Stocks Continue Churning, Nasdaq Underperforms
THE WEEK JUST PAST FEATURED 300 companies reporting results, two congressional visits by Alan Greenspan and several noteworthy economic releases. But judging by the main stock indexes, the market was bored near to inaction by the blur of headlines.
The market sits right in the middle of a compressed trading range that has contained stocks for more than six weeks. Having rushed to anticipate stronger economic and corporate performance with its energetic surge in the spring, the market has settled into a churning pattern.
A late-afternoon levitation act by the indexes on Friday left the Dow Jones Industrials a scant 68 points higher on the week, at 9188. The Standard & Poor's 500 slipped four points to 993, near the mid-point of the range that's bound it since June 4, spanning from 962 to 1015. The week's high point for the benchmark came midday Monday, when the S&P bumped against the 1015 level for the third time in a month, failing again to overcome it.
For the first time in weeks, the Nasdaq sharply underperformed the overall market, dropping 25 points, or 1.5%, to 1708. Big Board-listed IBM and Nokia disappointed Wall Street with their earnings results and outlooks, which emboldened sellers. And faintly encouraging words from Intel and Microsoft weren't enough to stem the negative tide.
The inability of stocks to catch any wind in their sails from broadly positive profit trends is, at minimum, a sign of buyer's fatigue. According to Thomson First Call, second-quarter earnings- growth expectations rose to 7% from 5% a week ago, and forecasts for the third quarter have nudged above 13% from 12.6%.
It remains early in the reporting season. And last week's heavy helping of bank and brokerage-stock earnings, which benefited from frenzied mortgage demand and the firmer capital markets, provided a disproportionate boost to consensus forecasts.
Even the auto sector is reaping rewards from the housing boom -- General Motors derived more than 80% of its quarterly earnings from its finance arm, which made half its money from home loans. GM will finance your car at 0%, but if you want a house and garage with it, the interest rates turn positive.
Those caveats duly noted, the firming of third-quarter numbers is a welcome departure from the previous two years, when second-half profit forecasts began tumbling in the summer months.
The question is whether investors will continue to use the solid fundamental news as an occasion to sell some winners. Next week's slate of earnings, which will include reports from 166 members of the S&P 500 and nearly a third of the largest 1,500 stocks in the market, will clearly test the strength of investors' hands.
With corporate news in focus, inter-market action might have occupied only the traders' peripheral vision. But that doesn't diminish its potential importance. Treasury bonds sold off sharply on perceptions that Greenspan's Federal Reserve would not be buying bonds outright as some had bet, boosting the 10-year Treasury yield above 4% for part of the week.
Decent economic data -- such as slightly higher industrial production, lower unemployment claims and a stronger Philadelphia Fed manufacturing index -- also chewed away at bond traders' nerve. It's worth noting that since the 10-year yield bottomed at 3.08% on June 13, the stock market has gone almost nowhere.
The last time the S&P 500 drifted in such a tight range for as long as this current stretch was during February and early March. The tense pre-war calm back then was broken by a wholesale selloff toward the old October lows, followed by the V-shaped reversal that evolved into the rally that has now leveled off. There's no telling whether the tedium will rupture again soon, though last July saw placidity quickly turn into a nasty selloff.
One emerging pattern in the market's favor is that it's not moving in unison across all sectors, the way it was early this year. In fact, tentative signs of money rotating from sector to sector arose last week.
Traditional industrial cyclicals, for example, took a leadership role away from technology and financial issues. Caterpillar mightily beat earnings forecasts and added a confident outlook, catching investors off guard. Cat shares jumped 8.23, or 14%, to 65.61. Taking a broader view, the Morgan Stanley Cyclical Index rose 2.1% on the week.
That's not the sort of move that puts much of a dent in the tech sector's huge performance lead, but it bears watching.
NO, DESPITE WHAT MANY FRUSTRATED BEARS will tell you, it's not like 1999 all over again. Even though the Nasdaq is beating the Dow this year by a factor of 4 to 1, and even though speculative stocks have been outrunning low-risk ones, today's environment doesn't qualify as a bubble redux.
Back then, the leaders were triple-digit stocks soaring toward infinity on outlandish perpetual-growth forecasts. Today, single-digit stocks emerging from the shadows of bankruptcy are in front.
