CAPITAL: Is Wall Street Overaggressive In Bond Pricing? Series: 1

“You’ve got a negative market on the one hand, anxious banks on another, and investment banks who are anxious for business,” said a treasury official at one regional bank. “There’s a certain amount of pain that’s going to be shared by everybody.” If banks “have a lot of paper to do, they can’t push the market too hard,” said Matthew J. Grayson, a vice president at Salomon Brothers Inc. “But some people let the investment banks bid themselves down to loss levels.” “There is an industry factor that goes into spreads,” he said, noting that the spread relative to Treasuries on his own bank’s bond issue has widened about 30 basis points. “The various concerns that may be out there for industry credit quality is affecting spreads as well as stock prices.”
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KELLEY HOLLAND

Full text: [American Banker (pre-1997 Fulltext)] Aug 29, 1990

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Leading Index Was Unchanged During July — Data Confirm the Economy Was Weak Even Before The Persian Gulf Crisis

The government’s principal economic forecasting index was flat in July, another sign that the economy was precarious even before turmoil in the Middle East jarred American consumers and businesses. The flat reading of the index of leading indicators, a collection of 11 sets of economic statistics that are supposed to foreshadow economic activity six to nine months in advance, followed a 0.1% rise in June and a 0.6% increase in May. Those figures marked slight revisions from last month when, based on preliminary data, the department calculated that the index was unchanged in June and rose 0.7% in May. Only three of the 11 indicators made positive contributions to the index last month: orders for new plant and equipment, raw materials prices and an index of consumer confidence all rose. The other eight — including stock prices, unemployment claims, factory orders and building permits — held the index down.
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By Hilary Stout

Full text: [Wall Street Journal] Aug 30, 1990

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Industrials Gain 17.58 on Decline in Oil, Prospect of Mideast Solution

Another sharp drop in oil prices and heightened optimism about the prospects for a peaceful resolution of the Persian Gulf crisis pushed stock prices up Aug 29, 1990. The Dow Jones Industrial Index closed 17.58 points higher at 2632.43.
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Wilson, David

Full text: [Wall Street Journal] Aug 30, 1990

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Industrials Gain 17.58 on Decline In Oil, Prospect of Mideast Solution

Another steep decline in crude-oil prices and heightened optimism about the prospects for a peaceful resolution of the Mideast conflict sent stock prices higher, but trading remained light. The Dow Jones Industrial Average climbed 17.58 to 2632.43 amid reports pointing toward a more conciliatory position by Iraq and news that most members of the Organization of Petroleum Exporting Countries had agreed to permit increased oil production. Advancing issues outnumbered decliners by 972 to 508 on the New York exchange. Among broader market indexes, Standard & Poor’s 500-Stock Index gained 2.85 to 324.19, the New York Stock Exchange Composite Index rose 1.52 to 177.78 and the Dow Jones Equity Market Index added 2.46 to 300.13.
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By David Wilson

Full text: [Wall Street Journal] Aug 30, 1990

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Bond Prices, Stocks Gain as Oil Falls

As oil prices fell Aug 29, 1990 because of OPEC’s decision to boost production, investors bid bond and stock prices higher. The Dow Jones Industrial Average closed at 2632.43, up 17.58 points.
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Winans, Christopher

Full text: [Wall Street Journal] Aug 30, 1990

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Bond Prices, Stocks Gain As Oil Falls — OPEC Output Boost Sends Dow Up 17.58; Dollar Ends Mixed

Investors bid bond and stock prices higher as oil prices tumbled on news that OPEC agreed to boost output. Also, market-buoying rumors circulated that Iraq had a plan for leaving Kuwait. The October futures contract for light crude oil fell $1.96 to $25.92, the lowest level in nearly three weeks. The Dow Jones Industrial Average, which stayed in a narrow range early in the session, gained 17.58 points to 2632.43 in sluggish trading. Long-term Treasury bond prices added 1 1/4 points, or $12.50 for each $1,000 face amount, also in light activity. The dollar ended mixed in an equally quiet currency market, with traders slimming their holdings in advance of the long weekend and U.S. economic data due out next week.
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By Christopher Winans

Full text: [Wall Street Journal] Aug 30, 1990

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Profit news sinks health firm’s stock

“We have experienced an approximate 150 percent increase in commitments to review worker’s compensation claims from our customers over the past 60 days, providing the highest backlog level from this area of our business in the company’s history,” he said. Pharmacy Management issued stock over the counter in April at $12 a share. It later climbed to $18 a share, but then an analyst’s negative report on controversy surrounding one of its back-pain treatments helped depress the stock price. A slumping market didn’t help, [Cecil S. Harrell] said. For the first nine months of fiscal 1990, ended April 30, the company’s sales were $39.17-million, a 66 percent increase from the previous year’s nine-month sales. Earnings for the first nine months of fiscal 1990 were $1.13-million, more than double the previous fiscal year’s nine-month earnings.
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DENISE L. AMOS

