MARKET TALK: With All The Data, Don't Forget About ECRI
15 Mar 10:32
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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10:31 (Dow Jones) The Economic Cycle Research Institute's weekly leading
index rose by 0.2% in the week ended March 8 and the index was 2.9% above its
52-week moving average, a larger gain than in the prior three weeks. (JM)
10:20 (Dow Jones) As the economy continues to stabilize and strengthen, value
stocks like autos and auto parts will become less attractive. Prudential says
market share slippage means overcapacity will continue, and incentives will
stay high. Rising interest rates by mid-year will likely depress auto industry
valuations, though Pru says the risk to its thesis is if production remains
strong and rates don't climb near mid-year. (TG)
10:11 (Dow Jones) The State Teachers Retirement Systems of Ohio said it will
vote in favor of the merger of Hewlett-Packard (HWP) and Compaq (CPQ) in part
because it has confidence that Compaq CEO Michael Capellas will bring the two
companies together, said spokeswoman Laura Ecklar. The pension fund also likes
the merger because it believes the combined company can achieve its cost
savings and revenue projections. While Ecklar said there is some concern about
competing in the low-margin consumer PC market, that will be offset by steady
sources of cash that will enable the new company to keep its lead in imaging
and printing. The retirement fund owns 4.3 million shares of Compaq and 3.5
million shares of H-P. (DLF)
10:04 (Dow Jones) The Treasury market's perverse ability to rally in the face
of very strong economic data has to do with just how oversold the market became
yesterday. It also has to do with the increasing certainty that the Fed will
move to a neutral balance of risks next week. Uncertainty causes yield
premiums, notes Merrill strategist Jerry Lucas, and the reduction in
uncertainty is reducing the premiums. (SV)
10:00 (Dow Jones) Mid-March University of Michigan consumer sentiment index
rose to larger-than-expected 95.0 from 90.7 in February, helped by a healthy
rise in the current conditions index, which rose to 99.3 from 96.2 last month.
Expectations are also on the rise, landing at 92.3 from 87.2 in Feb. Overall,
this suggests that the consumer is not at all about to drop out of the economy.
(SV)
9:50 (Dow Jones) UBS Warburg comes out with bold call Friday AM, proclaiming
that "U.S. advertising has turned," says media and entertainment analyst
Christopher Dixon in an interview. UBS recommends investors consider
broadcasting stocks, particularly Viacom (VIA, VIAB); Fox Entertainment (FOX),
Clear Channel (CCU), AOL Time Warner (AOL), and Hispanic media companies such
as Univision Communications (UVN). The call comes as a result of monitoring
advertising pacings, says Dixon, and noting that eight of top ten categories
"are pacing up, as opposed to just one of the top ten categories in January."
At the same time, UBS downgrades some newspaper stocks, such as New York Times
(NYT) and Gannett (GCI). The stocks, says Dixon, "have had nice runs, but we
also have had some concerns" about financial pressures and the migration of
classified ads to other venues. (BS)
9:34 (Dow Jones) The industrial production increases "are further evidence of
the rebounding economy and should result in increases in personal income as
businesses extend the workweek of their employees," says Bondtalk.com's Tony
Crescenzi. (MSD)
9:26 (Dow Jones) The Industrial Production data were just what the Fed was
looking for, and those that were on the fence regarding a move to a neutral
bias at next Tuesday's meeting will probably join the majority. Whether this
helps to move up bets of a rate hike is uncertain, but most can be certain
growth in the initial months of this year will indeed by strong. (MSD)
9:22 (Dow Jones) Industrial production rose by 0.4% in February, and January
was revised to up 0.2% from down 0.1%. These were the first increases since
Sept. 2000, except for July 2001 when production edged up 0.1%. These are
necessary signs of recovery and, with the rise in payrolls, suggests that
January may have been the first month of recovery, but February certainly was.
Capacity utilization rose by 0.3 percentage point to 74.8%. (JM)
9:17 (Dow Jones) Robertson Stephens looking for Disney (DIS) shares to cool
off. Firm cuts 2002 EBITA estimate and is no longer forecasting sequential
improvement in year-over-year operating income declines in 2Q. Longer term,
stock should work higher as management regains investor confidence and
demonstrates an ability to turn Disney's ship around. So, despite potential for
near-term weakness, firm keeps buy rating. DIS closed Thursday at $23.50. (TG)
9:01 (Dow Jones) WR Hambrecht still not sold on Oracle (ORCL), reiterating
its market perform rating. 3Q revenue was below firm's estimate, and Hambrecht
says Oracle's database business is facing pricing pressures, and the market for
applications sales remains tough. While growth in the company's application
server business looks to be a bright spot, Hambrecht says the product is priced
at about half of what competition IBM and BEA Systems (BEAS) are charging.
Oracle looking soft in pre-market dealings. (TG)
8:53 (Dow Jones) PPI was benign, and it didn't do much for the USD, which is
just a touch off from earlier levels. EUR is $0.8849; USD/JPY is Y128.98. (JRH)
8:48 (Dow Jones) Energy prices in the PPI were up 0.4% in February, not a
huge rise, but enough to help push overall inflation higher. It's worthy to
note that in Fed speakers' recent comments that inflation is not a problem,
they always hold out the wildcard of energy prices. (SV)
8:44 (Dow Jones) Mattel (MAT) has more top-line growth potential through
market share gains than Morgan Stanley was giving the company credit for. Firm
raises long-termsales growth view to 5% from 3% and 12-18 month price target
to $28 from $23. Given that implied return, Morgan ups shares to strong buy.
MAT closed Thursday at $18.83. (TG)
8:38 (Dow Jones) The Fed can again breathe a sigh of relief following the PPI
data, and know that if it wants to it keep rates low it can, simply because it
faces no notable inflation pressures. (MSD)
8:36 (Dow Jones) The overall PPI rose by 0.2% in February and the core was
unchanged. Energy prices rose by 0.4%, but food prices rose 1.0% led by fresh
and dried vegetables, up 22.2%. There is little sign of sustained inflationary
pressure, however, just a brief effect from crop supply shortage. (JM)
8:30 (Dow Jones) Oracle's (ORCL) 4Q outlook isn't going to give the
technology arena much help, but that's not the focus of greater Wall Street
Friday. Instead, the investment community will be taking in some other big
numbers: February PPI, capacity utilization, industrial production, and an
early March read on consumer sentiment. The struggling bond market is preparing
for some robust figures, while stock futures look flat as a pancake. A big 'no'
vote for Hewlett-Packard (HWP)/Compaq (CPQ) from the NY State retirement Fund,
and GE is thinking about spinning off its P&C insurance operations. How Wall
Street will interpret the Andersen indictment, meanwhile, is open for debate:
tougher standards may make 2002 profit-growth estimates look like a fantasy (if
they don't already), but tougher standards may also improve the quality of
numbers further down the road. (TG)
(END) DOW JONES NEWS 03-15-02
10:32 AM |
