11/03/00:
Economics & The Presidential Election
SUSIE GHARIB: So what happens to stocks after the presidential
election and is there a way to place a financial bet on the outcome? We asked
Scott Gurvey to find some answers to those questions.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Anecdotally,
Wall Street likes Republicans. That's because there is a consensus that the markets
do better when Republicans are in office. But since 1960, across five Democrat
and five Republican administrations, the S&P has performed best under Democrats
for both the first year and the full term. The sectors that historically favor
Democrats are capital goods, energy, financial, technology, transportation and
utilities. Consumer staples is the only sector that does demonstrably better under
Republicans. But the sharp differences between the candidates on tax issues makes
speculation on market reaction based on past history unusually risky this year.
GREGORY VALLIERE, CHIEF STRATEGIST, SCHWAB WASHINGTON RESEARCH
GROUP: For the bond market, I think Gore would be perfectly acceptable. He'd pay
down a lot of debt. His tax cuts are small. The bond market could worry that Bush's
tax cuts might be too big. But the other market, the equities market, I think
that every sector you look at that's regulated by Washington would be rooting
for Bush.
GURVEY: A Bush victory might ease antitrust concerns for
Microsoft (MSFT) and AOL (AOL). It might also reduce regulatory worries for tobacco
and drug companies. Bush favors more defense spending and his plan to allow individuals
to invest some of their Social Security could be good for the financial sector.
If Gore wins, increased spending might help companies connected with educational
programs. The environmental advocate could generate more business for environmental
services and cleanup companies. And the new tax credit programs would mean more
business for tax preparers and advisors. Wall Street also seems to believe it
is better off when Congress and the White House are controlled by different parties.
But here again, facts do not agree with perceptions.
SAM STOVALL, INDUSTRY INFORMATION DIRECTOR, STANDARD &
POOR'S: Again, if you look at the numbers, they really are not telling whatsoever,
that you could have a situation where it's a Republican president and then a Democratic
Congress and the market does relatively well and then visa versa. I think what
people perceive is that if you do have gridlock, then you have a less likelihood
of many expensive spending programs being pushed through.
GURVEY: The candidates are in full agreement in giving their
full support to Fed Chairman Alan Greenspan. At least that's one thing investor
voters will not have to worry about. Scott Gurvey, NIGHTLY BUSINESS REPORT, New
York.
Nightly Business Report transcripts are available on-line post broadcast.
The program is transcribed by FDCH. Updates may be posted at a later date. The
views of our guests and commentators are their own and do not necessarily represent
the views of Community Television Foundation of South Florida, Inc., Nightly Business
Report, or WPBT. Information presented on Nightly Business Report is not and should
not be considered as investment advice. © 2000 Community Television Foundation
of South Florida, Inc.
11/03/00: Sprint Dials Up An Earnings Warning
SUSIE GHARIB: First, AT&T (T), then WorldCom (WCOM),
and now Sprint (FON). It warned today that its profits through 2001 will be lower
than expected. Like the other telecom giants, Sprint blamed falling prices and
growing competition in long distance. Sprint now predicts earnings for 2000 will
fall between $1.80 and $1.90 a share; estimates were for $1.90. For 2001, earnings
in the range of $1.65 and $1.75. That's way below estimates of $2.10. Sprint's
Chairman denied rumors the company is for sale.
WILLIAM ESREY, CHAIRMAN & CEO, SPRINT: People say you're
not big enough and then we look at our competitors that are all splitting up and
getting smaller. Now, you can't have it both ways. So when we look at the economics
of our business and the markets that we're in, we have the economy of scale to
be the low cost providers. We don't see ourselves suffering in any way.
GHARIB: Well, Sprint's (FON) stock was up today, but its
PCS (PCS) tracking stock was down
Nightly Business Report transcripts are available on-line post broadcast.
The program is transcribed by FDCH. Updates may be posted at a later date. The
views of our guests and commentators are their own and do not necessarily represent
the views of Community Television Foundation of South Florida, Inc., Nightly Business
Report, or WPBT. Information presented on Nightly Business Report is not and should
not be considered as investment advice. © 2000 Community Television Foundation
of South Florida, Inc.
11/03/2000: Why Europe Is Interested In The US Elections
SUSIE GHARIB: Americans won't be the only ones watching
Tuesday's presidential race. So will Europeans. As Paul Miller reports from Paris,
Europeans also have a stake in the outcome.
PAUL MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Louis
Delmas, CEO of Citeel has a business that's booming. It made more than $10 million
last year installing fiber optic cable and cell phone links for telecoms in France,
Belgium and Switzerland. He's looking forward to even better days and to a Gore
administration.
