Program: Monday, November 3, 2003

Mutual Fund Fraud Exposed
The Manufactuing Sector Gets Productive
Raffi Amit, Professor of Entrepreneurship at Wharton On What Makes A Leader
Commentary: The Free Trade Tug Of War
Paul Kangas' Stocks In The News
Market Stats

11/03/03: Mutual Fund Fraud Exposed

SUSIE GHARIB: Shocking revelations today for investors: Mutual fund companies may be cheating them out of billions of dollars. The Securities and Exchange Commission and state officials told lawmakers at a Senate hearing that fraudulent trading by mutual fund companies is more widespread than previously thought. Federal regulators said many of the nation`s largest fund companies engage in illegal late trading of funds. Stephanie Woods has details.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The man who wrestled almost $1.5 billion from investment bankers for conflicts of interest told lawmakers that mutual funds should get ready to write a big check.

ELIOT SPITZER, ATTORNEY GENERAL, NEW YORK: There will need to be a disgorgement of all, and I repeat the word all, fees that were earned with respect to any fund during the period of time during which there was illegal behavior. This number will be big, and it will impose pain, and it should.

WOODS: Regulators found more than a quarter of brokerage firms and 10 percent of top fund groups engaged in late trading, and even more selectively disclosed information about their trades. Eliot Spitzer blasted mutual funds for putting their interests ahead of investors.

SPITZER: It is a cesspool. And it is an industry that has for too long said, we are pure, how dare you attack the virtues that we bring to the table? They`re going to get their comeuppance they deserve based upon their years of failing to police themselves.

WOODS: The Securities and Exchange Commission and the National Association of Securities Dealers say some investors were overcharged by $86 million in the past two years. The agencies are cracking down on brokers and funds that didn`t credit consumers for volume discounts. And that could mean a refund of about $300 per account.

MARY SCHAPIRO, VICE CHMN., NATL. ASSN. OF SECURITIES DEALERS: NASD has directed firms to make immediate refunds, and in the next several weeks, with the SEC, we will announce a number of enforcement actions seeking significant penalties.

WOODS: Lawmakers want to get tough on the industry too. They propose reforms including tougher independence requirements for fund directors, greater fee disclosures to investors, and disclosure of how much brokers are paid by the funds they recommend. The industry admits it`s time to make changes.

MATTHEW FINK, PRES., INVESTMENT COMPANY INSTITUTE: I`m worried most of all, like in any part of life, that you do something because it looks good, it doesn`t address the problem and you`re worse than when you began, because you make people think you addressed it and then the problem reappears.

WOODS: So now the big question is where does all of this leave mutual fund investors? Experts say investors should know what they`re buying, that means asking brokers and fund companies to explain their fees and trading practices. 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.

11/03/03: The Manufactuing Sector Gets Productive

PAUL KANGAS: There is new data out today showing manufacturing activity accelerated last month. The nation`s purchasing managers` gauge of activity rose in October to its highest level in four years, as factories increased production to meet a surge in new orders. Suzanne Pratt has the details.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: For the last few years, it has been the consumer that has kept the U.S. economy afloat, while businesses were in a state of hibernation. Now there`s fresh evidence that the manufacturing sector is definitely perking up. The Institute for Supply Management, a private research group, said its index of manufacturing activity rose to 57 in October. Not only was that stronger than forecasters predicted, but it was up nicely from previous levels. A reading above 50 points to expansion in factory activity, while one below indicates contraction.

CARY LEAHEY, SR. ECONOMIST, DEUTSCHE BANK ALEX. BROWN.: I would say, yes, it`s turned the corner and is out of the woods. But you still have a question of how self-reinforcing the recovery will be until the aggregate economy starts generating jobs, and that hasn`t quite started.

PRATT: Today`s report was important because it supplies one of the first hints of the economy`s performance in the fourth quarter. Nevertheless, most experts still predict the nation`s gross domestic product will slow in the October-to-December period. That`s after growing at the breakneck pace of 7.2 percent in the third quarter.

