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Program: Wednesday, October 29, 2003
10/29/03: The Medicare Drug Benefit Dilemma
SUSIE GHARIB: President Bush called on Congress today to send him a prescription drug benefit for Medicare no later than the end of this year. Both the House and Senate passed different Medicare plans this summer, but for the past two months, key lawmakers have been wrangling over their differences. As Stephanie Woods reports, pressure is building from all sides. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: In a room filled with senior citizens and interest groups who support the Medicare plan, President Bush urged lawmakers to deliver the bill to his desk by the end of the year. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We have the obligation to give seniors more choices and better benefits. We have come far, and now is the time to finish the job. WOODS: That`s just what a handful of lawmakers are doing in meetings behind closed doors. But they`re still hung up on key issues, including how much seniors will pay for drug coverage, whether the government will step in if private plans don`t, and setting up health savings accounts. Interest groups are turning up the heat. The Alliance for Retired Americans is running this ad. UNIDENTIFIED MALE: Did you know the Medicare drug plan they`re pushing through Congress would cost seniors 50 percent more each month, but still expose them to thousands of dollars in out-of-pocket cost? Now, what kind of deal is that? WOODS: A coalition of union and consumer groups want lower costs for seniors, and assurances that employers won`t drop retiree health coverage. ROGER HICKEY, CO-DIRECTOR, INST. FOR AMERICA`S FUTURE:: The politicians have gotten the message that the public wants a prescription drug benefit. Now the politicians have got to get the message that it better be a good one and they should go back to the drawing board. WOODS: Fiscal conservatives worry the plan will cost half a trillion dollars or more over 10 years without reforming the Medicare system. MICHAEL TANNER, HEALTH STUDIES DIR., CATO INSTITUTE: This is a bad bill that`s getting steadily worse as it makes its way through conference, and we should scrap the whole thing and go back to the drawing board, start over again with some real Medicare reforms. WOODS: Yet, despite the opposition, analysts expect Congress to pass a Medicare bill with prescription drug coverage by Thanksgiving. It`s a bill the president is sure to sign. 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.
SUSIE GHARIB: The New York Stock Exchange is about to undergo what may be the most dramatic reorganization in its history. Next week, the big board`s acting chairman is expected to suggest sweeping changes in how the exchange is governed. Scott Gurvey reports. SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: If acting New York Stock Exchange Chairman John Reed gets his way, more than 1300 exchange members are about to be asked to approve the biggest restructuring in the organization`s history. On Monday, Reed will give members a formal proposal for changes to the NYSE`s constitution, as well as a slate of candidates for the NYSE board of directors. Expected to consist of six to 12 members, the new board would be much smaller than the current 27-member group. And it will not have any representatives from the investment banking community. Reed reportedly also wants to create a second, so-called "business" board, which would have nothing to do with compensation or regulatory issues. The brokerage companies would be represented on this board. Sources familiar with briefings Reed has been conducting with some exchange members say the reform proposals do not address the future of the specialist system. John Bogle, the founder of Vanguard Funds, has led a call for the end of this two-century-old system, which gives exclusive rights to specific stocks to individual firms. The critics say modern electronic systems such as NASDAQ, with multiple market makers for each stock, provide customers with better prices. There have also been calls on Capitol Hill to force an end to the specialist system, as well as force the New York Stock Exchange to give up its regulatory functions. But these reforms would be unlikely to be approved if put to a voluntary vote of the members. And it appears that Reed will stick to those points on which he can expect to have the support of the membership. The exchange said members will be asked to approve the structural changes and the new board of directors by November 18. 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.