LOUIS DELMAS, CEO, CITEEL: From a business standpoint, I
would think that it would be better for us to have Al Gore and my feeling is that
Bush does not understand as well as Gore does what are the issues.
MILLER: Delmas' views are shared by many of Europe's political
leaders who know the Vice President. But many of Europe's business leaders don't
seem to have a strong preference for either Al Gore or George Bush.
ETIENNE COMBET, CEO, ARBIZON: People might be convinced
that the difference between the policy that the Republican Party or the Democrat
Party could run is not that big of a difference.
MILLER: Etienne Combet's Internet incubator and investment
company relies heavily on America's new economy. Many other sectors of the European
economy have also benefited from the strong U.S. economy by exporting goods and
services to the United States. European businesses want a healthy U.S. economy
and don't expect the election to change things.
JONATHAN STOREY, PROFESSOR, INSEAD GRADUATE SCHOOL: Businesspeople
in general say, well, there's not going to be much of a-the American public is
not going to make a choice that would shift policy radically one way or another,
at least as far as business is concerned. That would be the general view.
MILLER: There are issues between Europe and the United States
such as trade disputes over airliner subsidies and agricultural products where
people see a difference between the candidates. Businesspeople are also worried
about the falling value of their Euro currency, which has begun to effect earnings.
There are predictions that George Bush's promised tax cut would mean a return
to the Reagan years when the dollar soared against European currencies. But at
corporate headquarters in Paris and elsewhere, it's the candidate's political
views, not economic, that have made news. Europeans like a United States that
is engaged with Europe. They don't like isolationism. That's why many businesspeople
and politicians here were alarmed by the Bush proposal to remove U.S. peacekeepers
from the Balkans. Europeans also know that American campaign promises are not
always carried out and that the candidates are talking to a U.S. domestic audience,
not to them. This election they seem content to leave it to the Americans to make
the choice, figuring they will benefit no matter who wins. Paul Miller, NIGHTLY
BUSINESS REPORT, Paris.
Nightly Business Report transcripts are available on-line post-broadcast. The
program is transcribed by FDCH. Updates may be posted at a later date.
The views of our guests and commentators are their own and do not necessarily
represent the views of Community Television Foundation of South Florida, Inc.
Nightly Business Report, or WPBT.
Information presented on Nightly Business Report is not and should not be considered
as investment advice.
©2000 Community Television Foundation of South Florida, Inc.
11/02/2000: Market Monitor-Robert Morrow, Editor, "Institutional
Advisory Service"
PAUL KANGAS: My guest market monitor this week is Robert
Morrow of the "Institutional Advisory Service" and the editor of the
monthly "High Tech Growth Forecaster Market Letter." And welcome back,
Bob.
ROBERT MORROW, EDITOR, "INSTITUTIONAL ADVISORY SERVICE":
Thanks, Paul. Good to be back.
KANGAS: Your last visit with us was on April 14th, and it
was an absolutely horrendous day. The Dow tunneled 617 points, 5.6 percent. The
NASDAQ index plunged 355, or 9.7 percent. And you said in essence, don't worry,
be happy, because this is a great buying opportunity. And we have had an impressive
recovery. But are we out of the woods?
MORROW: I think so, Paul. I think that we're into a recovery
now that will lead to new highs by November next year, 2001. I think that will
also represent the end of the bull market.
KANGAS: The end of the bull market?
MORROW: Yes.
KANGAS: What do you see then, a nasty bear lasting just
two or three months like the last ones have?
MORROW: No, the previous ones have been, you know, very
short in length, one and a half months, two months, three months, three months.
Those are the last four bear markets. This one, I think, could extend almost a
year. The depth of the correction, I think, will be about 25 percent in terms
of the Standard & Poor's 500, about 25 percent on the Dow. The NASDAQ is problematic.
I'm going to have to say a range of 38 percent, perhaps as much as 50 if it becomes
over extended, as it has been.
KANGAS: Where will the Dow top out?
MORROW: The Dow will top out at 14,777.
KANGAS: We've got a long way to go yet, then.
MORROW: Right. The S&P would be 1876. The NASDAQ range
5,200 to 5,800, I'd say.
KANGAS: Well, with the volatility in the NASDAQ, I can understand
your problem in trying to figure out ranges.
MORROW: Right.
KANGAS: What sectors like best to you right now, Bob?
MORROW: Well, right now the basic industries, there's number
one, utilities, consumer staples, consumer services, industrials, financials,
cyclical transportation. Technology is near the bottom, energy and technology.
KANGAS: Well, that's your specialty.
MORROW: I know, and it's near the bottom. But it offers
a good bit of opportunities on stock recommendations.
