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Program: Friday, September 12, 2003
09/12/03: Wall Street Battles Back Against Weak Retail Sales & Economic Reports
SUSIE GHARIB: Stocks on Wall Street finished in the black today, turning early losses into gains. The Dow rose 11 points and the NASDAQ was up by about 9. Investors shrugged off disappointing economic news, showing weaker than expected retail sales and a drop in the latest reading on consumer sentiment. Erika Miller has details. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today`s retail sales and consumer confidence reports were expected to confirm that economic growth is accelerating. Instead, the data is raising concerns the recovery may be faltering. LARA RHAME, ECONOMIST, BROWN BROTHERS HARRIMAN: No matter how exuberant we get about the shape of this recovery, it still is very stop start. It still is very uneven. MILLER: Retail sales climbed 0.6 percent in August, less than half the gain economists had forecast. In addition, July`s figure was revised lower. The big disappointment was auto sales. They edged up just half a percent despite strong incentives from dealers. Another surprise was that consumers actually cut their spending on clothing during the month, despite tax rebates and the back to school season. A separate report showing a drop in consumer confidence also has some economists concerned about the recovery. The University of Michigan`s Consumer Sentiment Index dipped unexpectedly, to 88.2 in September. Economists say worries about layoffs are largely to blame. RHAME: I think the consumer is seeing a still very difficult labor market, no signs of that stabilizing or turning around any time soon. And I think probably higher interest rates are starting to pinch the pocket book a little bit, too. MILLER: But there was some good news on the inflation front. Prices for goods at the wholesale level rose 0.4 percent, mainly due to higher food and energy costs. Outside those two volatile areas, prices inched up 0.1 percent. CAREY LEAHEY, SR. ECONOMIST, DEUTSCHE BANK: Rising inflation right now is good news for the economy because we`re reducing the chances of deflation. So actually the increases you`re seeing in the crude, intermediate and finished goods levels are actually pretty good for the economy. MILLER: Today`s data comes ahead of the Federal Reserve`s Open Market Committee meeting next Tuesday to set short-term interest rates. Nearly everyone on Wall Street expects the central bank to keep rates unchanged. Erika Miller, 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.
SUSIE GHARIB: If there`s a silver cloud to the recession of the last three years, it`s that U.S. manufacturers are emerging leaner and meaner. Productivity improvements on factory floors are cutting costs and improving profits. But as Diane Eastabrook reports, those improvements have also eliminated jobs that might never return. DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Pacific Bearing is finally seeing light at the end of the tunnel. After a three year slump, sales of its linear bearings are improving in industries as varied as autos, medical equipment and semiconductors. That has CEO Robert Schroeder finally thinking about adding back jobs he cut during the recent recession. ROBERT SCHROEDER, CEO, PACIFIC BEARING: Our sales are going to have to come up to that pre-recession level before we start to add substantially to our staff. And our staff is down about 25 people from that pre-recession level. EASTABROOK: But Schroeder admits it could be months, maybe even years, before all of those positions are filled again. That`s because Pacific Bearing has adopted lean manufacturing techniques that allow it to make product faster. By doing more with fewer workers, the company can better compete with foreign manufacturers that have substantially lower labor costs. Economists say Pacific Bearing represents what is happening throughout manufacturing and some speculate many of the nearly three million factory jobs lost in recent years won`t come back because of it. CARL TANNENBAUM, CHIEF ECONOMIST, LASALLE BANK CORP.: The reality is that the mandate for manufacturers to continue to be super productive and to find the lowest cost source of everything that they buy is going to continue to restrict hiring in the manufacturing sector here in the United States. EASTABROOK: Some job experts are advising displaced factory workers to look for work in other industries. JOHN CHALLENGER, CEO, CHALLENGER, GRAY & CHRISTMAS: That might mean security work, home health care, retail. That`s where the jobs have been growing. EASTABROOK: Even those manufacturing jobs that do return could require new skills. Pacific Bearing has spent many hours retraining employees for a its leaner workplace. The company says laid off workers who want to return to their old jobs would have to upgrade their skills. SCHROEDER: Either they would have to be retrained on the outside or when they come back in here we would have to train them on the new manufacturing philosophies. EASTABROOK: But Schroeder thinks those new philosophies his workers are embracing will help them and the company weather future economic downturns more successfully. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Roscoe, Illinois.
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.