10/29/03: One On One With NASDAQ President & CEO, Robert Griefield
SUSIE GHARIB: While the spotlight is on the NYSE as it tries reform itself, the NASDAQ stock market is facing its own challenges. Joining us now: NASDAQ`s president and CEO, Robert Griefield. Mr. Griefield welcome to NIGHTLY BUSINESS REPORT. ROBERT GREIFELD, PRES. & CEO, NASDAQ STOCK MARKET: Glad to be here, Susie. GHARIB: Let me begin by talking to you a little bit about the NASDAQ structure. I know that the NASDAQ has been trying to convince the Securities and Exchange Commission to let the NASDAQ break free from its parent, the National Association of Securities Dealers, so it can be a stand-alone exchange. What are the chances of that happening? GREIFELD: Well, we are optimistic that it will happen. And one of the driving reasons will be that we will have complete separation from the regulator when it does happen and that will remove any conflict in the minds of investors. GHARIB: What impact would this have for investors or for the companies that are listed on the NASDAQ? GREIFELD: Well, one of the key requirements of my job is to understand what the individual investors are thinking. And certainly the individual investor had a been through a lot. We had the research scandal, we currently have a mutual fund issue. There`s a long tale to it. Investors need to have confidence in the market and one of the ways that we can ensure investor confidence is to say to investors that we have a separate regulator that is different and separated from the market center. GHARIB: Well, as you heard on the report on our program just a few moments ago, the NYSE is overhauling its structure, reportedly creating two boards but also preserving its self-regulatory structure and its specialist system. Now if that does go through as proposed, what do you think of that plan? GREIFELD: Well, we think we have a once-in-generation opportunity to really make the system better. We think it`s essentially a halfway measure. Separate boards still have a conflicted chairman. We think it`s important to remove any conflict from the operation of markets in this country. GHARIB: And so what do you think is - what do you think NYSE should do? What would be your advice if you were a consultant with them? GREIFELD: Our advice is very clear, separate the regulator from the market center, let the investing public know that when they invest in this U.S. equity marketplace that the regulatory function is separate without conflict and is a tough cop on the beat. GHARIB: I know that the NASDAQ is very proud of it it`s all-electronic system. Do you think that the NYSE will be able to hold onto its specialist system or is that going to go away, what do you think? GREIFELD: I think the problem with the specialist system is not the specialist itself, the problem is the specialist today is a monopolist. In NASDAQ we have 300 market makers, those 300 market makers compete between themselves and our electronic component. That competition yields a better outcome for investors. Competition is a good public policy in this country and we think it should be introduced across all equity markets. GHARIB: Speaking of competition, the NASDAQ and NYSE compete very heavily for IPOs, for new listings, if these proposals, as we reported this evening, do go through at the NYSE, how will that change the competitive relationship for new listings and IPOs between the NASDAQ and the NYSE? GREIFELD: Well, we`re entering an era where NASDAQ for the first time can compete for listings that currently trade on New York. And that happened with the repeal - or the pending repeal of Rule 500. So we`re very excited about that. It really gives the corporate community choice for the very first time and we`re actively communicating the values of the NASDAQ competitive market to those investors. GHARIB: Stocks on the NASDAQ have been up almost 75 percent since their low in October of 2002, what`s the outlook for NASDAQ stocks from here? GREIFELD: Well, we feel what I would say is caution optimism. The CEOs I talk to that have their companies that list on the NASDAQ market feel that the worst is behind them and they feel relatively optimistic that their business prospects going forward are pretty good. GHARIB: Well, I hope you`ll come back on the program again, get an update from you at some point. GREIFELD: OK, thank you, Susie. GHARIB: Thank you very much. We`ve been speaking with Robert Griefield, president and CEO of the NASDAQ.
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.
10/29/03: "Gas Trap,"-Part 1: What's Fueling Prices?
SUSIE GHARIB: President Bush urged Congress today to end the battle over passing an energy bill. But even if legislation is approved this year, it probably won`t provide a quick fix to the nation`s natural gas crisis. Tonight we begin a two-part series, "Gas Trap," looking at the soaring cost of natural gas. Diane Eastabrook examines why U.S. natural gas supplies are so tight, and the toll that`s taking on consumers. DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: About half of the natural gas needed this winter to heat homes and power businesses throughout northern Illinois is in storage at facilities like this. Nicor Gas (GAS) paid about 50 percent more for this gas than it did last year. But the utility fears the additional gas it buys later this winter will cost even more. THEODORE LENART, SUPPLY OPERATIONS, NICOR GAS: We do have some financial hedges on for a portion of those purchases. Roughly 40 percent of those purchases are hedged financially. So we do have some certainty on at least 40 percent of that volume. The other 60 percent, though, we don`t have hedged, and it is subject to the market. EASTABROOK: And the U.S. natural gas market has been a fickle one for the last few years. Gas prices started heading up in late 1999, spiked in 2000, seesawed wildly in 2001 and 2002, and have remained unusually high throughout this year. The outlook from energy analysts: expect a