KANGAS: Actually, on some of the more defensive issues back
in April you recommended Pepsico (PEP), at 36, it's now in the high 40s. You did
very well. Safeway (SWY) at 44. It's now about 10 points higher. Are you still
staying with them or out?
MORROW: Yes, they represent value stocks and value has been
doing better than growth lately. I don't know if that will be the story for all
of next year.
KANGAS: One stock you liked back then in April was Lucent
Technologies (LU) and it's had a terrible drop. Did you buy on the weakness and
are you still with the original price which was up around 50?
MORROW: No, in terms of the latter, the high tech growth
forecaster, we had to take it out when we saw a loss of about 15 percent.
KANGAS: That's right. You put mental stops onto the market
on every stock that you recommend.
MORROW: Right. I think every investor should follow that
example.
KANGAS: Fifteen percent below the existing market price?
MORROW: Fifteen, exactly.
KANGAS: Well, you gave us some great ones like Applied Materials
(AMAT). Adobe Systems (ADBE) has been wonderful. Automatic Data Processing (AUD).
You liked IBM (IBM). It's about where it was then. Are you still with these?
MORROW: The ones I like now are Adobe Systems, still there,
Automatic Data Processing, AUD. I like Biomet, BMET, Cadence Design, CDN, First
Data, FDC, Microsoft (MSFT) I like, Scientific-Atlanta (SFA) would be another
recommendation.
KANGAS: What makes you so bullish on these companies? I
mean we're seeing nothing but a torrent of earnings warnings.
MORROW: Well, when you have your industry groups and technology
near the bottom, there’s hardly anyplace but to go up. The excess has been
squeezed out of these stocks and this represents, I think, the cream of the crop.
The ones that I’m recommending are choices of maybe 10 choices out of perhaps
150 I follow.
KANGAS: Give us a few more you like.
MORROW: I like Tellabs, TLAB. I like Seagate Technology
(SEG) and I think going back to the previous ones, Intel (INTC) is a possibility.
KANGAS: You like that. It was at 52. Now it’s in the
high 40s.
MORROW: And of course the semiconductors have taken quite
a hit and it might be a very good bottom pick, in a sense.
KANGAS: How about stocks like Viacom (VIA)? This has been
very actively recently.
MORROW: Right. It still is a “buy” on my list,
Viacom. It’s certainly a “buy” or a “hold” from previous
recommendations to business before.
KANGAS: So you’re bullish until November of the year
2001 and then look out?
MORROW: Look out.
KANGAS: OK. Bob, we’ll be watching closely and thanks
for being with us again.
MORROW: Thank you very much, Paul.
The views of our guests and commentators are their own and do not necessarily
represent the views of Community Television Foundation of South Florida, Inc.
Nightly Business Report, or WPBT.
Information presented on Nightly Business Report is not and should not be considered
as investment advice.
©2000 Community Television Foundation of South Florida, Inc.
11/03/2000: Paul Kangas' Wall Street Wrap Up
PAUL KANGAS: The October jobs report showed enough strength
to merit a fairly tight monetary policy by the Federal Reserve, at least judging
by an opening sell-off on Wall Street, which pushed bonds lower and sent the Dow
Industrial Average to a 60-point loss by 10:00 a.m., while the NASDAQ Index fell
18 points. The tech sector staged a mid-morning recovery with the help of over
a 9-point jump in QUALCOMM (QCOM) stock in reaction to yesterday's better-than-expected
post-market earnings report, but the blue chips remained under selling pressure.
At noontime, the Dow fell to a 74-point deficit, but the NASDAQ Index posted a
23-point gain. A weak bond market and growing pre-election jitters sent many investors
to the sidelines in afternoon trading and the market showed little change from
its midday levels. The Dow Industrial Average closed with a loss of 62.56 points
at 10,817.95. The Industrial Average rose twice and fell three times this week
for a net overall gain of 227.33 points, that's 2.1 percent. The NASDAQ, on the
other hand, rose 22.56 today ending at 3451.58. For the week, this Index fell
twice, rose three times, had a net overall gain of 173.22, that's 5.3 percent
on the up side. Nice move.
Big board volume dropped to 992.6 million shares, well down
from yesterday's pace. And just a little bit more down volume than up volume.
The Dow Transport Index fell 28.12.
And a loss of 6 2/3 in the Utility Index.
The Closing Tick however, quite strong, rather bullish,
+705 at the closing bell.
Standard & Poor's 500 off 1.63.
Similar loss on the 100.
MidCap 400 fell just over one point.
Bridge Futures Price Index up 1.1.
A loss of 1.88 New York Stock Exchange Composite.
A 2/3-point drop on the Value Line.
Russell2000 Small Cap Index rose a little over 3/4 of a
point.