ROBERT BRUSCA, CHIEF ECONOMIST, NATIVE AMERICAN SECS.: My best guess is you might see a 3 percent growth rate in the fourth quarter. That`s a good growth rate following this 7 percent third quarter, but given the kind of productivity numbers we`ve been knocking down, it`s not nearly good enough to create any kind of jobs.

PRATT: The ISM report showed sharply rising new orders for manufactured goods. But the gains were not broad- based. Of the 20 industries represented in the survey, 14 were growing. On top of that, an employment index contained in the report rose to 47.7 last month from 45.7 in September. Economists say that suggests manufacturers were still cutting jobs, but at a slower pace.

BRUSCA: The fact is the employment index moved up, but it remains below that key 50 percent level, and that level tells you that employment is likely declining overall. It may be telling you though that employment will decline in manufacturing less this month than it did last month, and that would be some form of progress, but we`re not creating jobs yet.

PRATT: The manufacturing sector of the economy may not be creating jobs, but some experts believe the overall economy is starting to do so, and that is expected to be confirmed this Friday, when the government releases it`s October employment report. 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.

11/03/03: Raffi Amit, Professor of Entrepreneurship at Wharton On What Makes A Leader

SUSIE GHARIB: NIGHTLY BUSINESS REPORT will soon mark its 25th year on public television, and to celebrate that distinction, we have joined with the Wharton School of the University of Pennsylvania to select the most influential business persons of the past 25 years. Our viewers submitted over 700 nominations. Now a panel of Wharton judges will make the final selection, which we will announce early next year. Earlier today I talked about leadership with Raffi Amit, professor of entrepreneurship at Wharton, and asked him about the qualities of leaders who created new and profitable ideas.

RAPHAEL AMIT, ENTREPRENEURSHIP PROFESSOR, WHARTON: These are entrepreneur leaders, leaders that are learning, leaders that are flexing, leaders that are rapidly changing to new situations as they emerge. These are leaders that continuously search for opportunities, leaders that create opportunities for their companies, and are able to execute on these opportunities that they have identified.

GHARIB: Raffi, how would you distinguish between entrepreneurs who are in an established corporation and entrepreneurs who are starting a business from scratch?

AMIT: Well, in an established corporation there are many barriers to entrepreneurship, that fundamentally disincentives to risk. Bureaucracy is imposed too early. There may be a bias against mavericks. This project may be too large, too small. The project may consume too much money for too long. In an independent business, we wait for three, four, five years before we see cash-flow positive situation in large businesses. In a corporate setting, there may simply not be that kind of window to wait for the profits to come, and hence bureaucratic and accounting controls are imposed too early and often this is the kiss of death to those businesses.

GHARIB: Can you - do any examples come to mind, who fits that description?

AMIT: Well, there are a number of examples of entrepreneurs, leaders in a corporate setting. So take for example Herb Kelleher, Herb Kelleher created a fantastic company, created a new segment in the airline industry. He identified the opportunities, and he executed flawlessly. Many other airlines have tried to copy him. Another example might be Richard Branson with Virgin. Again, a visionary leader who excelled in execution.

GHARIB: Those are good examples. You know, most business people try very hard to come up with ideas that will be profitable, they spend money on research, they talk to their customers, but they don`t necessarily succeed. What distinguishes those who succeed and those who don`t?

AMIT: In my view, the key to success is execution. There are a lot of ideas, a lot of very clever people with fantastic vision. What distinguishes those that succeed from those who don`t is the ability to execute in a corporate setting. A number of such examples that one could recite, in great ideas but the execution has not quite measured up.

GHARIB: Are entrepreneurial leaders a special breed with unique talent, or is this a talent that anyone can learn?

