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Program: Wednesday, November 12, 2003
11/12/03: The Bulls Make A Post Veteran's Day Run
SUSIE GHARIB: Stocks on Wall Street charged ahead today, thanks to optimism for strong earnings in the tech sector. The Dow rose 111 points and the NASDAQ surged 42. It was also a good day for small cap stocks. The Russell 2000 index jumped 2 percent and now hovers at its highest level in more than three years. Erica Miller takes a look at the stunning gains in stocks of smaller companies. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Thinking small has been paying off big for investors. Since January, small cap stocks have clobbered their bigger brethren. The Russell 2000 benchmark of small cap stocks has surged more than 40 percent this year. The Standard & Poor's 500 is up only half that. Many small cap experts predict the sector will continue to shine. A big reason is that in the early stages of an economic recovery, small caps almost always do well. TIMOTHTY WOODS, SMITH BARNEY SMALL CAP GROWTH FUND: It doesn't really take much in terms of increased economic activity to get these stocks moving, to get these companies moving in terms of revenue growth as well as earnings. MILLER: According to Prudential Equity Group, in nine of the past 10 recessions, small caps beat large caps in performance in the 12 months after the recession ended. And they did so by an average of 7 1/2 percent. But small caps have more than just history on their side. Experts also point to attractive valuations. SATYA PRADHUMAN SMALL CAP ANALYST MERRILL LYNCH: The reason I think the outlook is compelling is that investors I think today are looking for better valuations and as a result, when you look at the smaller caps versus the blue chip sector, ultimately the small cap market is currently trading at a significant discount to the average blue chip company. MILLER: Others say investors will be drawn to the stronger profit growth of small caps. A study by Fifth Third Investment Advisors found that small caps beat large caps in earnings growth in 12 of the last 13 quarters and the firm says that trend is likely to continue. But investing in the sector is not without risk. If the economic recovery starts to falter, experts warn small caps will likely be hit hard. WOODS: What will be a major risk is if the economy does slow or if its investor perception towards the market turns negative, these stocks have a tendency to come down a little harder. MILLER: How much longer will the small cap cycle last? 2003 is likely to be the fifth straight year about performance but there haven't been six in a row for two decades. Erica Miller, "NIGHTLY BUSINESS REPORT," New York.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
JEFF YASTINE: As more and more mutual funds come under scrutiny for possible wrong-doing, investors are now considering other options for their money. One of those options is called folio investing. As Angela Terrill-Heath reports, it has some of the same advantages of funds, but experts say it's not a one size fits all solution. ANGELA TERRILL-HEATH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Online brokerage FolioFN first offered its services three years ago. Its founder Steve Wallman says the service hasn't caught on yet, but the crisis in the mutual fund industry might be an opportunity for Folio investing to take off. STEVE WALLMAN, CEO, FOLIOfn: Folio investing takes the benefit of the mutual funds to the next step and it gives people better control and more transparency in terms of what they own . TERRILL: Here's how it works. Investors set their goals. They can select from 75 pre-built portfolios, or build their own. A portfolio is a bundle of related stocks that you might find in a mutual fund. But FolioFN differs from traditional mutual funds in several ways. There are no managers. You select which stocks you want and at what price, and you determine when to buy and sell your stocks in your portfolio. It charges a flat annual fee and you may also pay for individual trades. Wallman, a former S.E.C. commissioner, says the Folio platform also lets individual investors put together a diversified portfolio in creative ways. WALLMAN: The other part of our system that makes it unique is the fact that not only do you buy half a share of Microsoft, but you buy that half a share at the same you're buying 75 other stocks and fractional shares perhaps in them as well. TERRILL: Wallman claims there is a growing number of financial advisers who use the platform for their clients. But experts caution its not for everyone. Morningtar's Russ Kinnel says investors must still select their own stock and do their own research. RUSS KINNEL, DIR. MUTUAL FUND ANALYST, MORNINGSTAR: I think that most people are better off delegating some or all of the stock selection work to someone else who can do that work full time. It's just too much work for most people. TERRILL: Still, however you choose to invest your money, experts say it's important to do your homework, stick to your goals, and consider the fees attached to the investment vehicles you use. Angela Terrill Heath, "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.