These stumpy stocks have traded like call options, as the corporate-bond market has strengthened and assured that many strapped companies might live, if not prosper. That could well be a problem some day for an economy with too much capacity, but for the moment the thrill of the reprieve trumps the likelihood of recidivism.
In '99, the Nasdaq made new all-time highs on almost every week. After the latest surge, the Nasdaq has recouped just 15% of what the index lost from the 2000 market top to the October low. Back then, overconfidence and greed gripped investors, while today hard-won skepticism is still evident in the short selling and options statistics.
This isn't to say the fundamental underpinnings of Nasdaq's tech tenants are all that strong. Or that a dangerous level of euphoria couldn't soon develop.
Though semiconductor production has sped up, possibly helping Nasdaq 100 earnings to reach the prevailing forecasts of 46% growth in 2003, those 100 stocks still trade at 37 times those optimistically projected operating profits. Low-priced maybe, but certainly not cheap.
But while valuation always matters eventually, it doesn't hold investors' attention at all times. And the history of past asset bubbles shows that "it's not completely unusual for equities to rebound sharply" after a bubble deflation, says Bear Stearns strategist Francois Trahan .
Mapping the course of burst bubbles past (see the nearby chart), Trahan shows that the Nasdaq is tracking the typical trajectory remarkably well. If it continues to levitate along that path it could tickle the 2000 mark late this year -- and then be lower two years later.
For the market as a whole, Trahan suggests that it's less like 1999 and more like 1975. After the '73-'74 bear market bottomed in early October 1974, the S&P sprang higher in the ensuing months, and in calendar-year 1975 the index gained 28%. That represented an overshot, to say the least. The index then traded roughly sideways for more than six years.
CITIGROUP OBLIGED A MARKET HUNGRY for yield last week, announcing a 75% dividend boost. That lifted the yield on its shares above 3%, and some analysts believe the dividend could rise further if Citi decides to match the earnings-payout ratios of other big banks.
The sweetened income stream is now one of the few things investors can know, touch and feel after a busy week for the company, in which Sandy Weill abdicated the CEO throne for a nonexecutive chairmanship until 2006. Insiders Chuck Prince, as CEO, and Robert Willumstad, as operating chief, were anointed, though they remain lesser-known quantities on Wall Street. Citi's earnings also arrived above expectations, and the company won the auction for Sears' credit-card business, as Weill's press clippings pile up during his final flourish.
LIBERTY MEDIA SHARES CHRONICALLY trade below the value of the company's assets, many of which are stakes in other public companies. Liberty also has unique cable programming businesses and interests in international broadband and satellite operations.
There's a neither-fish-nor-fowl problem presented by Liberty Media that weighs on its valuation. Investors who like the portfolio of public media holdings -- including News Corp., AOL Time Warner, Sprint PCS and XM Satellite Radio -- figure they can buy them a la carte, on their own. Those interested in the operating businesses get a collection of other securities they may not want. The public stakes alone are worth nearly $28 billion, just under Liberty's $30 billion equity-market value.
Liberty Chairman John Malone has stated his interest in simplifying the corporate structure and making it more of an operating concern and less a holding company.
Robert Routh, media analyst at Natexis Bleichroeder, has proposed a strategy by which Liberty could achieve exactly that through a series of transactions. And the analyst believes the company is thinking along the same lines.
Routh posits that Liberty could buy in the 25% of UnitedGlobalCom that it doesn't yet own. UnitedGlobalCom houses international broadband assets, which he believes have been assigned virtually no value by the market right now.
Once UGC is brought inside Liberty, Routh thinks Liberty would cleave itself in two, with one unit housing international operations and the other the domestic programming businesses. The latter include Discovery Communications, Starz/Encore, Court TV, Liberty Satellite and the soon-to-be-acquired QVC.
Then shareholders would be able to exchange Liberty shares for new stock in the international unit, if they wished. Malone used a similar technique to separate a unit from his old Tele-Communications cable company.
This would simplify the company, allow Liberty to shrink its equity base and offer investors targeted interests in the two discrete units. Theory and experience suggest that this would reduce the discount assigned to Liberty shares.
The complicating element in this hypothetical simplification plan is Liberty's continued interest in buying the Universal entertainment assets now being auctioned by Vivendi Universal. Vivendi turned away Liberty's request for exclusive negotiations, then rejected MGM's $11.5 billion offer. Vivendi is being aggressive in seeking a healthy price for the Universal studio, cable channels and theme parks. That could mean the "winner's curse" might be visited on the prevailing bidder.