AMIT: We`ve conducted a substantial amount of research on the very question you asked me. And the punch line is that these are - there are no special characteristics that distinguish these leaders from others. One cannot distinguish them on any particular trait or skill that these sellers have relative to others. And the message to each and every manager is, and entrepreneur, that you have what it takes to be very successful, just keep your eye on the ball.

GHARIB: Well, you`ve given probably a lot of managers who are watching this program some hope. Thank you very much.

AMIT: Thank you.

KANGAS: Tomorrow, the NBA is bouncing back. We begin a series of reports looking at the business of professional basketball.

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.

11/03/03: Commentary: The Free Trade Tug Of War

SUSIE GHARIB: Remember the saying, "if at first you don`t succeed, try, try again?" Well, tonight`s commentator says, if at first you don`t succeed, try a different argument. Here`s Alan Blinder, vice chairman of the Promontory Financial Group, and former vice chair of the Federal Reserve.

ALAN BLINDER, COMMENTARY: I`ve given up. Economists have been making the case for free trade for over 225 years now, but the message still hasn`t caught on. In trade negotiations, when one country agrees to open its markets further, that`s called a concession. The concession, of course, is to allow your citizens to buy things at lower prices. Is that something to apologize for? Recently, international trade negotiations broke down because rich countries were unwilling to open their markets to agricultural products from poor countries. As usual, a comparative handful of farmers, and perhaps more important, a few giant agribusiness companies, succeeded in forcing hundreds of millions of people to pay more for food than they should. But as I said, I`ve given up trying to make the economic case for free trade. Maybe a moral argument will work better. Here it is: The fact is that exporting farm products and simple textiles are the two best hopes for many of the world`s poorest countries to advance economically. So when we in the West erect barriers to imports of crops and textiles from the Third World, we condemn millions of unfortunate people to lives of misery, and in some cases, even starvation. For this reason, liberalizing trade in agriculture and textiles should rank high on the humanitarian agenda. I believe it may be the second most-important thing we can do for Africa, after finding a cure for AIDS. And by the way, did I mention that it`s good economics, too? I`m Alan Blinder.

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.

11/03/03: "Paul Kangas' Stocks In The News"

PAUL KANGAS: Wall Street opened higher as buyers rallied around news of a solid 1.3 percent rise in September construction spending to a record high. The tech sector got a boost from news that September semiconductor sales rose 17.5 percent over a year ago. After a half hour of trading, the Dow was up 76 points and the NASDAQ Index up 27 points. Then the Institute of Supply Management reported stronger- than-expected manufacturing activity last month. We`ll have details on that shortly. By early afternoon, the Dow was sporting a 90-point gain, while the NASDAQ Index was up 33 points. The blue chips faded a little bit during the afternoon on profit-taking, but the Dow Industrial Average still came in with a closing gain of 57 1/3 points at 9858.46, that`s a 17-month high. The NASDAQ Composite jumped 35.5 points to 1967.70, and that`s a 21-month high. The Standard & Poor`s 500 Index gained 8 1/3 points and closed at 1059.02. Over in the bond market, the 10-year note lost 12/32 to 99 8/32, lifting the yield to 4.34 percent.

The most active issue on the big board, as it has been so often recently, Lucent Technologies (LU), trading 37.3 million shares today, moving up $0.07 a share.

Followed by Time Warner (TWX), a $0.35 gain there.

Pfizer (PFE) managed to gain a penny even the FDA gave marketing approval to Dr. Reddy (RDY) corporation for a similar hypertension drug to Pfizer`s Norvasc.

AT&T Wireless (AWE) edged a penny higher.

GE (GE) down $0.21, number five in big board volume.

Citigroup (C) moved up $0.64.

Motorola (MOT), a $0.31 gain there.

Hewlett-Packard (HPQ) gained $0.39.

Bank of America (BAC) up $0.26.

And number 10 in big board volume, SBC Communications (SBC), a $0.09 gain.

