Program: Thursday, October 2, 2003

The New NYSE Chairman Meets With The Board
The September Employment Report Preview
Inflation Protected Internotes
3rd Quarter Mutual Fund Report With Christine Benz, Editor of "Morningstar Fund Investor"
Last Word: Texas-The Fry All State
Paul Kangas' Stocks In The News
Market Stats

10/02/03: The New NYSE Chairman Meets With The Board

JEFF YASTINE: The action at the New York Stock Exchange today was not on the trading floor, but in the board room. The Exchange's Interim Chairman, John Reed, presided over his first board of directors meeting. No substantive changes came out of it, but Reed is promising big changes ahead. Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: New York Stock Exchange Interim Chairman John Reed called his first board meeting "a good discussion." Topping the agenda was the formal report on corporate governance presented by Leon Panetta and former board member Carl McCall, who quit last week. The report included 27 proposals, which Reed refused to make public at this time.

JOHN REED, INTERIM CHAIRMAN, NYSE: I think the most important thing about which there is clear agreement is the Exchange is going to at least probably go beyond conforming to the rules that we expect of listed companies.

PRATT: Reed also told reporters after the meeting that there was a healthy discussion on the merits of keeping the Exchange's regulatory arm in-house, something on which he insists.

REED: Our position is we want to keep the regulatory structure here and we must come up with an architecture for governance that makes clear to everybody that the presence of industry people and so forth doesn't in any way compromise that.

PRATT: Also covered was the issue of transparency, particularly the disclosure of salaries of top exchange officials. While Reed refused to make those numbers public now, he said he would do so within the next month. Among the topics not covered at today's meeting were Dick Grasso's severance package, any talk of an initial public offering by the exchange and any potential list of candidates for permanent exchange chairman. And despite continued public criticism, there were no further resignations of board members at today's meeting. That's something corporate board advisors say is not surprising.

SARAH STEWART, PARTNER, BOARDROOM CONSULTANTS: It may not be easy to get members to resign at this point, because that implies that they have been responsible in a negative way. But I don't think it will be difficult to get people to serve on the New York Stock Exchange board. And the reason that people will want to do it is because there is a great sense of public duty involved.

PRATT: As for a timetable for all of this, Reed said today by year end he hopes to see changes to corporate governance and board composition and he hopes to see a successor in place to implement those changes. Suzanne Pratt, 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.

10/02/03: The September Employment Report Preview

SUSIE GHARIB: Tomorrow we'll get another look at how the economy is doing with the release of the September employment report. Economists expect a loss of 30,000 more jobs and the unemployment rate bumping up to 6.2 percent. As Stephanie Woods reports, those numbers are sending a clear message to lawmakers on Capitol Hill.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: A shaky economy at home and continued unrest in Iraq have pushed President Bush's approval rating to an all time low. With the key election issues of peace and prosperity in mind, Republican Congressional leaders are reframing their legislative agenda.

SEN. KAY BAILEY HUTCHISON (R-TX), VICE CHAIRMAN, REPUBLICAN CONFERENCE: We want more jobs created in our country and the stability that we can provide through these incentives and this legislation to create a private sector job market will be our priority.

WOODS: Republicans say those jobs will come through the energy bill, curbing class action lawsuits and tax breaks for companies with large exports. Democrats call those ideas warmed over stew. They want to focus debate on Iraq and continue to criticize the present's $87 billion funding request.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: This is a staggering number for what they call the reconstruction of Iraq. It sounds like the gold plated construction of Iraq and these numbers must be subjected to the harshest scrutiny.

WOODS: Democrats now see their chance to take the White House in 2004. Analysts say that puts added pressure on Republicans to pass legislation now on the GOP's terms.

JOANNE WOODWARD, POLICY ANALYST, GOLDMAN SACHS: Given those high stakes political games that are being, you know, played here with some of these major issues, the intent of the Republicans is to get these things done now. Nothing is going to happen in this town next year.

WOODS: Of course, the one thing is going happen in this town next year, a presidential election. Voters will be asking the tough questions about the economy, health care and jobs. Politicians are battling it out now to make sure they have the right answers. Stephanie Woods, 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.