Routh believes the Universal movie and theme-park businesses would inject an unwelcome capital-intensive, hit-driven aspect to Liberty's business, though Universal's USA and Sci-Fi networks are an attractive fit.
Until the Vivendi auction is finished, the concern about what Liberty might pay will no doubt hamper the stock's progress. But if Malone resists buying Universal, then he can pursue his professed goal of rationalizing his company and lifting its quote from Friday's 11.25, and closer to Routh's fair-value calculation of 16.
A LAST-MINUTE TIMEOUT WAS CALLED in the contest pitting some Clayton Homes shareholders against Warren Buffett's Berkshire Hathaway.
Clayton shareholders were scheduled to vote Wednesday on whether to approve selling the company to Berkshire for $12.50 a share. As detailed here in recent weeks, several investment firms insist that's a lowball price, and on July 10 distressed-investment fund Cerberus approached Clayton about a possible alternative bid.
Late Wednesday, the shareholder meeting was adjourned for two weeks, so other possible acquirers have time to evaluate their options. Berkshire flatly stated it wouldn't raise its offer. Clayton shares have continued to trade above the deal price, and are hovering around 13. The speculators and arbitragers seem to be willing to accept 50 cents of maximum downside for the chance that either another buyer pays more or the Berkshire deal is called off and the stock rises on its own.
股市继续剧烈波动那斯达克表现逊色
在刚刚过去的一周，有300家公司公布业绩、格林斯潘(Alan Greenspan)两度造访国会、美国还公布了一些值得人们关注的经济数据。但从大盘股指的走势来看，这些消息并未对市场产生太大影响。
市场已连续6周在一个窄幅区间内波动，目前处于该区间的中段。今年春天，因人们很快就认定经济和公司业绩将有所好转，股市展开一轮强势升势，到现在已进入剧烈波动阶段。
上周五后市尾盘的上涨使道琼斯工业股票平均价格指数一周累计上涨68点，收至9188点。标准普尔500指数下滑4点，至993点，接近6月4日以来所形成的波动区间962点至1015点的中段。该指数的一周最高点1015点出现在上周一，这是该指数一个月内第三次达到这个点位，但随后又告下跌。
几周以来，那斯达克综合指数的表现首次大幅逊于大盘，上周累计下跌25点，跌幅1.5%，收于1708点。在纽约证交所上市的国际商业机器公司(IBM)和诺基亚(Nokia)公布的业绩和预期都令人失望，导致卖盘踊跃。英特尔(Intel)和微软(Microsoft)虽有令人振奋之辞，但其力之微仍不足以逆转跌势。
尽管公司业绩普遍看来呈向好态势，但市场却没有因此而上涨，这就说明多方已露败迹。根据Thomson First Call的调查，对第二财政季度利润增长率预期已从一周前的5%升至7%，第三财政季度利润增长率预期从12.6%微幅增加至13%。
现在还没有达到收益季节的高峰期。受抵押贷款需求旺盛以及资本市场走强影响，银行和券商上周公布的业绩都不错，提振了市场对公司业绩的普遍预期。