And the broadly-based Wilshire 5000 down 5 1/3 points.
The bond market sold off sharply in reaction to that October
jobs report because it showed very few signs of a slowing economy; while the rise
in wages was greater than expected, all of which of course no doubt will keep
the Federal Reserve's monetary policy rather tight.
With that, tax free and corporate issues fell ½ point and
5/8s point losses.
And Treasuries were broadly lower across the board.
5-year notes dropping 11/32.
The 10-year note down 20/32, with the yield up to 5.83 percent.
30-year bond dropped 1 2/32.
And the Lehman Brothers Long-Term Treasury Bond Index off
over 13 3/4 points.
Well, the Dow Jones Industrial Average down a little over
62 ½ points but up nicely for the week 227 1/3 points. The broader market lower
by about a 14 to 13 margin negative today, 78 new highs, though, for the year;
only 37 new lows.
Corning (GLW) topped the active list on 20.9 million shares,
the stock up $1.88, traded as high as $74.50. The company's in the middle of pricing
a 30 million share offering at $71.25 a share. It's going to use the proceeds
for acquisitions. It also has a big convertible bond issue up for sale.
AT & T (T) moved up $0.88 today.
And there you see Sprint PCS Group (PCS) tumbling $8.06
on fears that sales growth is slowing.
Lucent Technologies (LU) edged up $0.13.
Nortel Networks (NT) had a good day, up $2.38.
AON (AOC) down $3.13. That's on top of a drop of nearly
$7.50 yesterday when the company came in with slightly lower than expected third
quarter earnings.
Sprint FON Group (FON) was up $1.38.
Xerox (XRX) moved up $0.88.
A $0.38 drop in General Electric (GE).
And Philip Morris (MO), 10th in volume, fell $1.19.
American Express (AXP) up $2. Believe it or not, that was
the best point gainer in the Dow Industrial Average today.
Computer Science (CSC) slipped in there with a $4.06 gain.
Second quarter earnings $0.64, up from $0.55 last year, right in line with Street
estimates.
Revenues up 12 percent and Merrill Lynch made positive comments.
J.P. Morgan (JPM) the big point loser in the Dow, off $3.44.
Interesting to see American Express and Morgan move in opposite directions the
same day.
PepsiCo (PEP) fell $1.25.
Quaker Oats (OAT) has rejected PepsiCo's buyout bid and
that may open the door for kind of a food fight between Coca-Cola (KO), Nestle,
Cadbury Schweppes (CSG) or even the French company Danone might be interested
in Quaker Oats, which went up very nicely today.
And Viacom (VIA) fell $1.06. This company will acquire privately
held BET Holdings, the parent of Black Entertainment Network, for $3 billion in
stock and debt assumption.
Getty Petroleum Marketing (GPM) the big percentage gainer,
up 40 percent, up $1.38. The story here, the company's going to be acquired by
Russia's big oil company called LUKoil for $71 million a share cash. Near as I
can tell, that's a little over $5 a share.
And Gener SA (CHR), this is a South American power generation
firm, AES Corp. (AES) plans to acquire it for $16 a share in AES stock.
Standard Commercial (STW) up $1.44, big second quarter earnings,
$0.43, way up from $0.17 last year.
Information Holdings (IHI) up $7.38. The stock was added
to the Standard & Poor's Small Cap 600 Index after the close today, index
fund buying helping, obviously.
Mitel (MLT) tumbled $5.81. Second quarter earnings, $0.24
Canadian and the company sees only $0.15 in third quarter earnings and guiding
2001 earnings lower as well.
Trex Company (TWP) in the plastics and rubber business tumbled
$12.31. Third quarter earnings a bit higher, $0.37 versus $0.29, but the company
sees fourth quarter flat or up just a little bit.
NASDAQ trading, a loss of 22, a gain of 22 ½ points in the
index. Volume well down to 1.8 million shares. Twenty stocks up for every 18 lower.
Cisco Systems (CSCO) topped the active list, moving up a
$1. Third quarter earnings for Cisco due out Monday. The Street, I believe, is
looking for about $0.17 a share.
Juniper Networks (JNPR) did well, up $21.25.
A $2.06 loss in Microsoft (MSFT).
BroadVision (BVSN) gained $2.44.
Palm (PALM) up nearly $8 a share, fifth in NASDAQ volume.
Oracle (ORCL) edged up $0.75.
And QUALCOMM (QCOM) winding up with a gain of $7.69 on those
better than expected earnings out yesterday.
Sun Microsystems (SUNW) gained $4.
WorldCom (WCOM) edging up $0.44.
And JDS (JDSU) up $0.63.
Optical Communications Products (OCPI), we know what they
do, went public today, 10 ½ milli |
