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Program: Friday, September 5, 2003
09/05/03: Investors Get Less Than Worked Up Over The Latest Labor Report
SUSIE GHARIB: A weak jobs report broke Wall Street`s winning streak today. The Dow fell 84 1/2 points and the NASDAQ was down 10, its first decline since August 25. Investors sold stocks after the Labor Department reported today that the economy lost many more jobs in August than expected. That overshadowed positive news of a drop in the unemployment rate to 6.1 percent. Scott Gurvey reports. SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Most analysts expected to see a modest increase in the number of Americans working in August. Instead, for the seventh month in a row, companies slashed payrolls. The 93,000 jobs cut was the biggest decline since March. The economy has now lost more than one million jobs since the recession ended in November of 2001. While there have been many signs of an improving economy in recent weeks, experts say job growth is essential if a recovery is to be successful. GERALD COHEN, SENIOR ECONOMIST, MERRILL LYNCH: To get an economy that grows above 3 1/2 percent, its potential or speed limit, you need job growth, because you get job growth, somebody has a job, they spend money. And so the unemployment rate is fairly low relative to history, but you`re not generating enough jobs to get this recovery to be self-sustaining. GURVEY: The job losses were across the board: 67,000 in the service sector, 44,000 in manufacturing, 26,000 in government. The civilian unemployment rate actually fell by 0.1 percent. But that`s because 10,000 people gave up looking for work. The report found more than half a million discouraged workers in the month. Still, increased productivity is enabling companies to increase output. That is something economists say will produce growth in the area of five percent for the current quarter and will, eventually, increase demand for goods that will require new jobs to create. JOHN LIPSKY, CHIEF ECONOMIST, J.P. MORGAN CHASE: People who have jobs are getting wage increases, not fantastic, but solid wage increases. When you add the impact of tax cuts in the third quarter, disposable income of households is probably going to be growing at about 10 percent and it`s going to continue to grow relatively rapidly for the next couple quarters. So there`s all the fuel, if you will, for spending is still there, and folks are feeling better about the outlook and they are spending. GURVEY: The economy is already becoming a political issue, with the Democrats quick to point out that two and a half million Americans have lost their jobs since President Bush took office. Still, there is more than a year to go before the President stands for reelection and most economists forecast a much healthier economy by that time. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/05/03: Supply & Demand Is Off Balance In The U.S. Workforce
SUSIE GHARIB: President Bush said today`s employment report shows that we`ve got to do more to create new jobs. But as Darren Gersh reports, that`s a difficult proposition when employers are getting more done with fewer people. DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: It is a new problem for a President and the economy. As Mr. Bush explains in speech after speech, American workers are so productive, employers can hold off on hiring more. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And so we`ve got a short-term problem. Long-term it`s good that we`re more productive. It means higher wages for the American worker. It means we`re more competitive overseas. Short-term, this economy needs to crank up faster than productivity increases in order for somebody to find a job. GERSH: How much faster? The latest official figures show the economy grew at a 3.1 percent annual rate in the spring. But productivity, the output per worker, is growing at 6.8 percent. The result is more work being done by fewer workers. ALAN BLINDER, FORMER FEDERAL RESERVE VICE CHAIRMAN: While rapid productivity improvements are very good for the economy, if they`re not accompanied by even more rapid increases in demand, so that you`re sucking more people into the workforce despite the increasing productivity, it`s not very good for the incumbent politicians. GERSH: Some analysts figure the economy, spurred on by low interest rates and tax cuts, could now be growing at five percent. And yet employers are still cutting jobs. KEVIN HASSETT, ECONOMIST, AMERICAN ENTERPRISE INSTITUTE: To have five percent growth and job loss at the same time, it`s astonishing that that could occur. GERSH: The President is pushing for what he calls a comprehensive job creation agenda that includes reducing health care costs, litigation and regulatory reform, passing an energy bill and opening foreign markets for American products. But those are long run reforms, unlikely to have an impact before the election. HASSETT: It`s time for the White House to just sit back and say their prayers and hope that what they`ve done is enough because, you know, there really isn`t any time to do anything more. And I`d have to say that I think that what they`ve done is enough. GERSH: Most economists doubt that employers can keep wringing out such large productivity increases from their current workers for very much longer. The key political question is how soon and how many new jobs will be created before election day. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/05/03: Malaysia Manages To Weather SARS and War Worries