就连汽车类股也沾了抵押贷款的光。通用汽车(General Motors)季度利润的80%多都源于其金融子公司，而后者二分之一的盈利取自房屋贷款。当你为购买汽车融资时，通用汽车为你提供零息贷款；但你想购买一处带车库的房产，那贷款利率可就不会是零了。
当投资者对下半年公司业绩的预期在炎炎夏日中开始下滑的时候，良好的第三季度业绩可预示公司已摆脱前两年的疲软，这当然是件好事。
但问题是投资者会不会利用基本面传出好消息时借机抛售一些已获利个股。标准普尔500指数的166个成分股本周会公布业绩，股市最大的1500家公司中也有将近三分之一的公司定于本周公布业绩，这显然能够考验出投资者是否会抛售股票。
由于公司消息牵扯了人们的主要精力，交易员只能捎带关注一下各个市场间的变动。但这并不代表它们不重要。因预计美国联邦储备委员会(Federal Reserve)可能不会如有些人的预期那样直接买入国债，国债遭到大举抛售，10年期国债的收益率上周有一段时间都在4%以上。
一些表现尚可的经济数据也促使国债走低。工业产值微幅增长、失业申请人数下降以及费城联邦储备银行商业景气指数上升等─值得关注的是，自从10年期国债收益率在6月13日达到3.08%的低点后，股市几乎毫无建树。
标准普尔500指数上一次出现这样长时间区间波动是在2月至3月初。当时，战争迫近的紧张气氛包围了市场，是汹涌的抛盘后来打破了市场的平静，使股指直逼去年10月创出的低点。随后，市场又出现V型反转，一路上扬，直到现在才出现高位盘整。谁也不知道这种沉闷的状态是否会在不久就能有突破。去年7月份也有类似的平静，之后大量的抛盘使市场迅速下挫。
市场人士希望看到的是，所有类股不要保持同样的走势，就像年初时那样。事实上，从上周开始，已经有资金在类股之间穿梭的迹象。
比如说，传统的工业周期股在上周就抢走了科技类股和金融类股的风头。卡特彼勒(Caterpillar)的收益大幅超出预期，公司对前途充满信心，大大出乎投资者的意料。其股价飙升8.23美元，收至65.61美元，涨幅14%。摩根士丹利周期类股指数(Morgan Stanley Cyclical Index)上周上涨2.1%。
虽然周期类股目前的走势还不足以撼动科技类股涨幅遥遥领先的态势，但也应当引起人们的关注。
不管那些持悲观态度的人怎样说，你都要相信，目前的走势和1999年是完全不同的。虽然那斯达克综合指数今年的表现远远超出道琼斯指数，虽然投机类股票的表现超过那些风险较低的股票，但今天的形势还谈不上是又出现了股市泡沫。
回想当时，领涨的都是股价超过100美元的股票，人们发疯似的认为它们有无穷的成长空间，股价上升似乎也没有到顶的时候。而时至今日，那些股价不超过10美元的股票已经走出了破产阴影，走在了市场的前列。
投资者对待这些股票就像买入看涨期权，因为随著公司债券市场的繁荣，很多境遇不佳的公司就算是繁荣不了，至少也可以生存下去。但对于美国这样一个产能过剩的国家来说，这迟早有一天会出现问题。不过，目前这些公司暂时缓解的希望要大于再度身陷苦难的可能。 在1999年，那斯达克综合指数几乎每周都在刷新历史高点。但近期的上扬仅使该指数反弹了（从去年10月低点到2000年高点的）15%。当时的人们过于自信和贪婪，而现如今，从短线抛盘到期权交易数据都可以看出投资者所具有的、得来不易的批判态度。
这并不是说，在那斯达克上市的所有科技公司的基本面都很好。或者说，短期内还不会出现股票普涨的危险局面。
半导体类股的加速上涨可能使那斯达克100指数今年的收益率达到人们普遍预计的46%，目前这100只股票以较为乐观的经营利润预期来计算的本益比为37倍。它们的价格可能还较低，但可并不等于便宜。
尽管价格最终要由价值来决定，但投资者的注意力并不是一直都放在股票价值上。贝尔斯登(Bear Stearns)策略师弗朗希斯．特拉恩(Francois Trahan)说，分析历史上几次出现市场泡沫的情况，股市大幅反弹并不总是反常的。
特拉恩说，观察以前的市场泡沫从形成到破裂的过程不难看出，那斯达克指数的走势显然是沿著一定的轨迹发展的。如果目前的涨势继续下去，那它将在今年晚些时候达到2000年的高点，随后的两年将不断走低。
特拉恩说，市场目前的整体走势与1999年不同，但与1975年有几分相似。在73-74年的熊市于1974年10月初触底后，标准普尔指数在随后的几个月大幅上涨，并在1975年上涨了28%。这就出现了过度反弹的情况，后来该指数经过了长达6年多的震荡盘整的过程。
花旗集团(Citigroup)上周宣布将派息额提高75%，大大满足了投资者的胃口，这使该股的投资收益率超过了3%。一些分析师认为，如果花旗集团想与其他同类大银行保持相同的派息水平，那该公司可能还会进一步提高派息。
Liberty Media股价长期低于公司的资产价值。该公司持有很多其他上市的公司的股权。Liberty的有线电视内容制作业务是独一无二的，它还拥有在国际宽带和卫星领域的权益。
因Clayton Homes股东有反对意见以及可能有竞争性出价出现，针对巴菲特(Warren Buffett)旗下的Berkshire Hathaway收购Clayton Homes的股东表决会议在最后时刻被推迟举行。