lot more of the same. PHILIP FLYNN, ENERGY ANALYST, ALARON TRADING: I think we`ve entered a new era with natural gas because as our economy continues to expand, our prices are going to continue to stay high. EASTABROOK: The groundwork for the current natural gas problem was actually laid more than a decade ago. In the early 1990s, natural gas started becoming a more attractive energy source because it was cleaner than coal, safer than nuclear energy, and a lot cheaper than oil. Natural gas is plentiful too, so everyone from electric utilities, to factories, to consumers started using more of it. But while demand for natural gas was spiraling higher, U.S. producers weren`t drilling new wells because government hurdles were too high and gas prices were too low. That helped create the current supply-demand imbalance. Today`s higher prices are encouraging producers to get more natural gas from existing wells. But producers still aren`t drilling many new ones because they say the government permit process is still too cumbersome. Additionally, they complain federal laws won`t let them access several gas-rich areas off U.S. shores and on public lands. The current energy bill before Congress could remove some of those barriers, but probably not all of them. R. SKIP HORVATH, PRES., NATURAL GAS SUPPLY ASSN.: It has a deep-water tax incentive that will encourage this new technology to get the gas that`s really deep, as much as three miles or more under the surface of the water, to bring it forward for consumption, and that`s helpful. But in other regards, does it have enough in there for land access? The answer is no. EASTABROOK: But even if producers start developing new natural gas fields soon, analysts say it could take five to six years for that fuel to hit the market. So if demand remains high, consumers could continue paying higher natural gas prices for several more years. That could force many U.S. companies, heavily dependent on natural gas, out of business. Hudapack, a metal treating company, fears it may have to close this plant in suburban Chicago. The five-year-old facility hasn`t been turning a profit because its natural gas costs have doubled in the past year. GARY HUSS, PRES., HUDAPACK METAL TREATING: We have been told by our bankers that we are very close to not having this place be a good risk from their standards, and we`ve been told that if - we`re closer to having this place shut down than we would like to think. EASTABROOK: Some analysts argue if higher natural gas prices drive enough U.S. companies out of business, demand will drop and prices will follow. But others are doubtful, predicting demand for natural gas will keep burning hot for at least another 20 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.
10/29/03:
"Money File"-The True Value of Dividends
SUSIE GHARIB: In the "Money File" tonight: a look at why dividends matter. Here`s John Waggoner, mutual fund columnist for "USA Today."
JOHN WAGGONER, MUTUAL FUND COLUMNIST, USA TODAY: The 21st Century is well under way, and we still don`t commute to work by jetpack or buy produce on Mars. But some old-fashioned things still work pretty well. And for mutual fund investors, dividends are one of the goldenest of the oldies.
Not too long ago, dividends were on the verge of extinction. Only boring, low-growth companies paid dividends, the argument went. Savvy companies used their extra cash to buy back company shares. Dividends still are still considered stodgy. But some decidedly non-stodgy companies, such as Microsoft, are starting dividend programs. So far this year, 19 other companies have initiated dividends.
Why are dividends in vogue? Well, thank the bear market. After all, a dividend will help cushion your losses in a decline. And if you`re waiting for a stock to turn around, a dividend payment will make the wait a little more interesting.
Thank Congress, too. Dividends used to be taxed at your maximum tax rate. Now they`re taxed at the lower capital gains rate. And over time, dividends are a big part of your total return. The Standard & Poor`s 500 stock index has gained 125 percent the past 10 years. Add in dividends, however, and you`re up 170 percent.
Equity-income funds are the best funds for dividend-minded investors. But choose carefully. Start with low expenses. The average company in the S&P 500 has a dividend yield of 1.7 percent. The less you pay in expenses, the more you keep for yourself.
Look for funds that seek above-average dividends and below-average risk. Typically, these funds look for beaten-up stocks whose dividends are in no danger of being cut. Equity-income funds aren`t as amazing as, say, nuclear-powered egg beaters. But they can give your portfolio good returns with low risk, making them one of today`s not-so-modern marvels.
I`m John Waggoner.
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.
10/27/03:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened slight lower on some widely expected profit-taking from yesterday`s sweeping rally. At midmorning, the Dow was off only 14 points though while the NASDAQ Index was down just 4. The mildness of the early downturn impressed investors, and so did better-than-expected earnings from Boeing (BA) and Northrop Grumman (NOC). So the market gradually improved for the rest of the morning. By early afternoon, the Dow was up 33 points and the NASDAQ posted a 2 1/2-point gain. Bullish enthusiasm was tempered a bit by weakness in AT&T (T), Johnson & Johnson (JNJ), and Microsoft (MSFT), but the market still managed to end the day on in positive territory. The Dow Industrial Average closed up almost 26 1/4 points at 9774.53. The NASDAQ Composite rose 4.30 points at 1936.56. Standard & Poor`s 500 gained 1.32 to 1048.11. Over in the bond market, weakness, the 10-year note fell a full point, down to 99 18/32, putting the yield at 4.30 percent.
Topping the New York Exchange`s active list on a very active 64.3 million shares, Lucent Technologies (LU) moving up $0.12 a share.
