MARKET TALK: Some Ominous Signs From Beige Book
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
2:40 (Dow Jones) The Beige Book is an ominous omen for the economy in that
it notes weakness in some sectors that have previously been buoyant, says
Lehman Brothers. Still, no change in the outlook for the June Fed meeting,
they say. (MSD)
2:33 (Dow Jones) A "possible bottoming out of the year-over-year growth of
retail sales lessens recession risks," says Moody's economist Lonski of
Tuesday's data. Near-term, he says, retail sales growth acceleration may be
crimped by rising unemployment, but interest rate and tax cuts should then
boost it in 4Q. (MC)
2:24 (Dow Jones) CSFB says it appears U.S. software sales are holding up for
Adobe (ADBE), and firm expects Adobe to meet or beat 2Q EPS view of 28c. The
bigger question is Europe and management's guidance for 3Q, CSFB says,
citing clear signs that Europe is deteriorating. If 3Q guidance disappoints,
expect modest selloff, and buy on weakness, especially below $40, CSFB says.
Shares off 2% at $40.30. (TG)
2:09 (Dow Jones) The Beige Book mainly confirmed the familiar story other
indicators were telling: economic activity little changed or decelerating in
April and May, manufacturing has remained flat or declined, retail sales
flat, labor markets continue to ease, and wage and price increases are
moderate. The one bright spot noted was increased energy exploration. (JM)
2:01 (Dow Jones) If there's one thing that may be interesting in the Beige
Book, it's how the Fed plays the inflation question, say market
participants. Policy makers have generally been dovish on the short-term
outlook. (MSD)
1:46 (Dow Jones) Stocks muddling through a sleepy session. DJIA up 12 at
10961, Nasdaq slips 12 to 2157, and S&P 500 off 3 at 1253. Upside in coming
sessions may be limited by worries hanging over the market on the earnings
front, and there is some vital economic data on tap over the next few days.
In fact, the Beige Book is coming up shortly. Internets worst group of the
day, followed by communication technology. (TG)
1:26 (Dow Jones) Mike Mayo, Pru's bearish banking analyst, has raised his
price target on Bank of America to $66 from $60: he believes the Charlotte
banks's restructuring story "has legs." And, he added, "the cyclical
weakness is not so bad in our view. We believe BAC is a unique restructuring
story in an industry facing a major structural speed bump." He expects the
company to earn $4.90 a share in 2001, up from last year's $4.72. Shares
were recently up 0.45, or 0.8%, at 59.55. (TAS)
1:09 (Dow Jones) So, does this mean you don't like how things are going at
JDS (JDSU)? Wit SoundView analyst Kevin Slocum has this to say: "Business
stinks, our numbers are too high, and it's time to get them down." Cuts FY02
rev view to $2.7B from $3.5B and EPS to 18c from 38c. Also can't rule out a
miss in current quarter because company still hustling for business. Sees
limited downside at $15 a share, but upside is limited beyond $20-$21.
Shares off 1.4% at $14.89. (TG)
12:53 (Dow Jones) Uncertainty over Iraq's continued export halt is keeping
oil prices from falling as they would otherwise, Dow Jones' Energy Matters
column says, citing key data called a "good indicator" by Saudi Oil Minister
Naimi. When crude stocks in the US Midwest, including the Cushing, Okla.,
NYMEX contract delivery point drop to near 60 million bbl the oil price
"really spikes," Naimi says. When stocks are 70-72 million bbl "the price
plummets." The indicator stands up historically, and latest EIA data says
June 8 stocks stand at 70.5 million bbl, down from near 72 million a week
ago. That suggests price weakness, but the Iraq situation is overwhelming
the fundamentals. (DCB)
12:29 (Dow Jones) One group left out of the Kraft IPO (KFT) were Philip
Morris (MO) shareholders. Some investors apparently thought that the Kraft
spinoff would ultimately give them shares in the food company. But this deal
was a carve-out, not a spinoff, and Philip Morris has said all along it
intends to retain the Kraft shares it still holds. (RJH)
12:21 (Dow Jones) Sep S&Ps and Nasdaq are firmer, trading near session highs
as the markets ready for the lunch hour. The positive trade bodes well for
further gains going into the p.m. Next event to watch is beige book. (DMC)
12:16 (Dow Jones) Lehman remains confident in Bed Bath & Beyond (BBBY) 1Q
estimate of 10c. Doesn't see upside potential to that number, but says
company well positioned to post strong gains in back half of year. (TG)
12:02 (Dow Jones) Rep. LaFalce, ranking Democrat on House Financial Services
Committee, serving up a soundbite in advance of tomorrow's hearing
"analyzing the analysts," says he's "increasingly concerned industry
self-regulation may not be sufficient to guard against the problems and
abuses we are seeing...." (JC)
11:49 (Dow Jones) The Fed's Ferguson is warning that there's a risk
consumers may cut their spending activity. He adds the economy is currently
growing quite slowly. (MSD)
11:45 (Dow Jones) Shares of Scientific-Atlanta (SFA) dropped nearly 11%
after an analyst meeting at the National Cable and Telecommunications
Association's annual conference prompted anxiety that the company's set-top
box sales could moderate in 2002. Management did not provide any updates to
guidance for either the current quarter or outlook for fiscal year 2002, but
analysts are anticipating some slowdown next year. (EGS)
11:34 (Dow Jones) CIBC sees Oracle (ORCL) posting 4Q results Monday that
meet analysts' estimates, but doesn't expect a positive outlook. Analyst
Melissa Eisenstat says her fiscal 2002 estimates ($12.9B in sales and EPS of
52 cents) are at risk and the weak economy isn't the only reason.
Competition in database software and gaps in its application product lineup
are also hampering the company, she says. (MLP)
(END) DOW JONES NEWS 06-13-01
02:39 PM
*** end of story * |
