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Program: Friday, October 10, 2003
10/10/03: The Bulls Celebate Their Birthday With Some Bear News
LINDA O'BRYON: Happy birthday, bull market. It's 1-year-old today, but Wall Street did little to celebrate. The Dow slipped 5 points, while the NASDAQ edged up 3 points, but still setting a new high for this year. And experts say the party isn't over yet. Suzanne Pratt reports. SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Autumn on Wall Street brings shorter days and cooler temperatures. For the stock market, however, the current forecast is a warm one. A year ago stocks bottomed. Since then, the Dow is up nearly 2,400 points, or more than 30 percent. The NASDAQ has soared 70 percent. And the S&P 500 is up more than 30 percent. Despite the fast and furious nature of the rally, many experts say stocks are headed even higher. RONALD HILL, INVESTMENT STRATEGIST, BROWN BROTHERS HARRIMAN: This is a bull market. It is for real. The bear market died October 9th of last year. And so we would expect higher prices by the end of this year, S&P 500 at 1,075 or so; higher prices again next year, S&P 500 perhaps at 1,200. PRATT: Market bulls say better than expected earnings and an accelerating economy should push stocks higher well into next year. In addition, with interest rates still at 40 year lows, stocks should continue to look more appealing to investors than bonds. HILL: We think bonds are actually probably in for a very long-term period of underperformance here. So that after a huge run since the 1980s, bonds have had a great, great long time to outperform. We think they will under perform for a while. PRATT: Nevertheless, other pros worry that the stock market has risen too far too quickly. They say double digit corporate profit gains are already factored into stock prices. And they are concerned the economic recovery is not sustainable. As a result, some say the market is in need of consolidation, or at least a minor pullback. Still others say longer term, stocks are likely to remain in a trading range. JOE MCALINDEN, MORGAN STANLEY INVESTMENT MANAGEMENT: You could argue that we are certainly likely to be in a secular sideways movement. When you look at the first decade of the new century overall, from the year 2000 to the year 2010, stocks are probably going to be moving in a sideways channel. PRATT: Historically, October is known as the jinx month for stocks. But, with a third of this October already finished, the Dow is up a respectable 400 points, or four percent. And the NASDAQ is up seven percent. 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.
LINDA O'BRYON: The U.S. trade deficit narrowed slightly in August on lower imports of cars and oil. But the United States still had a record trade gap with China. Even though the deficit has been improving this year, it is still running far above last year's record high. As Stephanie Woods reports, that imbalance is continuing to put pressure on the U.S. dollar. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Worried U.S. manufacturing jobs are being lost to China, the Bush administration has called on the Chinese to loosen their currency. Today the President's spokesman affirmed that message. SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We will continue to stress the importance of making sure that there is a level playing field. The President is concerned about our manufacturing sector particularly, where there have been heavy job losses. WOODS: U.S. manufacturers are happy with what they're hearing from the administration now. FRANK VARGO, ECONOMIST, NATIONAL ASSOCIATION OF MANUFACTURERS: What we have asked for is that the administration really explain that the value of the dollar is going to be set by the market free of government intervention, and they've done that. WOODS: But the markets have gotten mixed signals. Treasury Secretary John Snow says the administration continues to support a strong dollar, but also-called on G7 countries to support flexibility in currency markets, which traders understood to mean a weaker dollar. GREGORY SALVAGGIOM VICE PRESIDENT CAPITAL MARKETS, TEMPUS CONSULTING: If the U.S. administration will continue with this we believe in a strong dollar wink- wink policy, we support the G7 statement, the market will not look to economic fundamentals in the U.S. WOODS: There's a risk a weak dollar could inflate prices for consumers and in turn boost interest rates. But economists say that's not an immediate worry, since dollar fluctuations take time to factor into the economy. DOUG LEE, PRESIDENT, ECONOMICS FROM WASHINGTON: It takes a long time between the time the dollar's value changes and the time importers and exporters change their prices. So we don't see these impacts show up very quickly. The kind of trade numbers that we're seeing now are more a reflection of what was happening to the dollar a year ago than what's happening right now. WOODS: As long as the U.S. continues to import more than it exports, most economists forecast continued weakness for the dollar. 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.