10/02/03: Inflation Protected Internotes

SUSIE GHARIB: An improving economy has some investors worried about an old enemy: inflation. But there's a new way to hedge against it. Diane Eastabrook takes a look at a new type of corporate bond that has inflation protection.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fuel prices are rising, factory orders are climbing and consumers are spending money. Could inflation be just around the corner? Chicago based In Capital thinks it is. So, the investment bank has begun underwriting what it calls inflation protected internotes. They're 10 year corporate bonds that have coupon payments linked to changes in the All Urban Consumer Price Index.

THOMAS RICKETTS, PRESIDENT & CEO, INCAPITAL LLC: It's designed for the people that cannot get inflation protection and income with the current products on the market. So, to that extent, it does tend to have an older natural investor base, a more mature retired, perhaps, investor base.

EASTABROOK: The product works like this. In Capital sets yields by determining a base rate for the bond, say 2 1/4 percent annually. Then each month it adds the current CPIU rate, for example, 2.16 percent. That yields a coupon payment of 4.41 percent.

RICKETTS: And that's paid out monthly over the life of the bond, adjusted every month for changes in inflation. At the end of the life of the bond, at maturity, you receive your $1,000 back.

EASTABROOK: There are drawbacks to inflation protected internotes. They tend to offer a lower yield up front than a traditional corporate bond. And if the inflation rate falls, so will monthly coupon payments. Still, Howard Klieger, a broker for RBC Dain Rauscher, says so far the product has been popular with many his clients. He's sold several of the new inflation Indexed bonds to retirees who are trying to protect their bond heavy portfolios.

HOWARD KLIEGER, SENIOR VICE PRESIDENT, RBC DAIN RAUSCHER: The only people we've been discouraging from this are stock market buyers, because this won't present the type of returns that a stock purchaser would like.

EASTABROOK: So far, Household Finance (HTB) is the only firm to offer inflation protected internotes. But G.E. Capital (GEA), Boeing Capital (BA) and DaimlerChrysler (DCX), all In Capital clients, say they are familiar with the new product and might offer it in the future. In Capital is optimistic more companies will begin offering inflation adjusted internotes in the coming weeks. It's also planning to offer a similar product that matures in five years. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

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.

10/02/03: 3rd Quarter Mutual Fund Report With Christine Benz, Editor of "Morningstar Fund Investor"

JEFF YASTINE: Well, now that the third quarter is history, it's time to see which mutual funds came out smelling like roses between July and September. And here to help us with that review is Christine Benz, Editor of "Morningstar Fund Investor." And, Christine, welcome back to NIGHTLY BUSINESS REPORT.

CHRISTINE BENZ, EDITOR, MORNINGSTAR FUND INVESTOR: Hi, Jeff. Nice to see you.

YASTINE: Well, let's take a look at the top fund categories of the quarter. And it looks like gold funds once again came out on top.

BENZ: That's absolutely right. And what gold funds were responding was to strength in gold prices. As the dollar plummeted investors stock to gold because they see it as more or less a stable store of value.

YASTINE: All right, now, let's look at the individual best performing funds for the quarter. And the top five, again, either seem to be gold funds or Japanese funds.

BENZ: That's right. Gold funds are way up for the quarter, and they're and also way up over the past three years. These funds did really, really well during the bear market. Japan is something that we haven't necessarily seen on our radar the past few years. But we're talking to a lot of foreign stock fund managers who are saying that they are responding to both an improvement in the Japanese economy, and they're also saying that Japanese corporate management is finally getting around to implementing some reforms that they should have made a long time ago.

YASTINE: So the economy in Japan coming back perhaps a bit. And speaking of that, let's move on to a longer time frame for the one year period, the high tech fund Jacob Internet, also coming back. It was clearly the leader here, nearly tripling its investors' money. But what's the thing we're not seeing about this?

BENZ: The thing that you're not seeing is that this fund is just a huge boom and bust story. So this is a fund that was launched at, in my opinion, probably the worst conceivable time, right at the beginning of 2000, just as Internet stocks were ready to sell-off. So even though it's way up over the past year, this is a fund that is actually down 85 percent over the course of its life.

YASTINE: That's amazing. It shows you just how far down some of those have come. The three year leader is a gold fund that trailed some of the other gold funds for the past quarter. That's the First Eagle Gold (FEGIX). Does manager Jean-Marie Eveillard still have his golden touch?