SUSIE GHARIB: Many Asian governments have been worried that their economies would be in for a rough ride this year, first with the war in Iraq and then the outbreak of SARS. But some, such as Malaysia, have been revising their earlier pessimistic estimates upwards. Rian Maelzer reports from Kuala Lumpur. RIAN MAELZER, NIGHTLY BUSINESS REPORT CORRESPONDENT: For three decades, foreign investment powered the Malaysian economy to year after year of impressive growth, until the Asian financial crisis hit in 1997. Since then, with lower cost countries such as China sucking up most of the dollars and yen destined for Asia, foreign investment into Malaysia all but dried up. Until this year, that is. In the first half, applications for foreign direct investment in the manufacturing sector alone leapt some 70 percent year on year, to more than $1 billion. The bulk of those applications were for the electronics sector, with most coming from Japanese companies, to everyone`s surprise. Aside from being Malaysia`s biggest export market, the U.S. has also been the number one investor here for the past few years. MOHAMED ARIFF, MALAYSIAN INSTITUTE OF ECONOMIC RESEARCH: For the first time, we see Japan showing renewed interest in Malaysia, because in the recent past Japan has been focusing much of its attention on China. MAELZER: It`s one of several promising signs. Despite SARS, industrial output shot up by near double digit figures so far this year and Malaysia`s economy still looks set to grow around four and a half percent in 2003. The free trade agreement among Southeast Asian, or ASEAN countries, may be helping. RAFIDAH AZIZ, MINISTER OF INTERNATIONAL TRADE: People are realizing that Malaysia is, indeed, a very viable gateway to the ASEAN free trade area because we do have the infrastructure, the support facilities and the general trading networking with the rest of ASEAN. MAELZER: The government is also easing investment rules to make the country even more attractive. It`s now allowing foreigners to hold 100 percent equity in all industries, something investors long pushed for. Aside from manufacturing, Malaysia is also keen to develop its services sector. Tourism pre-SARS, was booming. And Malaysia aims to become an international hub for education and health care. ARIFF: The services sector has been protected for so long, jealously guarded, and that really was some kind of disincentive for foreigners to get in, in a big way. But there is a paradigm shift now. MAELZER: There`s also a paradigm shift in manufacturing, as Malaysia faces up to new realities. Malaysia is focusing on industries that take advantage of its abundant natural resources, such as food processing and biotechnology for agriculture. AZIZ: Up front we say that we`re no longer competitive for labor intensive industries, we`re no longer competitive for lower end manufacturing. So we say, OK, you can only come for your higher end technology and capital intensive, skills intensive. So the marketing must be very targeted and focused. MAELZER: The near drought of foreign investment these past few years appears to have taught Malaysia the perils of complacency. Rian Maelzer, NIGHTLY BUSINESS REPORT, Kuala Lumpur.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/05/03: Market Monitor-James Stack, President of Investech Research
PAUL KANGAS: My guest market monitor this week is James Stack, President of Investech Research, based in Whitefish, Montana. Welcome back to NIGHTLY BUSINESS REPORT, Jim. JAMES STACK, PRESIDENT, INVESTECH RESEARCH: Thank you, Paul. It`s great to talk to you again. KANGAS: Judging by today`s sell-off, do you think the stock market is telling us that its recovery has gotten ahead of the recovery in the U.S. economy, given today`s weak August jobs report? STACK: Well, one factor we have to keep in mind is the unemployment statistics are very lagging. Another is that we`ve been through six consecutive months of gains for all market averages. That`s something we haven`t seen since 1997. In addition, we`re heading into September, which is notably not a good month for the market. Over the past 40 years, 60 percent of the Septembers have been a down month. So I wouldn`t be surprised to see some more correction here. KANGAS: Last February, on your last visit with us as a market monitor, you said the building blocks were in place for a new bull market. Is the foundation solid enough now to expect more gains ahead? STACK: I think it is, Paul. Some of our technical readings in breadth, that is market participation