Full text: [St. Petersburg Times] Aug 30, 1990

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Key economic indicators stuck // Analysts say July data show recession trend before gulf crisis

Daryl Delano of Cahners Economics in Newton, Mass., said stock prices had continued to decline since the Iraqi invasion and, noting lackluster home sales, said building permits would remain a negative in the August report. One of the July components, orders for consumer goods, was unchanged. “Initial reports . . . indicate that the consumer’s first reaction to the Iraqi invasion was near panic,” said economist Mark Zandi of Regional Financial Associates in West Chester, Pa. Consumer spending represents two-thirds of the nation’s economic activity, and economists worry that a substantial cutback could halt economic growth and push the nation into recession.
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Full text: [Star Tribune] Aug 30, 1990

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Key Economic Index Stalled Last Month

“”Essentially, it’s another indication of a slumping economy,” said David Jones, an economist with Au- brey G. Lanston & Co., a New York securities company. “”In all likelihood, it’ll be down sharply next month,” reflecting the oil price shock and uncertainty caused by the August 2 Iraqi invasion of Kuwait. Gordon Richards, an economist with the National Association of Manufacturers, said that while the July figures don’t point to a recession, “”the sharp rise in world oil prices has made a downturn almost inevitable.” Three successive declines in the index have often – but not always – signaled a recession in the past. Daryl Delano of Cahners Economics in Newton, Mass., said stock prices had continued to decline since the Iraqi invasion and, noting lackluster home sales, said building permits would remain a negative in the August report.
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Full text: [San Francisco Chronicle (pre-1997 Fulltext)] Aug 30, 1990

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Dow off 39 as oil prices, Mideast raise fears anew

Stock prices closed sharply lower today as investors fled the market, wary of developments in the Persian Gulf and the inflationary implications of a renewed jump in oil prices. Home Shopping Network followed, up sharply. Wal-Mart was third, down sharply as retailers were weak amid fears of an imminent recession. Among the blue chips, General Electric and Philip Morris were lower in active trading. AT&T was down. IBM tumbled after announcing price hikes on some of its hardware and software products as of Jan. 1. American Express, Merck General Motors and Coca-Cola fell.
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Full text: [San Diego Tribune] Aug 30, 1990

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Market Place; A Short, Sad Tale Of In-Store Inc.

In the profit announcement, Mr. [Robert Polansky] said the company was facing what he described as ”a slowdown of advertisers’ commitments for the second half of 1990,” which he said was in part the result of ”an unexpected reticence” of some advertisers to buy space on the company’s electronic signs, which hang from the ceilings above aisles in 2,662 supermarkets. In an interview yesterday, Mr. Polansky said it was only in the last few weeks that the company became aware of the extent of the second-half slowdown and it wanted to disclose the facts quickly. ”We felt the need to be very straightforward with the people who purchased our stock,” he said. ”These people are our partners.” He said revenues would be higher than $5.2 million in the next quarters, but declined to be more specific. Mr. [Alvin Krongard] said that such ”crash and burns” are ”part of the nature of the business” and should be expected occasionally. ”But for us,” he added ruefully, ”they all seemed to come together.”
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Norris, Floyd

Full text: [New York Times] Aug 30, 1990

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Dow Rises 17.58 Points on Low Volume

”It’s uncanny,” said Peter G. Grennan, senior vice president of Shearson Lehman Brothers, ”that all of a sudden oil can have such a tight relationship with the stock market when we all know that there are many other factors that have an influence.” The odds have been ”disappointing,” however, in the last 11 years, according to the almanac, and Robert H. Stovall, president of Stovall/ Twenty-First Advisers, remarked, ”The market seems to be setting itself up for another Friday fainting spell.” Asked about new Government data showing that the economy seemed to be weakening, Joseph A. Feshbach, director of technical market analysis for Shearson Lehman Brothers, remarked: ”I don’t think anybody cares about that stuff right now. People are watching oil prices and the Middle East.”
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COLE, ROBERT J.

Full text: [New York Times] Aug 30, 1990

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3 Ex-MAI Employees Settle Insider Case

The SEC alleged that [Dale T. Jabour], a former director of accounting at MAI, purchased Prime call options after overhearing two MAI executives discuss the Tustin computer company’s planned takeover attempt for Prime in October, 1988. The SEC alleged that Jabour and [Winston M. Cheong] sold their Prime options three days after MAI publicly announced its bid for Prime. Jabour realized $21,800 in profits, and Cheong made $3,830. [Ronald Lee Thurman] sold his Prime options within two weeks and, because of a decline in the stock’s price, profited only $1,875, the SEC alleged. Bertrand Weidberg, MAI’s general counsel, said Jabour told MAI management in February, 1989, that he had purchased Prime options based on non-public information. He resigned weeks later. The company was unaware of Thurman and Cheong’s involvement “until literally hours before their resignation” in the past month, he said.
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CRISTINA LEE

Full text: [Los Angeles Times (pre-1997 Fulltext)] Aug 30, 1990

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Ex-MAI Employees Settle Insider Charges Securities: The three were accused by the SEC with trading on unpublished information in attempted takeover of Prime Computer.