BENZ: I would say so. I think Jean-Marie, in a lot of ways, is the class of this category. He's a manager, though, who has been getting a little defensive on gold. He thinks that the sector overall is a bit pricey so he's been positioning the fund definitively. And I think that's something investors looking at gold should think about. If one of the top managers is defensive, maybe you should think twice adding money to the group right now.

YASTINE: Let's take a look at the largest funds. It doesn't seem to have been a rip roaring quarter. In fact, the largest gain was registered by Growth Fund of America and was up just 3 2/3 percent.

BENZ: That's right. It wasn't a scintillating quarter for stock funds. But I think actually on the heels of a terrific second quarter, which we did have, I think the fact if funds are slightly up for the quarter, I think that's not such a bad thing. In fact, I think it's shaping up to be a pretty good year overall for stock fund investors.

YASTINE: Now, we understand that investors are starting to get nervous about bond funds in the third quarter and they pulled money out of bond funds in a big way. Now, why the sudden change of heart?

BENZ: Well, what we saw during the summer, really, in the months of June, July and August, was a big sell-off in the bond market. So you had bonds and bond funds tumbling because interest rates were rising. So I think a lot of investors who flocked to bond funds during the bear market for stocks are getting a rude awakening and are moving out of some of the longer-term, higher quality bond funds.

YASTINE: Now, getting back to stock funds, if you had to guess which equity category would do best in the year's final quarter, which we're now starting, which you would pick?

BENZ: We're hearing a lot of enthusiasm from fund managers about foreign stocks. I think most would tell that they're finding valuations more compelling overseas than in the U.S. And another pocket, I think, of potential strength is the dividend paying stocks, so a lot of these stodgy pharmaceuticals and big energy companies. I think that the stocks haven't participated quite as much in the rally. So I might look at a traditional sort of equity income fund, if you don't already have something like that in your portfolio.

YASTINE: All right, we'll have to see how it all shapes up in the next three months or so.

BENZ: Thanks, Jeff.

YASTINE: Christine, thanks for joining us. Our guest, Christine Benz of "Morningstar Fund Investor."

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.

10/02/03: Last Word: Texas-The Fry All State

SUSIE GHARIB: And finally, people in Texas have always marched to their own drummer, or, in this case, their own deep fryer. At this year's State Fair of Texas, which is now underway in Dallas, the hottest thing going is fried Oreos. Last year fried Twinkies were a big hit, but fried Oreos aren't alone in their newfound popularity. Fairgoers can also munch on fried pickles, fried cheesecake, fried okra, fried corn on the cob and fried tamales. And that's in addition to the usual fried turkey legs, fried ice cream -- I have a hard time imagining that one -- and fried Snickers bars. And, Jeff, for a state that made a fortune in oil drilling, I guess you could say all this frying makes sense, as long as they're not frying it in crude.

YASTINE: Can you get fried Snickers bars in New York City?

GHARIB: Not that I know of.

YASTINE: Maybe a new restaurant that will come along at some point.

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.

10/02/03: "Paul Kangas' Stocks In The News"

JEFF YASTINE: Well, it was a quiet session for stocks as the Indexes consolidated yesterday's double and triple digit gains. Those marked the beginning of the fourth quarter. Some early buying put the blue chips into positive territory, but once the initial purchases were made, both the Dow and NASDAQ began to drift. September's employment report is due out tomorrow morning, so many traders are waiting for that to take their next cue on the market's direction.

The Indexes began to move higher in the afternoon, but backed off in that last hour, to finish with marginal gains. The Dow rising 18 2/3 points, to close at 9,487. The NASDAQ Composite gained nearly 4 points, to 1,836. And the S&P edging up 2 points, to finish at 1,020.

Bond traders were also focused on tomorrow's data on September payrolls. The 10- year note falling 16/32, to 102 2/32. That pushed the yield back up to four percent.

Topping our list, we have Nokia (NOK) rising $0.54. Bank of America (BAC) says it expects a rebound in demand for cell phone handsets on an industry wide basis. It expects sales volumes to rise by 19 percent here in the second half of the year.

Pfizer (PFE) climbing $0.25.

GE (GE) advancing $0.12.

AT&T Wireless (AWE) up $0.28.

AOL Time Warner (AOL) up $0.19.

No change in EMC (EMC).

But Lucent Technologies (LU) edged up $0.02.

NorTel Networks (NT) advanced $0.08.