10/10/03: Saks Fifth Avenue Is Bound For Japan
LINDA O'BRYON: Japanese women won't have to travel to the United States anymore to shop at Saks Fifth Avenue (SKS). The upscale retailer recently announced plans to open a store in Japan in 2005. Saks hopes to cash in on the fact that young Japanese women crave famous branded goods. But as Lucy Craft reports from Tokyo, the Saks announcement coincides with a major shift in Japan's luxury market. LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Not so long ago, the fastest way to unload a $5,000 handbag or $300 key chain in Japan was to label it Gucci (GUC), Chanel or Prada. Even today Japan remains a nation of fashion victims, utterly smitten with snob brand. Despite by reports by at least one research institute that sales of pricey goods are wrinkling, retail experts say Japan is still a mecca for labels, which have invested aggressively in eye catching boutiques, flashy advertising and innovative merchandise. Japan is still the number one market for the LVMH stable of luxury brands, one of the few to report sales. Last year Japan accounted for over one third of global sales for the Paris-based firm. Saks enters Japan as a widening gap separates winners and losers in the increasingly competitive high fashion market here. HIROSHI FUKUIIZUMI, REP. DIRECTOR GARDE USP (THROUGH TRANSLATOR): Ten years ago Japanese leaped to buy anything that had a high fashion brand name. But nowadays consumers are more discerning and a clear divide has emerged between what sells and what doesn't. Now that closets are brimming with name labels, customers are picky about new purchases. CRAFT: A surge in the number of new luxury stores has literally and figuratively transformed the landscape of Tokyo, making it harder to attract the single females who comprise the core of haute couture shoppers in Japan. SETH SULKIN, PRESIDENT & CEO, PACIFICA MALLS: Though I think the top brands, what Japanese call the super brands like Louis Vitton and Air Mase (ph), etc., they have done extremely well, whereas consumption of the medium to lower brands, or the, you know, the middle market brands, have not done well. So that's where I think -- the people that are truly feeling the pain. CRAFT: With both famous brands and high end private labels duking it out for market share, some experts are dubious about prospects for Saks, which is still largely unknown to most consumers here. SULKIN: I would say Saks is going to have a very great challenge here. Japan has too many department stores today and it's very hard to differentiate among the department stores. CRAFT: But others say that by offering concierge quality service and a variety of chic brands under one roof, Saks could draw even jaded Japanese fashionistas. REIKO TAKAYAMA, MANAGING DIRECTOR, SHOP SYSTEM STUDY SOCIETY (THROUGH TRANSLATOR): The New York Saks first floor cosmetics counter, for instance, is cutting edge. Unlike other high end stores, it helps customers compare a variety of luxury brands. Japan has never had a high fashion specialty store like this, so I think Saks has a good chance at success. CRAFT: A spokesman for Saks Fifth Avenue in Tokyo declined to comment on the company's Japan venture. The company has announced it plans to build as many as 10 stores around the country, and create a beachhead for entry into China and South Korea. In order to succeed in Japan's increasingly luxury goods saturated market, experts say Saks will have to bring more to Japan than just its Fifth Avenue pedigree. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.
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.
10/10/03: Market Monitor- Al Goldman, Chief Market Strategist for A.G. Edwards
PAUL KANGAS: My guest market monitor this week is Al Goldman, Chief Market Strategist for A.G. Edwards. And welcome back to NIGHTLY BUSINESS REPORT, Al. Great to see you. AL GOLDMAN, CHIEF MARKET STRATEGIST, A.G. EDWARDS: Thank you, Paul. It's a pleasure to be with you. KANGAS: You know, we're just beginning to see the gusher of third quarter corporate earnings reports. How do you think it's going so far, what you've seen? GOLDMAN: I've been very pleased with third quarter. Pre-announcements were much less negative than we saw in the first and second quarter. And projections are for earnings to be up in the order of 18 or 19 percent, albeit against a weak quarter last year. But the trend is your friend. So, I'm looking for good earnings and so is the marketplace. That's why we've had such a good rally. KANGAS: So you think this rally is supported by the corporate earnings outlook? GOLDMAN: I think it's supported by the outlook for corporate earnings and also the outlook