and in leadership, have hit their best or their strongest readings in over a decade. This is a bull market. It`s a very tenuous bull market and there are sectors I think I`d definitely avoid out there, some of the high value tech sectors. KANGAS: You mean like high tech stocks that have had a big run-up and no earnings? STACK: The technology, I think, are priced to perfection and there`s a risk there for disappointment. You don`t have to play that momentum or that technology to gain, to make good profits in this market. Our model Investech portfolios are up over 20 percent year to date and we don`t have a single technology stock in them. KANGAS: Well, speaking of that, you gave us six stocks to buy back in February and we have a little list of what you recommended. You liked Pfizer (PFE) and Equitable Resources (EQT), and both of those are higher. Then the second two on your list were C.R. Bard (BCR), which is way up from where it was then, and AFLAC (AFL), the big insurance company, is up a point or two. Not bad at all. And to complete the list of six, all of which were gainers, I`m proud to say for you, and I`m proud of you, Washington Mutual (WM) and WPS Resources (WPS), both nice gainers. So good job. I congratulate you. STACK: Well, thank you, Paul. Those were all conservative picks that did well even in the uncertain market environment we had at the time. KANGAS: You know, at that time early in the year we were on the precipice of the second Iraqi war. And you said your history, your databank, which is considerable, shows that six months to a year after wars like that, the market is always higher. Well it certainly is now. It was 7,800 on the Dow then. Now we`re up at 9,500 and all the major averages are higher, too. Are we going to continue to go higher? STACK: Yes, I think we will see higher averages, or higher investments, by the end of this year. This bull market has good liquidity. It has good strength. The frothiness right now has me a little worried. I think we`re due for some correction or consolidation. But, again, looking at the longevity of this market, as long as we don`t see any warning flags appear, it could extend well into next year`s election. But the warning flags, I think I`d watch the long-term bond market and consumer confidence out there. Those are keys to this economic recovery right now. KANGAS: Can you give us a few stocks, like you did last February, that are going to go up, you hope? STACK: Well, some of our favorites -- and these are in our managed accounts at this time -- Biomet (BMET). It specializes in orthopedic products. It has a 15 percent sales and earnings growth over the past 10 years. KANGAS: OK. All right. STACK: It has no debt. We also like Mentor Corp. (MNT). Again -- KANGAS: These are both health related storks, aren`t they? STACK: They are. They have good growth, no debt and Metro Corp. has a 2.5 percent dividend yield. KANGAS: OK. STACK: We also like EnCana (ECA). The reason, it`s one of the largest natural gas producers in North America. And natural gas prices are up quite a bit over the past year. It`s more of a defensive hedge, a defensive protective hedge in our portfolio. And the last one I`d probably toss out right now is Newmont Mining (NEM). The gold stocks -- KANGAS: You liked that before, too, in February. It`s done very well. STACK: It`s done very well. It`s up about 35 percent year to date. But when you have a central bank, our Federal Reserve, trying to reinflate right now, one of the casualties will be the U.S. dollar. As the dollar falls, gold prices are going to be firm or move higher. KANGAS: All right, well, I`m glad you`re constructive on the market and we`ll look at those choices of yours very carefully. I hope they`re as successful as your last bunch of choices. Thanks very much, Jim. STACK: Always my pleasure, Paul. KANGAS: My guest market monitor, James Stack, President of Investech Research.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
SUSIE GHARIB: Here`s a look at what`s happening next week. Our Friday market monitor guest is Ned Riley, Chief Investment Strategist at State Street Global Advisors. On the economic calendar: Tuesday, July wholesale trade; Thursday, import prices for the month of August; and Friday, two reports for August come out, producer prices and retail sales. As for earnings: Adobe Systems (ADBE), Campbell`s Soup (CPB) and Oracle are scheduled to report.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
