MARKET TALK: Volatility Index Shows Some Complacency
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
11:49 (Dow Jones) Are options investors getting a little lax? Schaeffer's
Investment Research noted the CBOE market volatility index, or VIX, is at
its lowest pre-Fed-meeting level compared with prior meetings - a sign
investors are complacent about downside protection this round, despite the
continued flurry of earnings warnings. Options trading volume is light as
most await the 2:15 announcement and the burst of liquidity that would break
up this otherwise sleepy week. (KT)
11:32 (Dow Jones) Fed-watching futures traders have been rather fickle over
the past week, though the overall message is that nobody has any idea what
the Fed will choose to do today. According to CBOT economist Daniel
Grombacher, odds for a 50 BP cut have moved from 44% on June 19 up to 54% on
June 25, down to 40% late yesterday. (SV)
11:26 (Dow Jones) A Tuesday trip to Sears' (S) headquarters in Hoffman
Estates, Ill., left Robertson Stephens analyst Bill Dreher impressed with
morale. "We find the energy and enthusiasm in Sears executive offices to be
positive, which some may find contagious," Dreher said. But he's still
wondering about the strategic vision for the company, "which has not yet
been released, let alone implemented or realized." The company has pledged a
response by Labor Day. "We do not expect there to be much in the way of easy
answers," says Dreher, keeping a market perform rating on the shares. (JMC)
11:17 (Dow Jones) Ameritrade's (AMTD) reorganization plan won't involve any
additional costs and no layoffs were announced. The discount trading firm's
CEO says he sees the plan having a positive effect on the company's bottom
line and customer retention, but has no specific estimates on how much or
when that benefit will be seen. (LC)
11:09 (Dow Jones) The hip term to describe tech stocks these days is
"subdued." On Wednesday, C.E. Unterberg Towbin calls a Cisco (CSCO) customer
conference in L.A. "more subdued than in recent years." Goldman Sachs
analysts said Tuesday they expect tech firms' outlooks for the rest of 2001
to be "generally subdued." In the Dow Jones Interactive database, a search
of the terms "technology stocks" and "subdued" turns up 78 news articles
containing those words so far this month, up from just 32 in April. If
today's expected interest rate cut by the Fed helps matters, perhaps
"unleashed" will become the word of the day. (PDL)
10:59 (Dow Jones) Wit SoundView says it has been looking for a reason to
upgrade EMC, but instead it's finding "substantial near-term pressures."
Company has been taking a number of actions to make quarter, but Wit
(DOW JONES) DJN: DJ MARKET TALK: Volatility Index Shows Some Complacency
DJN: DJ MARKET TALK: Volatility Index Shows Some Complacency
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
11:49 (Dow Jones) Are options investors getting a little lax? Schaeffer's
Investment Research noted the CBOE market volatility index, or VIX, is at
its lowest pre-Fed-meeting level compared with prior meetings - a sign
investors are complacent about downside protection this round, despite the
continued flurry of earnings warnings. Options trading volume is light as
most await the 2:15 announcement and the burst of liquidity that would break
up this otherwise sleepy week. (KT)
11:32 (Dow Jones) Fed-watching futures traders have been rather fickle over
the past week, though the overall message is that nobody has any idea what
the Fed will choose to do today. According to CBOT economist Daniel
Grombacher, odds for a 50 BP cut have moved from 44% on June 19 up to 54% on
June 25, down to 40% late yesterday. (SV)
11:26 (Dow Jones) A Tuesday trip to Sears' (S) headquarters in Hoffman
Estates, Ill., left Robertson Stephens analyst Bill Dreher impressed with
morale. "We find the energy and enthusiasm in Sears executive offices to be
positive, which some may find contagious," Dreher said. But he's still
wondering about the strategic vision for the company, "which has not yet
been released, let alone implemented or realized." The company has pledged a
response by Labor Day. "We do not expect there to be much in the way of easy
answers," says Dreher, keeping a market perform rating on the shares. (JMC)
11:17 (Dow Jones) Ameritrade's (AMTD) reorganization plan won't involve any
additional costs and no layoffs were announced. The discount trading firm's
CEO says he sees the plan having a positive effect on the company's bottom
line and customer retention, but has no specific estimates on how much or
when that benefit will be seen. (LC)
11:09 (Dow Jones) The hip term to describe tech stocks these days is
"subdued." On Wednesday, C.E. Unterberg Towbin calls a Cisco (CSCO) customer
conference in L.A. "more subdued than in recent years." Goldman Sachs
analysts said Tuesday they expect tech firms' outlooks for the rest of 2001
to be "generally subdued." In the Dow Jones Interactive database, a search
of the terms "technology stocks" and "subdued" turns up 78 news articles
containing those words so far this month, up from just 32 in April. If
today's expected interest rate cut by the Fed helps matters, perhaps
"unleashed" will become the word of the day. (PDL)
10:59 (Dow Jones) Wit SoundView says it has been looking for a reason to
upgrade EMC, but instead it's finding "substantial near-term pressures."