for an improving economy. We've already had six quarters of positive GDP. And so there are lot of fundamentals going upward in this marketplace, and supporting the bull. KANGAS: Are you at all concerned about the recent pickup in speculative trading activity? We're back to momentum trading and penny stock action, all the things that created the bubble of the late '90s. Does that worry you? GOLDMAN: Paul, there are segments of the market where speculation has been running rampant. And penny stocks is just one of them, and the NASDAQ Composite, which is up 52 percent since its low in March. But the broad market, in my opinion, is still under valued by about 10 percent. So the easy money has probably been made and we're going to have to be more selective and work harder and smarter. But it's still a market where there are selectively good stocks to buy. KANGAS: Well, on your last visit with us, April 17 of this year, you recommended about six stocks, and they did pretty well. We have them up on the screen here. Applied Materials (AMAT) is up very comfortably, almost 40 percent, Dell (DELL) is up about almost 6 points. Those were two good ones. And then we looked at Microsoft (MSFT), which has edged up about 3 points from where it was back in April. And even G.E. is still in the plus, despite today's rather flat earnings report. And the final two, Pfizer (PFE) -- now this thing just can't seem to get out of the its own way, FedEx (FDX) has done extremely well. Just a word on Pfizer, why can't this stock get out of this pattern? GOLDMAN: The drug stocks have just been on the sidelines and no one is paying attention because confidence is growing in the overall economy. So why buy defensive growth stocks? But we still like the fundamentals long-term on Pfizer. KANGAS: All right, let's get specific here. What fundamentals particularly do you like of which companies? GOLDMAN: Well, there's a number. But in the consumer cyclical we like Harley- Davidson (HDI), with its strong growth record. The stock has just broken out of a two month base. KANGAS: OK, I think we have a little chart of it. There it is. Yes, it has broken out nicely. But it's also had quite a run-up. GOLDMAN: Well, yes, but it did rest for two months. And, by the way, my favorites, we have no investment banking relationship with any of them, nor do I own or my family own any stocks. KANGAS: OK. GOLDMAN: In the high tech, where I still like selectively the better quality, I like Microsoft. The shares have been moving, but they're still less than half of their bull market high. A very strong balance. And then in the energy area, Pride International (PDE). KANGAS: Yes, what is Pride International? What is their business? GOLDMAN: Pride International is a global driller and explorer for oil and gas, both on and offshore. The group has been out of favor, lately been acting a little better. And we're looking for a jack up, if you'll excuse the expression, of earnings next year. That's what they do. KANGAS: OK. Does the combination of a weak dollar and strong gold prices bother you? GOLDMAN: I think the dollar, ideally, will level off someplace. However, the trend in the dollar versus euro is still down. The dollar is already down 30 percent from its high and I don't see the dollar turning around sharply until the Fed raises interest rates, which is probably six to nine months off. Gold doesn't bother me. I think it's just been a trader's delight. I do not think that we are deflating our currency worldwide and I would not be chasing gold up here. Ideally, the dollar does level off, though, and makes everybody more comfortable. KANGAS: We just have 20 seconds left, Al. Oil spiked up about $32 a barrel today. What's going on there? GOLDMAN: Well, it's concern about we're coming into the winter. OPEC has already talked about reducing production. Oil is slowly but surely improving. KANGAS: But that's one of the reasons why you like Pride International, I assume. GOLDMAN: I'd like Pride International even if the price of oil was in the $23 to $25 a barrel. That's still plenty of incentive for exploration. KANGAS: OK. All right, interesting, as always, Al. Thanks very much for being with us. GOLDMAN: My pleasure. Thank you. KANGAS: My guest, Al Goldman, Chief Market Strategist, A. G. Edwards.
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.
LINDA O'BRYON: Our Friday market monitor guest is Richard Steinberg, Portfolio Manager at the Reserve Large Cap Growth Fund. Monday, the bond market will be closed for Columbus Day. Wednesday, it's September retail sales. Thursday, the Consumer Price Index and industrial production for September. And Friday, it's September housing starts.