9/05/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street showed its disappointment over the mixed jobs report with a modest opening sell-off. After 30 minutes of trading the Dow was off 20 points and the NASDAQ Index down 6 points. A Bank of America (BAC) downgrade on Wal-Mart (WMT) helped send the blue chips lower throughout the morning. But the tech stocks improved thanks to Intel`s (INTC) upward revision of its quarterly revenue estimates and a brokerage "buy" recommendation on National Semiconductor (NSM). At mid session, the Dow was off 42 points, but the NASDAQ Index had a 10 point gain. Persistent selling in the blue chips gradually undermined the tech sector and the market finally ended the week on a negative note. The Dow Industrial average closed with a loss of 84 1/2 points, at 9,503.34. The Dow rose in three of this week`s four sessions, however, and gained 87.52 points overall. The NASDAQ Composite fell 10 points today, at 1,858.24 today. But, it, too, was up in three of this week`s four sessions, and rose 47.79 points overall. The Standard & Poor`s 500 lost 6 1/2 points, to close at 1,021.39 today. The Treasury market firmed up across the board on that weak jobs report. The 10-year note surged 1 7/32, to 99 6/32, putting the yield down to 4.35 percent. The most active issue on the New York Exchange on a very active 47.7 million shares, NorTel Networks (NT) moving up $0.29. Standard & Poor`s affirmed the company`s B long-term corporate credit rating and also increased the outlook for the company from "negative" to "stable." Lucent Technologies (LU) edged up $0.06. Motorola (MOT) down $0.09. Texas Instruments (TXN) a $0.97 gain. The Webb Bush Morgan Brokerage repeated a "buy" in Texas Instruments and boosted 2003 and 2004 earnings estimates by $0.03 and $0.05 per share respectively. Pfizer (PFE) a $0.09 loss, number five in big board volume. And then General Electric (GE), down $0.28. Followed by Agere Systems (AGR.A), which rose $0.40. The Gap (GPS) rising $0.08. Advanced Micro Devices (AMD) a $0.40 gain. And tenth in volume was Sprint PCS Group (PCS), up $0.23. Prudential Securities upgraded Sprint from "hold" to "buy." As a matter of fact, Prudential upgraded the whole wireless group from "market perform" to "outperform." National Semiconductor (NSM) up $1.33. It traded as high as $34.79 today. Yesterday it was up over $3 on first quarter earnings of $0.15, up from a $0.01 the year before and $0.03 above the Street estimate. And today, UBS Financial upgraded the stock from "neutral" to "buy." A good day for NSM. AMR (AMR), parent of American Airlines, up $0.40. It traded as high as $13.35 after Lehman Brothers upgraded it from "under weight" to "equal weight" in the belief that the company`s revenues will continue to improve well into the autumn of this year. Wal-Mart (WMT), a big Dow stock, off $1.19. As I touched on earlier, Banc of America downgraded it from "buy" to "neutral" because it sees the company`s same store sales flattening out a bit this fall. Eli Lilly (LLY) down just $0.04. It traded as high as $62.23 after the company said 2003 full year earnings will be at the high end of its estimated range of $2.55 to $2.60 a share. Circuit City Stores (CC) edged up $0.35. The August same store sales were down five percent, but Prudential Securities thought there`d be about an eight percent drop. Meanwhile, one of its recent spin-offs, and that`s CarMax (KMX), was down $2.30, although CarMax upped its second quarter earnings estimate from about $0.34 to $0.36. But it also said new store openings are cutting into existing stores sales and I think that`s probably what hurt the stock. H&R Block (HRB) off $2.08. The news? Chief Financial Officer Frank Cotroneo is stepping down as of the 31st of October. The CFO is stepping down. And DeVry (DV) off $2.67. A number of analysts cut earnings estimates after the company decided to phase out its Toronto school operations. Another loser, Pentair (PNR), off $2.05. J.P. Morgan (JPM) downgraded it from "over weight" to "neutral." Topped the active list on NASDAQ, Microsoft (MSFT) losing a $0.05. Intel (INTC) up $0.11 on the upward revision in revenues. Cisco Systems (CSCO), a $0.17 loss there. Dell Incorporated (DELL) down $0.26. A $0.64 drop in Oracle (ORCL), number five in dollar volume on NASDAQ. Applied Materials (AMAT) was up $0.12. A similar gain in Qualcomm (QCOM). Yahoo! (YHOO), a $0.06 rise there. PeopleSoft (PSFT) was down a $0.05, although the company increased 2003 earnings estimates as well as revenue estimates. Deutsche Bank Securities upgraded it from "hold" to "buy." The company said it just closed its acquisition of JD Edwards (JDEC) and said Oracle`s (ORCL) buyout bid for PeopleSoft is, to quote, "dead." Finally, eBay (EBAY), tenth in volume, was down $0.77. Intrabiotics Pharmaceuticals (IBPI), look at that percentage move, up nearly 111 percent. The news, the FDA has granted the company`s pneumonia drug a fast track status for approval. A big move there. And Dot Hill Systems (HILL) was down $3.40. The company is in the data storage business and it expects to meet third quarter and fourth quarter earnings targets on Wall Street, but not revenue targets, and that`s what hurt the stock. And finally Aceto Corporation (ACET), industrial chemicals firm, off $3.15. Fourth quarter earnings were higher, $0.23 versus last year`s $0.17, but the company did issue profit warnings for both the first and second quarters of the new year. And those are the stocks in the news tonight.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/05/03:
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