The reports I have read come from DB, CSFB and UBS and differ markedly on the matter.
Sentiment at the moment is quite negative when it comes to honesty, integrity and many of the other qualities that define the human spirit. Quite pointedly, it is aimed at the Corporate world and anybody who is seen to be misleading the markets (ie: being less than honest and forthright with their disclosures).
The reaction to Tyco, however, appears to have been overdone (ie: public reaction to a private tax investigation).
That is not to say that Tyco does not have any issues to square off against in a post-Enron environment. Rather, it has everything to do with investors beicng spooked and herded idnto a reaction.
In Tyco's case, management has been holding weekly conference calls /market updates since early March and there is a fair bit of disclosure out there.
The markets, therefore, confused the issue of Tyco's CEO stepping down, and an investigation being launched, with something being amiss in relation to the Company (ie: and that the weekly conference calls have been misleading). Overnight, they are likely to digest the news that the problems at Tyco had more to do with the CEO and his private business affairs, than with Tyco itself and its management. Once this is digested, the market will regain some of its losses from last night.
The story over at El Paso Corp, however, is somewhat different, and points to something that bears further insight /investigation. Again, it may well end up being linked more to private matters, rather than with the Company's current fortunes. But the lack of current information means that everyone is still groping about on this, looking for a lead.
That said, El Paso's continuing influence on the markets is likely to be minimal.
Tonight, therefore, I am predicting the following: 1) a rebound in Tyco's share price; 2) an uptick in the DOW (50 -100 points) and in the Nasdaq (10 -15 points); 3) the markets returning to consider the phsyical economics news that is coming out (ie: filtering out the management noise, etc).
The AUD, however, will continue to rise in the coming weeks, but short term is likely to peak at under 59 (more likely, 58.5).
Gold is likely to react within a narrow channel, up or down (my tip is stable, to down), whilst its current rise remains somewhat less robust once adjusted for AUD FX considerations.