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. 10/10/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened with a modest rebound from yesterday's late sell- off. Some of the buying was prompted by news that the September Producer Price Index was up a very mild 3/10 percent and it was unchanged, excluding the food and energy components. General Electric's (GE) third quarter earnings and fourth quarter outlook, which we'll have details on shortly, acted as somewhat of a drag on the market. At mid session, the Dow sank to an 8 point loss and the NASDAQ Index was down about 2 points. Stocks lapsed into a very narrow trading range this afternoon, with a spike up to $32 per barrel in oil prices and normal pre-weekend selling pressures quashing buying enthusiasm. The Dow Industrial average closed down 5 1/3 points, at 9,674.68, and the Industrial average rose twice this week -- or it fell twice and rose three times, for an overall rise of 102.37 points. That's 1.1 percent for the week. The NASDAQ Composite managed a gain of 3.41 today, ending at 1,915.31. For the week, it fell once and rose four times, and had a net gain of 34 3/4 points, or 1.8 percent. The Standard & Poor's 500 Index ended down 2/3 of a point, at 1,038.06 today. Over on the bond market, the 10-year note rose 10/32, to 99 31/32, putting the yield at 4.26 percent. The most active big board issue was General Electric (GE), trading 27.2 million shares and down $0.81. That's probably because the company lowered its fourth quarter earnings outlook a touch. Lucent Technologies (LU) managed to gain $0.03. And then Computer Associates (CA) dropping another $2.45 after falling $3 yesterday, when the company asked three top executives, including the chief financial officer, to resign in the wake of an audit company inquiry. Corning (GLW) moved up $0.18. NorTel Networks (NT) a $0.16 rise, number five in big board volume. Then Pfizer (PFE), down $0.02. AOL Time Warner (AOL) a $0.21 gain. Texas Instruments (TXN) moved up $0.49 a share. Deutsche Bank Securities upgraded Texas Instruments from "sell" to "hold." Eastman Kodak (EK) moving up $0.71 after a rough week. SBC Communications (SBC), tenth in volume, was a $0.09 loser. Coachmen Industries (COA) one of the biggest gainers of the day, up $3.21, or 25 percent. The R.V. and mobile home maker sees third quarter earnings coming in at $0.35 -- maybe $0.33 to $0.35 -- and that's up from $0.27 a year ago and well above the $0.25 Wall Street estimate. It will be the best earnings quarter in the past 16 quarters for Coachmen. Amersham (AHM), these are the American Depository shares. G.E., as you just heard, is going to acquire this company for $9.5 billion. The company makes medical diagnostic equipment and the deal appears to be worth somewhere around $70 to $80 per Amersham share. That's the adds'. A complicated deal. Countrywide Financial (CFC) having a good day, up $8.25. Positive comments about the company's outlook came today from the chief executive officer. He sees 2003 earnings better than the expected $13 to $15 a share, which the company projected not long ago. Interpool (IPX), this company is involved in cargo containers and the president and chief operating officer resigned today amid an accounting probe. Another one of those. Then AirTran Holdings (AII) down $2.38, or nearly 12 percent. Discount airlines were all down today after UBS Financial said they will be unable to sustain profit margin growth as competitive capacity returns to the airline industry. La-Z-Boy (LZB) down $3.07. The company cut its previous second quarter earnings estimate of $0.38 to $0.43, all the way down to $0.26 to $0.29. The company cited Hurricane Isabel, which kept a lot of buyers out of showrooms. And that had a negative impact on a lot of furniture makers, including Ethan Allen (ETH), down $1.29; Furniture Brands (FBN), off $1.21; and Stanley Furniture (STLY), which trades on NASDAQ, down $0.56. Hilb, Rogal & Hamilton (HRH), this is an insurance company. The stock down $1.88. The company sees lower than expected third quarter earnings of $0.54 to $0.55. The Street estimate had been $0.58. And today Merrill Lynch downgraded the stock from "buy" to just a "neutral" rating. Topping the active list on the NASDAQ, Intel (INTC) moving up $0.66. But Microsoft (MSFT) fell $0.03. Cisco Systems (CSCO) a $0.16 drop. Juniper Networks (JNPR) down $0.78, even though after the close yesterday the company reported a third quarter turnaround, earnings of $0.02 a share versus a loss of $0.24 the previous year. But keep in mind, the 52 week low for this stock was $4.36, so plenty of room for profit taking there. Yahoo! (YHOO) up $0.41 after those good earnings out yesterday. Amazon.com (AMZN) up $0.20. As was the case with Applied Materials (AMAT). Qualcomm (QCOM) gained $0.65. No change in Oracle (ORCL). And Amgen (AMGN) was down $0.47 a share. Zoltek (ZOLT) up $1.55. How's that for a percentage move up, over 45 percent? The company said it got its first one million pound order for commercial grade carbon from an Asian sporting goods manufacturer and also had two other 800,000 pound orders. Overstock.com (OSTK) down $1.53, or 9 1/2 percent. This is an online discount retailer and the chief executive officer said two projects, namely one, a search technology, and, two, a branding campaign, have taken more time and money than expected. And the Pacific Growth Brokerage repeated an "under weight" rating for Overstock. 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.
10/10/03:
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