: Treasurys Retreating From 50 BP Cut Theory
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
2:13 (Dow Jones) Rebounding stocks combined with stronger-than-expected
economic reports has caused the Tsys market to start backing away from
expectations of a 50 BP rate cut at Tuesday and Wednesday FOMC meeting, says
Richard Gilhooly of Paribas Capital Markets in NY. 10yr Tsy has retreated
from earlier highs, now up 3/32 on session at 98 17/32, yield up 1bp on
session at 5.20% (AEG)
2:04 (Dow Jones) Merrill Lynch (MER) is out with a commercial showing a man
watching reruns of financial television (meant to look like a network that
starts with C and ends with NBC) where anchors and reporters gleefully
high-five amid chatter that Nasdaq would break 10000. Investors are told to
look forward, not back, but here's a thought for another commercial from the
firm: A lot of the enthusiasm back in 1999 and 2000 was fed not only by TV,
but by ubiquitous high-tech analysts. So, how about reruns of, say, Henry
Blodget's predictions? (RJH)
1:50 (Dow Jones) Improving sentiment suggests that stocks should bounce,
says Arnhold's John Roque, but that should be limited to about 2200 on
Nasdaq. A rising put/call ratio a plus, but the daily number of new lows is
far below the level of prior Nasdaq rallies. (TG)
1:33 (Dow Jones) Quaker Oats (OAT) shares get hit on fears FTC will squash
deal with PepsiCo (PEP). AG Edwards isn't buying it - the rumor, that is.
Upgrades Quaker on belief merger goes through without any change to the
economics of the transaction. Rumor has FTC blocking deal because the
proposed buyer of Pepsi's All Sport brand, Monarch Beverages, isn't a
legitimate competitor in beverage market. "We believe Pepsi would be willing
to 'give' this brand away to some larger company just to make sure this deal
gets completed," says analyst Chris Growe. (TG)
1:24 (Dow Jones) CBOT records show full seat sold for $335,000 on Wednesday,
down from last seat sold at $340,000 on June 15. (SPC)
1:14 (Dow Jones) In observance of the Fourth of July holiday, the CBOE said
it will end trading early Tuesday, July 3. Equity options that normally
close at 3:02 pm CDT will close at 12:02 pm that day; index products like
the QQQ or OEF that typically close at 3:15 pm CDT will close at 12:15 pm.
(KT)
1:05 (Dow Jones) Isle of Capris Casinos (ISLE) fiscal 4Q earnings of 37
cents came in ahead of Robertson Stephens analyst Smedes Rose' projection of
30 cents. However, he warned that initial results for the company's
Boonville, Mo., casino, opening next year, could be weaker than expected and
competition may increase in key markets. (DDO)
12:49 (Dow Jones) Mortgage rates fell for the third straight week, according
to Freddie Mac's survey. The average 30-year fixed-rate mortgage dropped to
7.11%, with average 1.0 point, for the week ending June 22. The 15-year rate
fell to 6.65%, with 1.0 point and one-year ARM rate dropped to 5.74%, with
0.9 point. (JSX)
12:35 (Dow Jones) Floor traders say Sept. S&Ps and Nasdaq saw little
reaction to Philly Fed numbers. "We were already up to begin with," one
trader says. S&Ps holding gains, which is positive for the afternoon
session. "It might be too soon to say it's a change in trend from what we've
seen, but a firmer close would go a long way to confirm" a short-term trend
change. (DMC)
12:25 (Dow Jones) The Philly Fed is blaming much of the increases in its
prices paid index to energy cost increases, they said in a conference call.
(MSD)
12:22 (Dow Jones) Investors continued to pull shares of Ariba (ARBA) back
from the all-time lows the stock hit earlier this week. One analyst said
some buyers believe the online business-to-business commerce company's stock
had become oversold. Shares also continued to receive a lift from Wednesday
morning's news that Ariba inked a contract with the U.S. Department of
Defense, evidence the once high-flying company still has credibility with
important customers. Nevertheless, many investors are still cautious about a
shortfall when Ariba reports its June quarter, the analyst said. Ariba was
recently up 5.5% after trading 14% higher. (RS)
12:11 (Dow Jones) Being the last investment bank to report fiscal second
quarter earnings this week, Morgan Stanley (MWD) knew the hot topics on
analysts' minds. So before opening his first analyst conference call to
questions, newly-minted CFO Stephen Crawford fired off a few of his own,
with the answers. The top one, in his mind, was the pressure investment
banks feel from commercial banks dangling their hefty balance sheets to win
deals. Morgan Stanley, he said, has always been willing to put its balance
sheet to work and doesn't feel at a competitive disadvantage. (CWM)
12:04 (Dow Jones) July Fed funds slip about 2.5 BP shortly after Philly Fed
data. Contract traded in fast market around 96.345, said to be showing
expectations for 25 BP cut at June FOMC, decreased chances for 50 BP. (SPC)
11:57 (Dow Jones) Don't forget, the Philly Fed report that was scheduled for
earlier this morning is coming in two minutes. Business index seen showing
decline of 10 points. (TG)
11:54 (Dow Jones) Takeover traders lightened up their bets that PepsiCo
(PEP) will succeed in its planned acquisition of Quaker (OAT), amid growing
fears that the FTC may block the deal. Those jitters prompted the spread to
balloon to about $14, a roughly 16% discount to PepsiCo's offer. Takeover
traders' fears about the deal have been exacerbated by the apparently failed
merger between General Electric (GE) and Honeywell (HON), which caught many
traders by surprise. "Maybe it would be an $8 or $10 spread if it weren't
for GE-Honeywell," says a trader. (JAW)
11:41 (Dow Jones) Let's resist the obvious puns in discussing Exodus
Communications' (EXDS) woes. But suffice it to say that the company's cash
is leaving its coffers en masse. Exodus had $1.04 billion in cash at March
31. By June 30, that balance should be down to $550 million, the company
said. By year-end, it'll be at $200 million, which the company says is
enough to fund itself through mid-2002, when it expects to generate positive
cash flow from operations. Jefferies analyst Fred Moran says the company
will run out of cash by early 2002. As for borrowing money, it just got more
expensive - S&P cut the company's debt rating Thursday. (PDL)
(END) DOW JONES NEWS 06-21-01
02:14 PM
*** end of story *** |