09/12/03: Investing In India Is Still Attractive Despite The Threat of Terrorism
SUSIE GHARIB: This week`s anniversary of the 9/11 attacks has reminded Americans of the damage that can be done by terrorists. But we`re not alone in realizing that. In India, for example, terrorism has been a continuing factor in the nation`s consciousness. From Mumbai, Anish Trivedi reports. ANISH TRIVEDI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It began 10 years ago, 300 people died in the first bombs to go off in Mumbai then. Since March 1993, the city has seen terrorist activity escalate. In August this year alone, terrorist bombs have killed almost a hundred people, leaving a few hundred wounded. Religious discord is blamed for terrorism in India. But in Mumbai, the targets are not temples and churches. Terrorists here are striking the center of the city`s existence, the business and financial community. And like other financial centers around the world, Mumbai is finding it is an easy target. NANA CHUDASAMA, FORMER SHERIFF, MUMBAI: It is a commercial city. They do want to disturb it because I think that will hurt the economy of the nation. But I also feel that Bombay is an easier place to operate on because it`s become too vast. There are too many slums. And it really becomes very difficult to pinpoint where these activities are taking place. They have enough places to take shelter in, the terrorists especially. So I think they have chosen this as a target and I think this will continue. TRIVEDI: The bombs have gone off in crowded buses, railway stations and in the heart of the financial district, hoping to bring the city`s commuter network and commercial activity to a halt. So far, the people responsible for the blasts have not succeeded. HIMANSHU ROY, DEPUTY COMMISSIONER, POLICE: Everybody here understands, the business community understands that these isolated acts of violence are not something which is going to basically destabilize the economy or the city or its infrastructure and that we in the administration and the police have been doing everything we can, and we continue to do everything we can to make sure that this doesn`t happen again. TRIVEDI: Investors seem to believe that promise. Mumbai continues to attract money from domestic and overseas businesses. SOENKE BRUHNS, DIRECTOR, VORA PACKAGING: We`re investing in India because, from the economic point of view, it makes more sense for us to invest here. We certainly looked at a number of different countries and we did the risk assessment. And for us, it`s just that it makes more sense to come to India, even though we`ve got the occasional terrorist activity here and there. TRIVEDI: That`s as long as companies and citizens consider terrorism in Mumbai to be on par with cities like London and New York, occasional and under control. But should that escalate to the levels of Belfast and Beirut, investors say they will look elsewhere. CYRUS BAHADURJI, CHAIRMAN, TYTAN CHEMICALS: If you had a significant ramp up in terrorist activity, which in turn impacted our ability to do business, our ability to stay open, so to speak, on a day to day basis, I think that would be the main driving force that would lead us into considering a shift in locale. TRIVEDI: There`s no exodus yet. But for Mumbai`s 15 million people, losing businesses to other cities would mean more than just a loss of jobs. It would mean giving up the city`s claim as the country`s financial capital. And more than terrorist bombs, that would hurt far more. Anish Trivedi, NIGHTLY BUSINESS REPORT, Mumbai.
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.
09/12/03: Market Monitor-Ned Riley, Chief Market Strategist at State Street Global Advisors
SUSIE KANGAS: My guest market monitor this week is Ned Riley, Chief Market Strategist at State Street Global Advisors. Welcome back to NIGHTLY BUSINESS REPORT, Ned. Great to see you. NED RILEY, STATE STREET GLOBAL ADVISORS: Well, Paul, thank you for having me. KANGAS: You know, we`ve seen a number of disappointing reports recently, similar to today`s lower than expected retail sales and consumer sentiment. And that suggests the economy`s comeback is wavering. Should we be concerned about this? RILEY: Well, I`m not too concerned about it because I think one number really doesn`t make the whole picture. As a matter of fact, the August retail sales number was a little surprising to me, considering that auto industry sales were the highest in the month of August and department stores and merchandisers said they had one heck of a month. So I think that number is going to be revised. I think consumer spending is going to be up 8.6 percent or so in this third quarter and I think people are going to find the consumers still healthy, wealthy and spending money. KANGAS: Well, the market has had a pretty good rise in the interim period. Do you think it`s accounted for most of any economic recovery? Do you think it`s getting a little ahead of itself? RILEY: Well, do I think it`s discounted some of this recovery. But back in the spring of this year, many people were challenging the notion that the market couldn`t rise because they didn`t have the data. Well, the market rose dramatically and now the data is coming out to support that rise. I think you`re going to see 2004 a better year than 2003, and profits are going to be accelerating as well as more liquidity coming into the market. So I`m optimistic about 2004, as well. KANGAS: Well, you were very optimistic on your last visit with us on February 14. And