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To: H James Morris who wrote (51963)	5/23/2002 2:10:13 PM
From: stockman_scott	Respond to of 65232

<<..."The economy is rebounding and we are likely to see surprises on the upside rather than on the downside as was the case today," said Sung Won Sohn, chief economist at Wells Fargo...>> Economy Back on Firmer Footing - Reports By Anna Willard Thursday May 23, 1:45 pm Eastern Time WASHINGTON (Reuters) - Worries about a double-dip U.S. recession faded on Thursday as two government reports showed businesses splurging on new equipment in April while fewer workers signed up for unemployment benefits last week. The Commerce Department said new orders for durable goods shot past expectations last month, boosted by a surge in demand for autos and solid gains in computer equipment and machinery. Meanwhile, the number of Americans lining up for the first time to claim state jobless benefits fell in the latest week. "The economy is rebounding and we are likely to see surprises on the upside rather than on the downside as was the case today," said Sung Won Sohn, chief economist at Wells Fargo. The battered dollar firmed against other currencies following the reports while U.S. Treasuries initially added to losses, then turned firmer later in the session on a flight to safety as investors fretted about new terror threats. Those worries beset stock markets as well with both the blue-chip Dow Jones industrial average and the technology-heavy Nasdaq composite losing ground in early afternoon trade. While analysts welcomed the data, they said the news is unlikely to have any near-term impact on Federal Reserve policymaking. They said the Fed is likely to focus more on the next employment report, due on June 7, for evidence the labor market is improving. U.S. central bank policymakers next meet to set interest rates on June 25 and 26. Commerce said U.S. durable goods climbed 1.1 percent, beating analyst expectations for a 0.4 percent increase. Leading the charge was the biggest gain in auto orders -- 12.0 percent -- in more than three years. In a sign that businesses are starting to invest again after the recession that began last March, orders of computer and electronic products climbed 2.5 percent, the sharpest gain since last October. Machinery orders were up 4.0 percent. REVIVAL REQUIRES FIRMS TO SPEND Business spending has been highlighted by Federal Reserve Chairman Alan Greenspan as key to a sustained U.S. recovery and the report adds weight to the central bank chief's comments in April that a revival in this area was beginning. "The durable goods orders put another nail into the coffin for people who are worried about a double dip," said Carey Leahy, senior U.S. economist at Deutsche Bank Securities in New York. "You're starting to see positive numbers for capital equipment spending and if the ISM orders and overall figures are correct, these numbers will continue to strengthen." There was good news as well from the Labor Department which said jobless claims for the May 18 week fell 9,000 to 416,000. While the drop was not as big as Wall Street expectations for a fall to 412,000, analysts said it was a step in the right direction. "The initial claims decline, while it is volatile on a week-to-week basis, (shows) the labor market is clearly improving even though the strength is not as it should be," said Sohn. ROSIER ECONOMIC NEWS These pieces of data are the latest in a series spelling good news from the world's most important economy. April's retail sales report, out last Tuesday, showed consumers hitting stores and new car showrooms in droves. Sales rose an unexpectedly strong 1.2 percent with auto sales up 1.9 percent. And industrial production for the same month, reflecting a pickup in auto production, climbed 0.4 percent -- the fourth straight monthly increase -- in a sign the hard-hit manufacturing sector is regaining its feet. Amid the optimism, some economists offered a word of caution, however. Oscar Gonzalez, an economist at John Hancock Financial Services, said the economy is not yet on solid ground. "It's like we're struggling up a sand dune rather than running straight uphill." He noted that the durable goods number is often volatile and that jobless claims remain above the key 400,000 mark which analysts say can suggest the labor market is still unhealthy.

To: H James Morris who wrote (51963)	5/23/2002 6:09:25 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

eToys Accuses Goldman of Mispricing Its IPO By Rebecca Byrne Staff Reporter TheStreet.com 05/23/2002 04:30 PM EDT eToys, the Internet toy seller that went bankrupt early last year, claims it got low-balled on its IPO by Goldman Sachs (GS:NYSE - news - commentary - research - analysis) and is suing the bank over the money it left on the table. eToys, now called EBCI Inc., said it incurred "hundreds of millions of dollars in damages and eventually had to declare bankruptcy as a result of Goldman Sachs' illegal conduct in underpricing the IPO and in receiving kickbacks." It's alleging breach of fiduciary duty, among other things. On Goldman Sachs' recommendation, the IPO was priced at $20 a share, which eToys said was substantially lower than market conditions warranted given the high demand for its shares. The company alleges that Goldman, which was the lead underwriter on the deal, deliberately underpriced the shares because it had entered into unlawful arrangements with its customers, who gave kickbacks to Goldman when the shares soared in the aftermarket. On the first day of trading, more than 13 million shares changed hands, with prices reaching more than $85 a share, or more than four times the IPO price set by Goldman. The stock closed at $76.56 on its Nasdaq debut on May 20, 1999. Shares now trade on the pink sheets at less than a penny a share. A spokesman for Goldman Sachs said the company does not comment on legal matters. Scores of investors have filed lawsuits against investment banks for their handling of IPOs, and the Securities and Exchange Commission is also trying to determine whether four Wall Street firms -- Goldman Sachs, the Robertson Stephens unit of FleetBoston (FBF:NYSE - news - commentary - research - analysis), the securities unit of J.P. Morgan Chase (JPM:NYSE - news - commentary - research - analysis) and Morgan Stanley (MWD:NYSE - news - commentary - research - analysis) -- required clients who bought hot IPOs to buy additional shares to pump up the price once the stock began trading, according to The Wall Street Journal. "There've been a lot of lawsuits against [brokers] , but this is really the first company saying it's not happy with the offering and that it thinks it was mishandled," said Kyle Huske, a market analyst at IPO.com. "There are so many other companies that could follow." Huske said there was speculation in the late 1990s about whether stocks were being priced appropriately and whether some of the money that was being made should have gone to the companies. The fact that eToys has waited until now to file a lawsuit may be a reflection of the general backlash against brokers for the way they handled stocks during the boom. Huske also noted that brokers are more likely to settle such allegations out of court now, given that many of them are also under investigation by the New York State attorney general for conflicts of interest. While eToys may have opened the door for other companies to file suit as well, Huske noted that many of the companies that might think they have claims probably don't have the funds to sue. "So many of them have now gone out of business, who has the means?" she said.