Kellogg (K) had a good day, up $1.77. Third-quarter earnings came in at $0.56 a share, $0.04 above the Street estimate, and nicely higher than $0.49 last year. Sales were up 6.8 percent. And the company increased its 2003 earnings guidance by about a penny or two to $1.90 a share.

Church & Dwight (CHD), this chart may be off just a little bit, in any case, the price of the close is correct, and so is the net change, up $1.27. Friday that stock was up $2.17 on a Prudential Securities upgrade to overweight. And today Church & Dwight out with third-quarter earnings, $0.46 versus last year`s $0.42. The company sees 2003 earnings of around $1.85. And that`s $0.10 better than the Wall Street estimate.

Aetna (AET) down $1.42. As we touched on earlier, major health issues down on concern that the Supreme Court might rule that healthcare companies can be sued by patients for failure to pay for medical care recommended by a doctor.

And another stock affected by that, that`s CIGNA Corp. (CI), and this chart may be a bit off, too. But this net change, down $1.18 at 55.87 is correct.

One of the big gainers of the day percentage-wise, up 73 percent and then some, Media Arts Group (MDA), up $1.67. A Thomas Kinkaid affiliate is going to take MDA private for $4 a share in cash. That works out to about $32.7 million.

Ag Services of America (ASV), or Ag Services, up $2.28. This company sells seed and fertilizer and other products to farmers. And Rabobank International is going to acquire the company for $8.50 a share in cash.

Administaff (ASF) up $1.70. This personnel management company did well in its third-quarter earnings, $0.31, double - a little better than double last year`s $0.15 a share. Nice move in the stock today.

Sovereign Bancorp (SOV) up $2.07. Standard & Poor`s noted that there is speculation the company has rejected a $25 a share buyout bid from Royal Bank of Scotland, saying that that bid is inadequate.

And then Dr Reddy`s Labs (RDY) doing well, up $2.06. As I touched on, FDA gave marketing approval to the company`s treatment for hypertension. It`s called AmVaz.

And Footstar (FTS), one of the few big percentage losers today, off $1.17 or nearly 19 percent. The company cut its 2003 earnings outlook from about $10 million in profit to breakeven at the very best.

NASDAQ`s most active issue was Intel (INTC), moving up $1.09 in that strong semiconductor group on the big jump in sales over a year ago.

And then Microsoft (MSFT) gained $0.54.

Cisco Systems (CSCO), a $0.78 rise.

Applied Materials (AMAT) up $1.23.

First Health (FHCC) down $6.02. The company`s earnings growth is stalling out in 2004, at least according to the company, it sees flat earnings, same as in 2003. And it had been maintaining a 15 percent annual growth rate. So a big jump on the downside there.

Amgen (AMGN), a $0.61 loss.

Dell Incorporated (DELL), a $0.52 gainer.

eBay (EBAY) up $1.58.

Sun Microsystems (SUNW) gained $0.44.

And Novellus Systems (NVLS), tenth in dollar volume on NASDAQ, up $2.69.

KNBT Bancorp (KNBT), what a day it had. This is a conversion from a mutual bank to a public corporation, 20.2 million shares were offered at a price of 10. The stock opened at 17 and had a high of $17.20, closed very close to the high. A good day there.

And Electronics Boutique (ELBO), this one a rough day, down $5.17. It`s an electric game retailer. And it cut its third-quarter earnings estimate from a range of $0.14 to $0.18, all the way down to only $0.05 to $0.06 a share. And the whole group of electronic game retailers were undermined a bit by that news.

And 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.

