Where Are Rates Going? Here’s What One Large Bond Investor Says

Stocks were mixed Tuesday. A pullback in
crude oil prices was overshadowed by disappointing earnings from Morgan Stanley
and lowered guidance from Ford.

After the close, Bed Bath & Beyond
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Herman Miller
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Boiopharma
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the European Medicines Agency. China’s state run oil firm CNOOC will bid for
Unocal
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PowerRating).

Germany, France and the U.K. are all at 3-year highs and the global bond
rally continues.

Crude inventories fell -1.6 million barrels; gasoline stocks rose 200K
barrels; distillates saw a build of 1.3 million barrels. All were in-line.

Pimco’s Bill Gross says the Fed may start cutting rates again. At an
investment conference yesterday, Mr. Gross said he expects rates to fall by
year-end. 10-year notes fell below 4%–to a near  14-month low–finishing
at 3.942%. Traders are concerned that high crude oil prices may be slowing the
global economy. The 1-year is referenced for corporate borrowing and mortgages.
The Federal Reserves meets today and tomorrow.

By 2025, 25% of the Fortune 500 could be owned by Chinese investors,
according to David Hall of Chatham House. Chinese acquisitions rose to $3
billion last year, says Thomson Financial, more than the previous 4 years
combined. Just yesterday, a Chinese-led investment group bid $1.3 billion for
Maytag and another group is bidding for Unocal. $650 billion: that’s Harvard 
economist Kenneth Rogoss’s estimate of the Chinese investment in the U.S.
One-third of that is invested in Treasuries, he says, making the Chinese the
second largest foreign holder of U.S. government securities after Japan.

Morgan Stanley
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include a $140 million legal charge. Revenues beat estimates but fell 9% to $6
billion.

Ford
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workforce) North American white collar jobs.

Ameritrade
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estimated to be worth $3 billion. Ameritrade CEO Joe Moglia will run the
combined company.

Strong sectors were:   
Brokers
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+2.03%    Semis
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Weak sectors were:   Gold  
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-1.06%      Biotech
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-1.88%     Homebuilders
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Gtech
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Eyetech
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FMC Corp.
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PowerRating) raised 2005 guidance.