you gave us some very nice recommendations. The NASDAQ cubes (QQQ) you liked at $24. They`re now around $34. Spiders, S&P Depositary Receipts (SPY), have moved from $84 to $102. And then you gave us some individual stocks like Northern Trust (NTRS), which is way up, and so is Citigroup (C). And you liked the pharmaceuticals, also, back in February. Merck (MRK) hasn`t done much, but Pfizer (PFE) has moved up rather nicely, about 3 1/2 points. Do you do you still own all of them and you`re still with all of those? RILEY: Yes, I am, Paul. We still hold them and I still hold them personally. KANGAS: Well, you`re still bullish. Do you have any new recommendations? Do you still like those S&P spiders? RILEY: I still like the spiders for major diversification of a portfolio, but I like other sectors, as well. KANGAS: OK. All right, now, let`s have a look at what the spiders have done on a chart here. And there we see the Depositary Receipts. Now, you say you like certain sectors of the S&P 500. How about the financial sector? Do you like that? RILEY: Yes, I do, Paul. As a matter of fact, I think the fundamentals are going to bottom out around this third quarter and I think as we go into 2004, we`re going to find that loan demand picks up, the industry is very inexpensive relative to other industries. And I do think a lot of people got down simply because of the adverse publicity around the SEC investigations over the past six months or so. KANGAS: OK, there are other sectors in the spiders like health. Do you like health? RILEY: Health care is a good long-term holding. I think shorter term, we`ve discounted most of the negativity. KANGAS: Yes, this has had a choppy record here. RILEY: Well, it has because most of the pharmaceuticals have pulled back, and that`s a heavy component of that particular index. KANGAS: Right. RILEY: But I still like them. KANGAS: What else in the sector of spiders? RILEY: Well, I like the technology group. I still like it. I had the QQQs before and I like this group right now. It is representative of the 97 companies that are in the S&P 500, Microsoft (MSFT), Intel (INTC) and IBM (IBM) and Cisco (CSCO), the top four. But still, I like technology because it`s a secular growth industry. It is also going to deal with obsolescence since Y2K is so far away. So I like the group and I think it`s cheaply priced. KANGAS: And you own all of these sectors, as well as the spiders still? RILEY: Right. And State Street is the investment manager and trustee for these, but these are available in other companies, as well. So it isn`t just State Street. KANGAS: So you`re taking the diversified approach to the market? RILEY: Most definitely. KANGAS: Right. RILEY: For the average investor, this is the way they should go. KANGAS: We have less than a minute, Ned. The gold stocks have been great performers. Why? RILEY: Well, I think they`re discounting an economic recovery. They`re also, I`d say, rising because of anticipation of inflation. And the gold area has really been in a funk for many, many years after hitting a peak back in -- KANGAS: Is it telling us inflation is about to hit us? RILEY: Well, maybe not about to hit us, but I think I`ve passed the low in inflation and that deflation scare that the Federal Reserve was worried about is behind us, not ahead of us. KANGAS: OK. All right. We`ve got it. Very nice, Ned. We`ll look forward to your next visit. I hope it was as successful as your recommendations on the 14th of February. RILEY: Well, I remember humility, Paul. KANGAS: All the best. Take care. My guest market monitor this week, Ned Riley, Chief Market Strategist at State Street Global Advisors.
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. 09/12/03: Last Word: Seattle's Coffee Tax Controversy
SUSIE GHARIB: And finally tonight, there`s a battle brewing in Seattle and it`s brewing over espresso. The city that got America to love lattes is now proposing a 10 cent tax on a cup of espresso or espresso based coffee that`s sold there. The taxes raised would to go pay for child care for low income families. Last week, a group that opposes the tax dumped coffee sacks into a local lake in a kind of java version of the Boston Tea Party of 1773. And, Paul, Starbucks (SBUX), the coffee conglomerate, you know, has been pretty quiet on the issue, only donating money to a coalition opposing the tax. PAUL KANGAS: And it looks like Seattle has found new grounds for taxing. GHARIB: Either that or they`re going to be drinking a lot of tea. KANGAS: Yes.
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.
9/12/03:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Given those disappointing reports on retail sales
and that drop in consumer sentiment, it was no surprise to see an
early sell-off on Wall Street. After an hour of trading, the Dow
fell to a 73 point loss and the NASDAQ Composite was down 20. As
bargain hunters stepped in, the market slowly began to trim its
losses, with the banking and housing stocks leading the way thanks
to a decline in interest rates as the bond market rallied. By early
afternoon, the Dow was down only 37 points, the NASDAQ off just
12. The upturn gained enough momentum to get the market narrowly
into positive ground by the final bell. So the Dow Industrial average
closed up 11.79, at 9,471.55 today. The Dow fell twice and rose
three times this week, for a net loss of 31.79. The NASDAQ Composite
was up 8.94, to 1,855.03 today. And, like the Dow, it also fell
twice and rose three times this week, but it lost 3.21 overall.