Company has been taking a number of actions to make quarter, but Wit
believes EMC will have tough time meeting expectations for fundamental
earnings growth. (TG)
10:47 (Dow Jones) No real surprise that stocks treading water in front of
Fed's move. DJIA up 45 at 10520, Nasdaq higher by 5 to 2069, and S&P 500
adds 1 to 1218. There seems to be growing sentiment in general that the Fed
has lost its ability to maneuver the economy. Well, the dynamics have no
doubt changed a lot over the past decade or so, but don't write off the
Fed's impact just yet. To say the cuts to date haven't impacted the stock
market ignores the fact that the first loosening in January should only now
be starting to get felt in the economy, let alone the other four eases that
came after. And you can't blame the Fed for causing the bear market with
rate hikes in 1999 on one hand and then say its cuts mean next to nothing
now. (TG)
10:35 (Dow Jones) Level 3's (LVLT) 9 1/8% notes due 2008 are up a point to
41 bid after it announced a deal with Microsoft (MSFT) to provide Internet
access. More importantly, says a trader, is talk that a major equity fund
manager had bought $100 million each of Level 3 and Exodus Communications
(EXDS) bonds. With the telecom names attracting "smart money" interest from
investors who don't normally buy bonds, the trader said "people are feeling
a little better" about buying them. Exodus' 11 5/8 due 2010 are up almost 2
points to 36.7 bid. (RTB)
10:18 (Dow Jones) Though a half-point Fed rate cut today might cause a bit
of steepening in the Tsy yield curve, it won't likely mark the beginning of
a new trend, says UBS Painewebber strategist Mike Ryan. "We continue to
expect the next major shift in the curve to be a flattening," he says. (SV)
10:09 (Dow Jones) The latest reading from the Conference Board showed
consumers still worried about the current job market - but growing more
optimistic about future job market. The rebound in consumer expectations
predicting better earnings for consumer cyclical companies, supporting
Deutsche Banc Alex. Brown's recommendation to overweight that sector. (TG)
9:57 (Dow Jones) Taking its first step towards reorganizing under
bankruptcy, USG received speedy interim court approval to use funds under
its debtor-in-possession financing. The ruling gives USG the ability to
access $150 million in financing until a final hearing is scheduled on the
$350 million DIP facility. The company filed for Chapter 11 protection
Monday because of mounting asbestos litigation. (TB)
9:41 (Dow Jones) Conservative movement at the FDA leads CSFB analyst David
Maris to push the launch of Inhale Therapeutic's (INHL), Pfizer's (PFE) and
Aventis' (AVE) inhaled insulin off a year until 2003. As a result, Maris is
lowering his revenue and earnings forecasts for Inhale to a loss of $1.38 a
share on revenues of $72 million from a loss of 75 cents on revenues of $117
million in 2002 and to a loss of 51 cents a share on revenues of $176
million from earnings of 4 cents on revenues of $209 million in 2003.
However, he notes that a regulatory filing and shortened review is possible
by the end of the year. (BMM)
9:34 (Dow Jones) Nymex crude futures expected to open 50 cents a barrel
lower, extending overnight losses posted after API reported across-the-board
builds in U.S. petroleum inventories. DOE/EIA data show no change in crude
levels, but traders are focusing on EIA's report of another big build in
gasoline stocks. Gasoline futures fell to a new 2001 low in overnight trade,
75.40 cents a gallon. August crude, down 51c at $26.47 on Access, has
support at $25.75-$25.85; resistance is seen at $27. (MXF)
9:26 (Dow Jones) UBS Warburg analyst Don Young says Palm (PALM) management
has gone from being way too bullish on outlook for demand to way too
bearish. That said, he adopts management's 10%-15% year-over-year unit
guidance even though he thinks 25%-30% is a more likely range. Also says
Palm's liquidity "crisis" is over, as sales momentum coincides with improved
asset management and better cash visibility. Reiterates strong buy, $11
price target. (TG)
(END) DOW JONES NEWS 06-27-01
11:49 AM
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