The SEC alleged that [Dale T. Jabour], a former director of accounting at MAI, purchased Prime call options after overhearing two MAI executives discuss the Tustin computer company’s planned takeover of Prime in October, 1988. The SEC alleged that Jabour and [Winston M. Cheong] sold their Prime options three days after MAI publicly announced its bid for Prime. Jabour realized $21,800 in profits and Cheong made $3,830. [Ronald Lee Thurman] sold his Prime options within two weeks and, because of a decline in the stock’s price, profited only $1,875, the SEC alleged. Bertrand Weidberg, MAI’s general counsel, said Jabour told MAI management in February, 1989, that he had purchased Prime options based on non-public information, and then resigned weeks later. The company was unaware of Thurman and Cheong’s involvement “until literally hours before their resignation” within the past month, he said.
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CRISTINA LEE

Full text: [Los Angeles Times (pre-1997 Fulltext)] Aug 30, 1990

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Stockholders Furious Over Stoneridge Chief’s Absence

Randon Samelson skipped another annual meeting Wednesday of Stoneridge Resources Inc., but the reclusive chief executive couldn’t dodge criticism from his shareholders. Samelson’s absence dominated discussion at the long-delayed meeting of the Bloomfield Hills-based natural resources conglomerate that has struggled financially for the past three years. “It is outrageous that Randy Samelson is not at this meeting,” said Gordon Wood, a stockholder and retired Detroit lawyer. “He can’t give me the guff that he’s so busy working for our benefit that he can’t take the time to come.” (excerpt)
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Vlasic, Bill

Full text: [Detroit News] Aug 30, 1990

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Chrysler’s Bonds in ‘Distress’

The major credit rating agencies give Chrysler Corp.’s corporate bonds an investment-grade rating, but the No. 3 automaker’s bonds are trading no better than junk on Wall Street. To encourage wary traders to buy Chrysler’s bonds, the market has pushed the rate of the retum on the company’s bonds up to the levels of junk bonds – considered high risks by investors and therefore requiring higher yields. Yields on Chrysler bonds are now ranging from 12.67 percent to 13.75 percent. That’s up more than 2 percentage points in the past month and it’s more than 3 points above the face value of the bonds. (excerpt)
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Naughton, Keith

Full text: [Detroit News] Aug 30, 1990

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Oil price slide greases gears for stock, bond gains

Stock prices closed higher Wednesday after a steep drop in oil prices sparked a rally in the bond market, a sign that inflation worries are cooling. “The crude oil price broke, and the bonds, as a consequence, went crazy,” said Bear, Stearns & Co. analyst Jack Solomon. Bonds rose on the assumption that lower inflationary pressures would allow the Federal Reserve to lower interest rates to keep the economy moving. The prospect of lower prices triggered firmness in the Treasury bond market, sparking a one-point jump in the price of the benchmark 30-year bond, which lowered the yield to 8.94 percent from 9.05 percent Tuesday. As bond prices rise, their yield falls.
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Chicago Tribune wires

Full text: [Chicago Tribune (pre-1997 Fulltext)] Aug 30, 1990

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The Somerset Group Inc. Announces Stock Purchase Agreement

The Somerset Group Inc. (OTC:SOMR) announced today that an agreement has been reached for the repurchase of 100,000 shares of the company’s common stock at a per share price of $7.695. After careful study by the board of directors and a review of the transaction by an independent investment securities firm, the board of directors approved the purchase of 100,000 shares of common stock from four shareholders, including Nora McKinney Hiatt, a director of the company. The shares will be held in the treasury and used to fund stock option programs, company contributions to employee savings programs, and future acquisitions. (excerpt)
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Richter, Joseph M.

Full text: [Business Wire] Aug 30, 1990

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SEC Charges Three in MAI’s Prime Bid

Nearly two years after MAI Basic Four Inc. attempted a hostile takeover of Prime Computer Inc. of Natick, three former MAI employees have been charged with insider trading. The Securities and Exchange Commission filed a complaint in federal court in California charging that Dale T. Jabour, Ronald Lee Thurman and Winston M. Cheong bought call options in Prime after learning that MAI was considering a bid for the company. Call options give an investor the right to buy stock at a set price in the future. Investors purchase call options when they think a stock price is going to increase. (excerpt)
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Fitz Simon, Jane

Full text: [Boston Globe] Aug 30, 1990

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INDICATORS FORECAST A TOTTERING ECONOMY

Negative contributors were: faster business delivery times, a decline in the money supply, a drop in manufacturers’ unfilled orders, a shorter average work week, a drop in building permits, an increase in weekly unemployment claims and a decline in the stock market. Daryl Delano of Cahners Economics in Newton, Mass., said stock prices had continued to decline since the Iraqi invasion and, noting lackluster home sales, said building permits would remain a negative in the August report.
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Associated Press

Full text: [Boston Globe (pre-1997 Fulltext)] Aug 30, 1990

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