And Citigroup (C) up a $0.25.

Hewlett-Packard (HPQ) losing $0.19.

Caterpillar (CAT) rising $1.36. C.S. First Boston raised its earnings estimates for Caterpillar. The analyst thinks the company may win a government contract for power generating equipment to be used in Iraqi reconstruction efforts.

IBM (IBM) falling $0.27. Big Blue announced job cuts for 720 service employees.

And as you heard, shares of Wendy's International (WEN) super sized today, climbing $1.09. The company reporting stronger September sales. Goldman Sachs and Smith Barney each raising their 2004 earnings estimates.

Mylan Labs (MYL) jumped $2.40. Merrill Lynch expects strong sales of its generic heartburn drug Prilosec to drive second quarter earnings above current seems of $0.40 a share.

NDCHealth (NDC) advanced $2.57. The company is maintaining its 2004 earnings forecast of $1.08 to $1.25 a share. Yesterday, the company reported a 34 percent drop in first quarter profits.

PetroKazakhstan (PKN) rising $1.64. This used to be Hurricane Hydrocarbons. The stock rebounding following yesterday's reports in which authorities in Kazakhstan said they might confiscate millions from the company because of alleged price manipulation. Well, today the company, which is based in Canada, said it reviewed the government claims and it noticed some discrepancies. Any penalties, though, should amount to about $400,000.

Graftech International (GTI) rising $0.72. Graftech is a maker of synthetic graphite. It offered 22 million shares priced at $8 each.

First American (FAF) gaining $1.72. The insurer acquired a pair of real estate service businesses from Agon, the big Dutch insurance company, for $400 million. The deal should be accretive to First American's profits.

Shares in Friedman's (FRM), the jewelry retailer, gaining -- excuse me, falling $1.28. The Justice Department is investigating fraud allegations made by another firm, Capital Factors. It is suing Friedman's and 13 other jewelers.

And here's a look at one of them. Whitehall Jewelers (JWL) also under pressure, the stock falling $0.73. Whitehall says it's cooperating with the Justice Department, the SEC and the New York attorney general's office, which are all probing similar charges.

Over on the NASDAQ, sort of a mixed board here.

Intel (INTC) slipping a $0.01.

Cisco Systems (CSCO) falling $0.21.

Microsoft (MSFT) losing $0.02.

Applied Materials (AMAT) down a $0.01.

Yahoo! (YHOO), though, up $1.51. It settled a copyright infringement lawsuit with EMI (EMI) and some other record labels.

Oracle (ORCL) was off $0.29 for the day.

SINA (SINA) up $2.21.

UTStarcom (UTSI) up $2.35, a nice reaction to the company raising its revenue and earnings forecast for the third quarter and the year. Apparently business is quite good in its Chinese market.

Dell (DELL) falling $0.15.

Amgen (AMGN) losing $0.13.

Here's a look at Sun Micro (SUNW), which fell another two percent following yesterday's profit warning. Merrill Lynch analysts wrote an open letter to Sun Micro's CEO, Scott McNealy, saying the company needed job cuts, it needs refocusing on its core computing business and a rapid return to profitability. Now, Sun talked with NIGHTLY BUSINESS REPORT. They told us that they are actively addressing all the issues raised in Merrill Lynch's report, it's making progress and that Steve Milunovich, who's the Merrill Lynch analyst, and his team, have a standing invitation to come and discuss the issues they raised with Sun management. Moody's separately downgraded Sun's debt rating, as well.

Netflix (NFLX) surged nearly $6.50. The company updating its subscriber growth. It said active subscribers to its DVD rental service rose more than 70 percent on a year-over-year basis. It comes out with earnings in two weeks.

NetIQ (NTIQ) falling $1.18. The shares falling sharply, with the company cutting its fiscal first quarter revenue forecasts. The company did not say why it was lowering its revenue estimates. A Montgomery Scott analyst thinks it may be due to problems in their systems management unit.

And finally, Helen of Troy (HELE), the shares falling $2.25 and about six times average volume. Earnings rose about 40 percent compared to year ago levels, but it received an artificial boost due to a lower federal tax rate. Inventories were also rising so investors were selling the stock.

And those are our 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.

