLL). Weyerhaeuser's
fist-in-velvet glove approach apparently isn't working, as Willamette
soundly rejected Weyerhaeuser's sweetened $50 a share offer - even
dismissing it as a "bargain basement" price. Ouch! In making the offer
Monday, Weyerhaeuser threatened that Willamette's continued rejection of the
offer would negatively affect what Weyerhaeuser would be willing to pay. So
it's onto the June 7 annual shareholder meeting, where Weyerhaeuser expects
to put more pressure on Willamette's board by getting its slate of directors
elected. They better bring boxing gloves; this fight is only getting
nastier. (CCW)
12:24 (Dow Jones) House Democratic Leader Gephardt, commenting on pending
budget resolution, says "in my view, this budget is the death of the budget
process." (JC)
12:16 (Dow Jones) Online advertising and marketing company Mediaplex (MPLX)
plans to announce later today it's effectively getting out of the business
of buying online ad space and selling it to customers. Instead, the company
is focusing on its higher-margin software business that helps online and
off-line companies coordinate ad campaigns and distribute targeted Web ads
and e-mails. In line with the move, the company is laying off 45 employees,
or 20% of its workforce. Mediaplex also plans to announce it has scored
another big customer in the form of Orbitz, the online travel service with
backing from the nation's five biggest airlines. Stock was recently up 3% at
$1.12. (RS)
12:04 (Dow Jones) Worldcom (WCOM) (A3/BBB+) makes bond history. $10.1B
3-part deal the largest non-convertible debt issue of all time. $1.5B 3-year
at Tsys + 215 BP, $4B 10-year at Tsys + 245 BP, and $4.6B 30-year at Tsys +
265 BP via JP Morgan/Salomon. (KG)
11:55 (Dow Jones) Couch potatoes, get ready for some TV-tech goodies. UBS
Warburg cable analyst Thomas Eagan sees Cablevision Systems (CVC) rolling
out some fancy Sony digital set-top boxes in the fall, all to help a planned
conversion to digital over the next three and a half years. Meanwhile,
Comcast Corp. (CMCSA, CMCSK) will accelerate its roll out of new services in
2001, and expects to have video-on-demand trials in front of 2 million homes
by the end of the year, says the analyst. (BS)
11:47 (Dow Jones) The AFS title search index, an indicator of housing
turnover and refinance activity, rose 2.2% to 190 for the week ended May 4,
from 185.9 the previous week. AFS's Paul Descloux said as mortgage rates
linger around 7%, the "prepayment plateau" may extend beyond its four months
to date. (JSX)
11:36 (Dow Jones) A full CBOT seat sold for $335,000 today, according to the
exchange. That was up from the previous sale price of $325,000. (CMN)
11:33 (Dow Jones) Want in on underwriting the swap of AT&T Wireless (AWE)
tracking stock into a new common stock? It'll cost you about $3 billion up
front. That's at least the message Wall Street got when AT&T (T) threw out
the possibility in an SEC filing that it is considering a debt swap deal
similar to the one Lucent (LU) wanted with its spinoff of Agere (AGRA). The
company is suggesting that the deal's underwriter would buy $3 billion in
AT&T debt, swap it for AT&T Wireless shares, then sell it as part of a
public offering. No underwriter has been chosen for the deal. (RJH)
(END) DOW JONES NEWS 05-09-01
01:52 PM
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