The Standard & Poor`s 500 Index gained 2.21 points, to close at
1,018.63 today. In the debt market, the 10-year note rose 16/32,
to 99 31/32, putting the yield at 4.25 percent.
The most active big board issue on 21.9 million shares, Lucent
Technologies (LU), edging up another $0.05. It gained $0.12 yesterday
after Soundview Technology upgraded it from "under perform" to "neutral"
because of improving demand for Lucent`s products.
Then FirstEnergy (FE), that was up $0.71. The SEC is requesting
data on the company`s restated 2002 results and also those of the
first quarter this year. The company`s transmission lines have been
suspected of being part of the cause of last month`s big blackout.
Incidentally, the company today made a $28 million share offering
priced at $30, and the stock did trade that low at one stage, then
recovered.
Liberty Media (L) down a $0.10.
And then a $0.04 loss in AOL Time Warner (AOL).
General Electric (GE), fifth in volume, was up a $0.05 a share.
Then NorTel Networks (NT) rising a $0.10.
Followed by Pfizer (PFE), a $0.06 gain there.
And then Alcan (AL) rising $3.82. The French aluminum maker Pechiney
(PY) supports Alcan`s bid to acquire it. The combination would displace
ALCOA as the world`s largest aluminum producer. BB&T Capital Brokerage
issued a "strong buy" on Alcan and Pechiney, which trades in ADRs
on the big board, moved up $0.46, to $28.51.
Home Depot (HD) was down $0.17.
Tenth in volume, ExxonMobil (XOM), a $0.27 loss.
Janus Capital Group (JNS) down $1.38. Merrill Lynch downgraded
it from "buy" to "neutral" and Morningstar says recent allegations
of trading misdeed by Janus, Bank America and Strong Funds should
prompt investors to consider selling the mutual funds run by these
firms.
KLM (KLM) moved up $0.77, over a six percent gain. The company
is now in very advanced talks with Air France about a potential
alliance.
And then Toyota Motors (TM) up $2.31. The company appears to be
winning the battle for U.S. market share versus the big three. Morgan
Stanley has been making bullish comments on Toyota in recent days.
And then Conseco (CNO) down $1.46. Now, this is back trading on
the New York Exchange after emerging from bankruptcy yesterday.
And the new trade symbol is CNO.
GTECH Holdings (GTK) fell $1.84. The lottery machine company had
higher second quarter earnings, $0.74 versus $0.66, $0.06 better
than the Street expected, but the company sees third quarter earnings
falling to as low as $0.55 to $0.60, and that`s below the $0.61
Wall Street earnings estimate.
Gildan Activewear (GIL) drop[ping $1.93. The company cut its fiscal
2003 earnings guidance from the $2.70 to $2.80 range -- that`s Canadian
funds -- down to $2.55 to $2.60 a share.
And Titan Corp. (TTN) down $0.62. C.S. First Boston downgraded
it from "outperform" to "neutral." It traded as low as $16.60 today.
Oracle (ORCL) topping the active list on NASDAQ, down $0.43. This
morning the company was out with first quarter earnings, $0.08 versus
last year`s $0.06, in line with estimates. But the company`s new
software license sales were down seven percent and that`s what hurt
the stock.
Microsoft (MSFT) moved up $0.50 a share. The company is doubling
its annual cash dividend from $0.08 to $0.16, and that will give
it a yield of 1/2 of one percent.
Intel (INTC) was up $0.32.
Cisco Systems (CSCO) a drop of a $0.05.
Qualcomm (QCOM) moved up $1.82. Merrill Lynch upgraded it from
"neutral" to "buy."
Moving along, Applied Materials (AMAT) down $0.14.
Followed by Dell Computer (DELL), which was a $0.17 gainer.
Yahoo! (YHOO) up $0.23.
Amgen (AMGN) gained $0.27.
And tenth in volume was eBay (EBAY), with a gain of $0.92.
Sycamore Networks (SCMR) was up $1.07 a share. There`s a Web site
called lightreading.com and today it reported that Cisco, Ciena
(CIEN) and Juniper (JNPR), along with this company, have won Department
of Defense contracts for networking products and services.
And then we see Skibo Financial (SKBO) rising $3.44, a good percentage
move there. Northwest Bancorp (NWSB) is going to acquire this company
for $17 a share cash. And what you`re looking at is a three month
chart of a stock that is very thinly traded.
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.
09/12/03:
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