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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (50909)	5/3/2002 12:07:06 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

HOW WALL STREET'S ANALYSTS FOOLED THE PUBLIC ON VERISIGN By JOHN CRUDELE The New York Post May 2, 2002 TO TELL THE TRUTH: New York Attorney General Eliot Spitzer, (above) and other regulators should look at trading of VeriSign and the warnings put out about the stock by Wall Street analysts. May 2, 2002 -- IT must be something in the Pellegrino. Despite already being in the cross hairs of Albany and Washington, Wall Street still has a hard time being honest. If the cops have room in the indictment, here's another scam. You've already met the analysts who do research on companies. They're the guys and girls who get paid a ton of money to tell clients that the stock of even the crappiest company is a good buy. And they'll keep recommending garbage stocks right up until the point that the companies get hauled off to the landfill. That's where the latest bit of dishonesty comes in. Even after their research is proven wrong, analysts are fooling with the facts to make it look as if they got clients out of the way of a collapsing stock. Let's use the recent case of VeriSign Inc. as an example, although people who find this practice abhorrent say this sort of thing happens all the time. On April 26, VeriSign reduced its forecast for second quarter earnings. Its stock fell an incredible $8.35 a share to $9.89. That day the company lost nearly $2 billion of its market capitalization - or about half of what it had been worth. Not surprising was that lots of analysts loved the stock before this announcement. And equally expected were the downgrades - some only minor - that came after the shocking company announcement. But here's the deceit. All the analysts who downgraded the company on the 26th used VeriSign's pre-announcement stock price in their reports, making it appear as though the report had hit the Street before the price dropped. In other words, all the analysts made it look as if they were warning clients when the stock was at $18.24, instead of after it had dropped. But in fact, none of the analysts had issued their reports until the stock had fallen. And even if a VeriSign shareholder had been able to move like lightning, the best he could have received for his shares on April 26 was $12.05. "This makes it look like the analysts got it ahead of time," says one trader who thinks the practice should be stopped. "It's a scam." Oh yeah. Among the brokerage firms downgrading VeriSign after the announcement were A.G. Edwards, Salomon Smith Barney, J.P. Morgan Chase, Merrill Lynch and Credit Suisse First Boston. * Before you get excited by the gains in the stock market on Tuesday and Wednesday, consider this. Tuesday was April 30, which was the last day of the month. That's when professional traders regularly goose the market so their clients - you and yours - will look at their monthly performance and be impressed. And yesterday is typically strong as the start of the month. Everyone say it together: Wow, we are impressed! If the rally continues, then we can all be hopeful that April's bad showing was a fluke. * It looks like Interstate Hotels can avoid a shotgun wedding. The company was the recent recipient of an unsolicited takeover offer from Shaner Hotel Corp., which began a cash tender for nearly 2.5 million Interstate shares. If successful the offer would result in Shaner owning 51 percent of Interstate. Needless to say, Interstate isn't happy. But wait. Buried deep inside a filing with the Securities & Exchange Commission, Interstate says that "in late March and in early April, Interstate received unsolicited phone calls from several parties making preliminary and informal inquiries about Interstate's interest in pursuing discussions about alternative transactions." Interstate also said it has held discussions since last summer with "a third party regarding a possible business combination." It said those talks were continuing. It's always better to have two dates to the prom, especially if you don't like the first one. * Wall Street is already getting nervous about corporate profits. Just a couple weeks ago, the experts were predicting a 30.3 percent profit jump in the third quarter of this year. Now they expect just a 27.1 percent improvement. And hopes for the fourth quarter are down from 41.5 percent to 40.3 percent. Second quarter profits are still expected to grow just under 7 percent. But that'll hardly make up for the 11.5 percent drop in earnings in the recently completed first quarter. Corporate earnings in the third and fourth quarters of 2001 were each down 21.6 percent. As this column has said before, analysts are notoriously optimistic at the beginning of every year and have to trim expectations as the year goes on. This year doesn't appear to be any different. * Please send e-mail to: jcrudele@nypost.com _____________________________________ nypost.com

To: Jim Willie CB who wrote (50909)	5/3/2002 1:50:08 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Unemployment Rate Highest in 7 1/2 Years By Glenn Somerville Friday May 3, 2002 WASHINGTON (Reuters) - The U.S. unemployment rate shot up to its highest level in more than 7-1/2 years in April, the government said on Friday, bolstering a belief that it may be some months before the Federal Reserve needs to raise interest rates. The Labor Department said 43,000 jobs were created in April but that followed a sharply revised loss of 21,000 jobs in March. The unemployment rate climbed to 6 percent in April -- its highest since a matching 6 percent in August 1994 -- from 5.7 percent in March. Analysts said the report implied the economy still was having difficulty getting traction for sustained growth after last year's downturn. While expansion in gross domestic product -- the broadest measure of economic activity -- roared ahead during the first quarter, there have been indications that factory orders were growing only slowly. "The higher-than-expected unemployment rate does confirm the fact that we've got a sort of stalling going on in the recovery and is also consistent with the fact that labor always lags in a recovery as well," said Sharon Stark, chief fixed income strategist at Legg Mason in Baltimore. "Clearly, I think even August might be a stretch now for a rate hike," she added. REVISIONS ARE BLEAK Wall Street economists had forecast that 41,000 jobs would be created in April and that the unemployment rate would edge up to 5.8 percent. But revised government figures show jobs were lost in each of the first three months this year -- 109,000 in January, 4,000 in February and 21,000 in March -- in a suggestion that a pickup in the labor market may lag other improving economic sectors for some time. The Fed's policysetting Federal Open Market Committee is expected to take soft job markets into consideration when it meets to consider interest-rate strategy next Tuesday, and to decide to keep rates steady at current 40-year lows until there are firmer indications of a sustained economic recovery. Bond prices initially jumped on the jobs report, taking it as confirmation that steady rates lay ahead for some time, but gave up some of the gains later. The dollar's value slipped as traders once again weighed prospects that a U.S. recovery may not be as robust as the first-quarter GDP figures had implied. Stocks opened slightly softer on the weak data. Robert Macintosh, an economist with Eaton Vance Management Inc. in Boston, said the April jobs number was weak and meant U.S. central bank policymakers should be on hold at next week's FOMC gathering and perhaps much longer. "The Fed should do nothing. I don't think there is any impetus for the Federal Reserve to raise rates now," Macintosh said. "The economy right now is just barely moving forward, and that's not an environment for the Fed to raise rates. I don't expect rates to rise this year."