Salomon

Salomon Smith Barney meteorologist Jon Davis released his 2002 hurricane forecast last week calling for normal to below normal hurricane activity this year based mainly on the growing likelihood of an El Nino weather pattern in the equatorial Pacific. It is well known that in El Nino years Atlantic hurricane activity is hindered by a strong southern jet stream, Davis said. Pacific sea surface temperatures currently are warmer than normal but not quite enough yet to call an El Nino.

Salomon Smith Barney (SSB) said Wednesday it would change the structure of its stock research department to match the changes agreed to this week by Merrill Lynch & Co. in a $100 million settlement with the State of New York (see Daily GPI, May 23). In a memorandum to the SSB staff, CEO Michael A. Carpenter said a research review committee would be formed to oversee analysts’ recommendations, and said SSB would separate “the evaluation and compensation of equity research analysts from investment banking.”

Last winter appears to have shaken the meteorological community, most of which — Davis included — predicted a colder than normal winter. It turned out to be the fifth warmest on record. Davis said he’s still trying to determine the causes of the very unusual winter temperatures.

Following the roller-coaster ride that crude oil prices have been experiencing over the past few weeks, Salomon Smith Barney’s Robert Morris said that crude prices continue to be the “fulcrum” for exploration and production company stock performance. The analyst pointed out that E&P shares extended their retreat two weeks ago as both crude oil and natural gas prices dropped sharply.

In contrast to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and Salomon Smith Barney of a colder-than-normal winter in key eastern consuming regions, WSI Corp.’s end-of-October update to its seasonal forecast for November, December and January predicts warmer-than-normal temperatures in the Northeast, Mid-Atlantic and in the central and southern Plains. WSI, however, said it expects cooler-than-normal temperatures in the Gulf Coast states, Northern Plains, Great Lakes states, and all areas west of the Rocky Mountains.

In contrast to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and Salomon Smith Barney of a colder-than-normal winter in key energy consuming regions, WSI Corp.’s end-of-October update to its seasonal forecast for November, December and January predicts warmer-than-normal temperatures in the Northeast, Mid-Atlantic and in the central and southern Plains. WSI, however, said it expects cooler-than-normal temperatures in the Gulf Coast states, Northern Plains, Great Lakes states, and all areas west of the Rocky Mountains.

Due to the rapid growth of new generating capacity across the nation, Salomon Smith Barney analyst Raymond C. Niles said the country is currently “crossing the mountaintop” when it comes to electricity prices peaking. He warned that the third quarter 2001 will become the first full quarter of negative commodity comparisons.

Driven by North America’s growing thirst for natural gas and more drilling worldwide, Salomon Smith Barney revised its worldwide rig count forecast upwards by 30% and grew its estimated exploration and production midyear spending projections by 25%, predicting 22% more growth in North America alone. U.S. spending, propelled by aggressive independents, is at a higher pace than at any time in almost 20 years.

Driven by North America’s growing thirst for natural gas and more drilling worldwide, Salomon Smith Barney revised its worldwide rig count forecast upwards by 30% and grew its estimated exploration and production midyear spending projections by 25%, predicting 22% more growth in North America alone. U.S. spending, propelled by aggressive independents, is at a higher pace than at any time in almost 20 years.