11/03/03: Market Stats

			     
                              
                                      NET    PERCENT
                         CLOSE     CHANGE     CHANGE
DOW CLOSE              9858.46     +57.34       + .6
HIGH                                         9896.16
LOW                                          9802.38

NASDAQ COMP.           1967.70     +35.49       +1.8
HIGH                                         1969.26
LOW                                          1941.31

VOLUME                                       1,357.1
PREVIOUS                                     1,443.6
UP VOLUME                                    1,024.8
DOWN VOLUME                                    318.5

DOW TRANSPORTS         2940.73     +27.62      + 1.0
DOW UTILITIES           255.38      +2.68      + 1.1
CLOSING TICK                                    +754

S&P 500                1059.02      +8.30       + .8
S&P 100                 524.01      +4.03       + .8
MIDCAP 400              555.00      +6.48      + 1.2
REUTERS/CRB             245.85      -1.73       - .7

NYSE COMPOSITE         5995.98     +36.97       + .6
VALUE LINE              345.65      +4.23       1.24
RUSSELL 2000            537.84      +9.62       1.82
WILSHIRE 5000          10317.2     +92.68       0.91

U.S. TREASURIES
5-YEAR NOTE 3.125%
Oct. 15,2008          99           -14/32       3.35 

10-YEAR NOTE 4.25%
Aug. 15,2013          99  8/32     -12/32       4.34

30-YEAR NOTE 5.375%
Feb. 15, 2031        103  2/32     -14/32       5.16

LEHMAN BROS.
LONG BOND INDEX        1708.37      -8.84


DOW CLOSE              9858.46     +57.34       + .6
ADVANCES                                        2270
DECLINES                                         984
NEW HIGHS                                        526
NEW LOWS                                           0

                                      NET    PERCENT
NYSE MOST ACTIVES    4PM CLOSE     CHANGE     CHANGE
LU     Lucent Tech        3.27       +.07       +2.2
TWX    Time Warner       15.64       +.35       +2.3
PFE    Pfizer            31.61       +.01        +.0
AWE    AT&T Wireless      7.26       +.01        +.1
GE     GE                28.80       -.21        -.7
C      Citigroup         48.04       +.64       +1.4
MOT    Motorola          13.84       +.31       +2.3
HPQ    Hewlett-Packard   22.70       +.39       +1.8
BAC    Bank Of America   75.99       +.26        +.3
SBC    SBC Comms         24.07       +.09        +.4

NASDAQ CLOSE           1967.70    + 35.49      + 1.8
VOLUME                                       2,093.3
PREVIOUS                                     1,843.1
ADVANCES                                        2164
DECLINES                                        1077

NASDAQ ACTIVES
INTC   Intel             34.04      +1.09       +3.3
MSFT   Microsoft         26.68       +.54       +2.1
CSCO   Cisco Systems     21.71       +.78       +3.7
AMAT   Applied Matl      24.56      +1.23       +5.3
FHCC   First Health      18.45      -6.02      -24.6
AMGN   Amgen             61.15       -.61       -1.0
DELL   Dell Inc          36.52       +.52       +1.4
EBAY   eBay Inc          57.51      +1.58       +2.8
SUNW   Sun Micro          4.39       +.44      +11.1
NVLS   Novellus Sys      43.94      +2.69       +6.5

AMEX CLOSE             1061.31     - 2.02       - .2

INDEX SHARES
DIA    DIAMONDS TRUST    98.51       +.54        +.6
QQQ    NASDAQ 100        35.78       +.60       +1.7
SPY    S&P DEP.RECEIPTS 105.99       +.66        +.6

STOCKS IN THE NEWS
K      Kellogg Co        34.90      +1.77       +5.3
CHD    Church Dwight     38.54      +1.27       +3.4
AET    Aetna             55.99      -1.42       -2.5
CI     Cigna Corp        55.87      -1.18       -2.1
MDA    Media Arts         3.93      +1.67      +73.9
ASV    Ag Serv Of Amer    8.40      +2.28      +37.3
ASF    Administaff       13.28      +1.70      +14.7
SOV    Sovereign Banc    22.88      +2.07      +10.0
RDY    Dr Reddys Labs    28.72      +2.06       +7.7
FTS    Footstar           5.08      -1.17      -18.7
KNBT   KNBT Bancorp      16.88      +6.88      +68.8
ELBO   Eltronic Boutique 23.25      -5.17      -18.2