10/02/03: Market Stats

   

                                      NET    PERCENT
                         CLOSE     CHANGE     CHANGE
DOW CLOSE              9487.80     +18.60       + .2
HIGH                                         9511.06
LOW                                          9427.65

NASDAQ COMP.           1836.22      +3.97        +.2
HIGH                                         1842.55
LOW                                          1823.64

VOLUME                                       1,269.4
PREVIOUS                                     1,507.9
UP VOLUME                                      821.9
DOWN VOLUME                                    419.3

DOW TRANSPORTS         2743.67      +7.33       + .3
DOW UTILITIES           253.32       +.29       + .1
CLOSING TICK                                    +602

S&P 500                1020.24      +2.02       + .2
S&P 100                 511.20       +.87       + .2
MIDCAP 400              523.71      +2.32       + .4
REUTERS/CRB             244.56       +.28       + .1

NYSE COMPOSITE         5779.96     +11.64       + .2
VALUE LINE              327.23      +1.46       0.45
RUSSELL 2000             503.2      +2.88       0.58
WILSHIRE 5000          9887.36     +27.80       0.28

U.S. TREASURIES
5-YEAR NOTE 3.125%
Sept. 15,2008        101  5/32      -8/32       2.87

10-YEAR NOTE 4.25%
Aug. 15,2013         102  2/32     -16/32       4.00

30-YEAR NOTE 5.375%
Feb. 15, 2031        106 17/32     -23/32       4.94

LEHMAN BROS.
LONG BOND INDEX        1763.58     -12.74


DOW CLOSE              9487.80     +18.60       + .2
ADVANCES                                        1941
DECLINES                                        1265
NEW HIGHS                                        245
NEW LOWS                                           5

                                      NET    PERCENT
NYSE MOST ACTIVES    4PM CLOSE     CHANGE     CHANGE
NOK    Nokia             16.56       +.54       +3.4
PFE    Pfizer            31.05       +.25        +.8
GE     GE                30.75       +.12        +.4
AWE    AT&T Wireless      8.49       +.28       +3.4
AOL    AOL Time Warner   15.51       +.19       +1.2
EMC    EMC Corp          13.00      unch.      unch.
LU     Lucent Tech        2.16       +.02        +.9
NT     Nortel Networks    4.30       +.08       +1.9
C      Citigroup         47.25       +.25        +.5
HPQ    Hewlett-Packard   19.52       -.19       -1.0

NASDAQ CLOSE           1836.22     + 3.97       + .2
VOLUME                                       1,607.7
PREVIOUS                                     1,828.9
ADVANCES                                        1739
DECLINES                                        1401

NASDAQ ACTIVES
INTC   Intel             28.62       -.01        -.0
CSCO   Cisco Systems     19.99       -.21       -1.0
MSFT   Microsoft         28.50       -.02        -.1
AMAT   Applied Matl      18.55       -.01        -.1
YHOO   Yahoo!            37.91      +1.51       +4.2
ORCL   Oracle            11.40       -.29       -2.5
SINA   Sina Corp         37.47      +2.21       +6.3
UTSI   UTStarcom         34.26      +2.35       +7.4
DELL   Dell Inc          33.87       -.15        -.4
AMGN   Amgen             66.15       -.13        -.2

AMEX CLOSE             1007.02     + 3.31       + .3

INDEX SHARES
DIA    DIAMONDS TRUST    95.19       +.38        +.4
QQQ    NASDAQ 100        33.26       +.11        +.3
SPY    S&P DEP.RECEIPTS 102.48       +.40        +.4

STOCKS IN THE NEWS
CAT    Caterpillar       72.70      +1.36       +1.9
IBM    IBM               90.08       -.27        -.3
WEN    Wendys Intl       34.19      +1.09       +3.3
MYL    Mylan Labs        41.40      +2.40       +6.2
NDC    NDChealth         23.64      +2.57      +12.2
PKN    PetroKazakhstan   20.00      +1.64       +8.9
GTI    GrafTech Intl      8.95       +.72       +8.8
FAF    First American    27.10      +1.72       +6.8
FRM    Friedmans         12.72      -1.28       -9.1
JWL    Whitehall Jewel   11.15       -.73       -6.1
SUNW   Sun Micro          3.20       -.05       -1.5
NFLX   Netflix           40.97      +6.46      +18.7
NTIQ   NetIQ             11.24      -1.18       -9.5
HELE   Helen Of Troy     22.83      -2.28       -9.1