Tag - Pjc

After a brief pull back after the opening, small caps staged a welcome upward trajectory, breaking this week’s red streak as better-than-expected earnings from Wells Fargo (NYSE:WFC), the SEC’s initiation to taper the shorting the financial sector has experienced year-to-date and deflating crude served to lift the market.
 
At 1:51 p.m. ET, the Russell 2000 (NYSE:IWM) was up 14.65, or 2.21%, at 677, while the Dow is up 153.96, or 1.4%, at 11,116.50.

Federal Reserve Chairman Ben Bernanke was back on Capitol Hill for day two of his six-month economic progress report. Following a Q&A session in front of the Senate on Tuesday, the Fed Chair told the House a similar version. In testimony in front of the House, Bernanki told regulators that the central bank aims to attain price stability, as inflation in the United States “is too high.”

“Bernanke is stuck between a rock and a hard place right now regarding the economy,” said Bill Greiner, chief investment officer for UMB Asset Management and UMB Bank, and chief economist for Scout Investment Advisors. “The Fed’s priority has been trying to maintain stability in the financial system this year. The collateral damage of that focus now is that they’re going to try to keep the system liquid and not pay strict attention to what’s going on in the inflation world … I think they will be [hawkish] into 2009. They started jawboning about six weeks ago — trying to talk interest rates up, talking about the idea of tightening money supply by increasing interest rates some time in the not so distant future. But then Fannie Mae and Freddie Mac happened.”

As the Fed Chair again addressed slower growth coupled with inflationary pressures that confront the economy, his comments proved timely in the face of troubling consumer price index data.

The headline figure for CPI clocked in at plus 1.1%, which was the largest monthly advance in 26 years. What’s more, the year-over-year increase was at a whopping 5%, which is the largest rise in consumer prices since 1991. Today’s CPI figure, which was in line with the forecast, came on the heels of Tuesday’s unsettling PPI report.

“We’re starting to see signs that headline inflation—and what’s been driving headline inflation on the upside (i.e. transportation costs and food costs) are starting to bleed into other areas of the economy,” Greiner said. “We’re starting to see some serious contagion with energy and commodity price inflation into other segments in the economy. Now I don’t think it’s gotten to a point where we’ll see wage-price spiral inflation. [However,]…if we’re starting to see labor costs move up dramatically in relation to productivity gains then I think we have a much more serious problem on our hands than we do today.”

Piper Jaffray Companies (NYSE:PJC) CEO Andrew Duff said the Minneapolis, Minn.-based investment bank continues to hold a cautious view on the first half of 2008. Duff made the comments during a morning conference call.

“Our outlook has not changed. We believe the weakness in the first quarter activity levels will carry through the second quarter,” Duff said. “That said, we remain focused on our long-term strategy and growth objectives.”

The chief executive said Piper Jaffray intends to benefit from the market turmoil

“We also intend to seize opportunities presented by the market downturn, including selectively hiring talent to enhance our franchise that can place us in an even stronger competitive position when the conditions turn more favorable,” Duff said.

In response to an analyst’s question about bringing in new hires, Duff said the current market environment can be particularly favorable because prospective employees can be hired under uncharacteristic terms. While Piper has hired new talent in its telecom, media and biotech segments, Duff said the firm has fired employees involved in . . .

Small caps are poised for a higher opening this morning, riding a wave that kicked off after Tuesday’s close when the market embraced earnings news from giant chip maker Intel Corporation (Nasdaq:INTC). The Russell pushed up about 0.70% overnight on the news, and appeared to hold onto those gains through this morning’s CPI and Housing Starts reports, with the iShares Russell Trust up about 0.80% (NYSE:IWM) heading into the open.

The market still must navigate through Industrial Production data, which comes out at 9:15 a.m. ET. In addition, later today Federal Reserve official Janet Yellen will speak about the economic picture at 11:45 a.m. ET, and the Beige Book comes out at 2:00 p.m. ET.

From a chart perspective, the Russell 2000 Index should open into or even through resistance in the 695 zone, and the next . . .

We have a week with no IPOs on the calendar. China Resources Ltd., a SPAC, is listed as pricing during the week of March 31, but was originally supposed to price in February. Because more deals have been pulled than priced this month, let's examine which companies walked away from the public markets — at least for the time being.

MonoSol Rx (www.monosolrx.com, IPO withdrawn March 27)

MonoSol Rx develops thin-film products used for drug delivery. The finished product is similar to the different breath-freshening, cough and cold strips out on the market; in fact, MonoSol makes some of those. Unlike the breath strips, where the taste is the whole point, MonoSol’s film technology encapsulates the drug to mask the taste. This is a huge advantage for foul medications that uncooperative patients have to take by mouth. Two products in development target nausea and Alzheimer’s disease. MonoSol isn’t profitable, though. For the first six months of 2007, it lost $7.6 million on $2.2 million in revenue. The company had planned to offer 4 million shares at a price range of $16 to $18 per share through Cowen & Company.

LifeWatch (www.lifewatchinc.com, IPO withdrawn March 21)

LifeWatch is profitable, but that’s not enough to generate interest these days. The company provides remote cardiac monitoring services. A doctor instructs a patient to wear a monitor to detect cardiac arrhythmias. The data are transmitted via phone to LifeWatch’s call centers, which collect the information to report back to the physician. If a major problem is detected, a LifeWatch rep will call the patient and tell him or her to get medical care. The company is owned by Card Guard AG, a manufacturer of . . .

The Russell 2000 (NYSE:IWM) and the other major U.S. indices are posting bold gains as investors look forward to the pending decision on interest rates.

At 11:47 a.m. ET, the small-cap index had advanced 18.68 points, or 2.87%, to 669.16. The Dow Jones Industrial Average (INDU) was up 285.35 points, or 2.38%, to 12,257.60.

The bulls are on a stampede following news of better-than-expected earnings at major investment banks and speculation of a major cut in the target federal funds rate. The U.S. Federal Reserve is holding its regularly scheduled policy meeting today, with a decision expected at about 2:15 p.m. ET.

The market is pricing a full 1% cut that will lower the federal funds rate, the rate at which commercial banks make overnight loans to each other, to 2% from the current 3%.

In economic news, the U.S. Labor Department reported before the opening that producer prices, the selling prices received by domestic producers for their output, climbed an expected 0.3% in February. However, core producer prices, which exclude the costs of food and energy, rose 0.5%, above the projected 0.4%.

The Russell 2000 (NYSE: IWM) posted a big loss as news of liquidity problems at Bear Stearns spread credit fears. The small-cap index fell 16.81 points, or 2.47%, to 662.90. The Dow Jones Industrial Average (INDU) declined 194.65 points, or 1.60%, to 11,951.09.

On a year-to-date basis, the Russell 2000 has lost13.46%, while the Dow is down 9.90% and the S&P 500 has retreated 12.27%.

Stocks small and large tumbled today on news that Bear Stearns’ (NYSE: BSC) cash position has deteriorated significantly over the past 24 hours. The investment bank, which has been highly exposed to the subprime mortgage sector, turned to J.P. Morgan Chase & Co. (NYSE: JPM) and the New York Federal Reserve for short-term financing to alleviate its liquidity problems.

There’s speculation that Bear Stearns will soon be purchased by one of its larger rivals. News of the company’s problems spread fears of a severe credit squeeze, leading to a sharp sell-off.