FleetBoston Financial (FBF) moving up $0.75. Of course, it`s going to be taken over by Bank of America (BAC).
Johnson & Johnson (JNJ), one of the big losers in the Dow, off $1.06. It traded as low as $48.10 earlier in the day after the FDA warned doctors of over 290 reports of clotting in patients implanted with J&J`s drug-eluting stent.
Bank of America (BAC) rebounding $1.51. It`s going to have to come up with over $40 billion in stock to buy FleetBoston.
Sprint PCS (PCS), a $0.27 gain there, fifth in volume.
Pfizer (PFE) was down $0.23.
General Electric (GE), a $0.31 gain.
Motorola (MOT) moved up $0.48.
EMC (EMC), a $0.14 gain there.
And Time Warner (TWX), tenth in big board volume, down $0.15 a share.
AT&T (T) down $0.87. "The Wall Street Journal" today reported that AT&T and BellSouth (BLS) have ended merger talks. Word has it that BellSouth balked at any idea of paying as much 19 to $20 billion for AT&T. BellSouth stock moved up $0.67 to $26 a share, incidentally.
Boeing (BA), another Dow member, doing well, up $2.46. Third-quarter earnings $0.32, a nickel above Wall Street estimates. The company also increased 2003 revenue guidance to $50 billion, citing a defense spending build-up. Standard & Poor`s repeated a buy on BA stock.
Northrop Grumman (NOC) up $2.86. A real third-quarter turnaround, earnings of $1 a share versus a loss of $0.56 a share last year.
Halliburton (HAL) down $0.56. The company in with third-quarter results sharply lower, $0.13 a share versus last year`s 22. The Street was looking for $0.28 a share. The company cited a shortfall due to the expenses of asbestos litigation.
Phelps Dodge (PD) had a good day on the upside, rising $4.21. The company narrowed its third-quarter loss to only $0.10 a share versus a $0.27 loss last year. Revenues were up 9.7 percent. And Standard & Poor`s repeated an accumulate on PD stock.
Allied Waste Industries (AW) up $1.13, a good percentage move. After the close yesterday the company did report lower third-quarter earnings, $0.06 versus $0.19 a year ago. But today Smith Barney brokerage upgraded it from hold to buy after the company said it is on track to meet its $1 billion debt reduction goal by the end of this year.
Praxair Incorporated (PX), a good day, up $2.75. A lot of good news, too. Third-quarter earnings, $0.91, a penny above the Street estimate and well above $0.80 last year. The company predicting fourth-quarter earnings in the range of $0.90 to $0.94 a share. It also announced a two-for-one stock split and it will boost the quarterly dividend on the pre-split shares from $0.21 1/2 to $0.27 a share.
Fluor (FLR) lost $3.29. The company in with third-quarter earnings, $0.55, up from $0.39 last year, but that was a penny below the Wall Street estimate, a little disappointment there.
Mentor Corp. (MNTR), which makes medical devices, down $3.18. Second-quarter earnings lower, $0.22 versus $0.26 a year ago. Higher expenses offset a 4 percent rise in sales. And the company cut its 2004 revenue and earnings growth projections to just 5 to 6 percent.
And then Seagate Technology (STX) moving up $1.90. The company said a recent SEC inquiry has only to do with a former employee`s allegation that the company incorrectly reallocated expenses. And the company says those allegations are completed without merit. So a little re - rally there - relief rally.
Gilead Sciences (GILD) topped the most active list on the NASDAQ, down $7.46. After the close yesterday the company reported $0.28 in earnings, $0.07 below the Street estimate. And the company said sales of its HIV drug fell well short of Wall Street projections.
Microsoft (MSFT) was down $0.46.
A $0.13-gain for Intel (INTC).
Netease.com (NTES) plunging $15.21. This is a Chinese Internet portal company. Third-quarter earnings were at a record last night. But the government is clamping down on pornographic downloads. In that sense the company`s services revenues down 21 percent in the third quarter.
Dell (DELL), a $0.33 gain.
Applied Materials (AMAT) was up $0.03.
Amgen (AMGN) fell $0.70.
Cisco Systems (CSCO), $0.08 loss.
And SINA (SINA), that`s another Chinese Internet portal, following Netease down, $2.07.
Yahoo! (YHOO), a $0.06 gain.
And finally, a spin-off from Palm Incorporated (PALM), Palmsource (PRSC), this is the one that makes the software for Palm computers. And this was the first day of trading. That price, $11, up from its first trading price.
Those are the "Stocks in the News."
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.
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