11/12/03: "Inovation Island-"Part 3: Manufacturing Production Plants SUSIE GHARIB: It's a familiar refrain to Americans: companies closing because of competition, jobs moving offshore to save on production costs. But it's not just happening in America. It's also happening in Taiwan, and there are growing concerns that the economy of the island will suffer as a result. Tonight, as we continue our series, "innovation island," Washington Bureau Chief Darren Gersh looks at Taiwan's changing manufacturing sector and the toll that competition is taking there. DARREN GERSH, WASHINGTON BUREAU CHIEF, TAOYUAN: The Jinn Lung steel valve factory, the workers now guard the front gate. After the plant shut down, they set up watch to make sure the owner didn't sell off the equipment or ship it to China. Huang Ho-Li was a quality engineer here for 12 years. Now he is organizing the workers' rescue team. Huang says the trouble began early this year when the paychecks were late. HUANG HO-LI, UNEMPLOYED WORKER (Translated): At that time, we believed there might be some temporary difficulties facing the company, so we continued working. It wasn't until early April that we found the boss had changed his attitude. He became very, very tough and he just refused to pay. GERSH: The owner sold off his inventory, but he didn't pay the workers. In June, management announced the plant would close, with no explanation. Huang suspects his job and some 200 others were shipped across the straits of Taiwan to the owner's other plant in mainland China. It's a plant Huang helped start. At the time, the owner told Huang not to worry about what he called his expansion plan. HO-LI (Translated): So he set up the factory in Shanghai and said he would move low-end production to mainland China, and maintain high-end production of high-end valves in Taiwan. I never thought that the outcome would be so painful. GERSH (on-camera): The city of Taoyuan, just south of Taipei, was a center for manufacturing in Taiwan. Now many factories like this are empty and rusting, the jobs shipped to mainland China, leaving behind a bitter debate over whether Taiwan's economy is hollowing out. GERSH (voice-over): Taiwanese companies have invested $100 billion in mainland China, giving them access to a huge market and cheap labor. After studying this cross-straits economic relationship, Professor Tung Chen Yuan has concluded it is helping Taiwanese companies lower costs and increase their global market share in IT manufacturing. TUNG CHEN-YUAN, ASST RESEARCH FELLOW, CHENOCHI UNIV.: A lot of people say this kind of investment in China might create troubles for Taiwan, but I would say they create opportunities for Taiwan. GERSH: Many analysts like Tung dismiss concerns Taiwan is "hollowing out," arguing the evidence does not support it. Manufacturing employment has held steady here for much of the last decade. But while high-tech employment is increasing, workers in so-called traditional industries feel abandoned. HO-LI (Translated): This kind of hollowing trend taking place is not because Taiwan's workers became lazy or they decided to quit working. Taiwan still has a high-skilled labor force. The point is that the management deliberately left for cost concerns. They abandoned very high-skilled workers here. GERSH: Professor Chen Pochih fears Taiwan's high-tech sector is also at risk through tax incentives and political pressure. Chen says China is forcing Taiwanese companies to shift high-tech manufacturing to the mainland. CHEN POCHIH, CHMN TAIWAN THINKTANK: In some sense China is targeting the good industries in Taiwan. GERSH: China is now Taiwan's leading trading partner, but Beijing considers the island to be part of its sovereign territory. And critics like Chen worry the mainland is using its economic muscle as leverage. POCHIH: They also use this market opportunity to force Taiwanese businessmen to support China politically, and China still using hundreds of missiles and also hundreds of jet fighters to terrify Taiwanese people. GERSH: But Tung says his research proves China would have much more to lose from a conflict with Taiwan. If trade were disrupted, Tung estimates it would hit mainland China's economy five times as hard as Taiwan's and cost 10 million workers on the mainland their jobs. CHEN-YUAN: China's leverage is minimal, I mean almost nonexistent. GERSH: The issue is heating up as Taiwan's president, Chen Shui Bien runs for reelection next March. But opinion here seems to be split between those who see opportunity in China and those who think it will be the death of more factories like this. At Jinn Lung, some of the workers were weeks away from getting their pension. HO-LI: We have taken hold of this place, humbly hoping that the management can show their willingness to help us. We sincerely hope that the company can resume production, because we want our jobs back. GERSH: We tried to reach the factory's owner, but the phone number had been disconnected. Since the factory closed, fewer than 20 percent of workers here have found new jobs. And Huang is left to ponder the future his children will face if more manufacturing jobs head to China. HO-LI (Translated): This question is very difficult for us to answer. We find it painful to face this question. GERSH: But it is a question Taiwan can no longer avoid. Darren Gersh, "NIGHTLY BUSINESS REPORT," Taoyuan, Taiwan. YASTINE: Tomorrow, "innovation island" continues with a look at the world's tallest building now gracing the skyline of Taipei.
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.
11/12/03: "Money File"-Military Benefits
SUSIE GHARIB: Just a day after the nation marked Veterans' Day, remembering the military men and women who serve our country, we take a look tonight at military benefits in the "money file" tonight. Here's Kathy Kristof, business writer for the "Los Angeles Times," and author of "Investing 101." KATHY KRISTOF, AUTHOR, "INVESTING 101" Members of the military, National Guard, and reserves will get several new tax breaks thanks to a new law just passed by Congress. The law doubles so-called death gratuity (ph) payments made to family members of those lost in either armed conflict, transportation or training exercises. The new payment is $12,000 and all of it is tax free. In the past, the payment was $6,000, and only half of it was free from Federal income tax. Because this law is retroactive to September 11, 2001, literally hundreds of military families are expected to get additional checks in coming months. Additionally, those who paid tax on these payments in the past can get a refund by filing an amended return. A new tax break was also initiated for members of the National Guard and the reserves who need to travel more than 100 miles from home overnight. There are no specific dollar limit on this deduction, but it cannot exceed the Federal per diem rate for the destination city. ' Home sale rules were also modified to make it easier for active duty service personnel to take advantage of tax breaks for homeowners, and certain Department of Defense payments to home owners were ultimately tax free. On a practical relief front, service personnel and some civilians in combat zones are getting additional time to pay and addition time to file. I'm Kathy Kristof.
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.
11/12/03:
"Paul Kangas' Stocks In The News"
JEFF YASTINE: Well, it was up, up and away for the indexes as traders decided
it was time to go shopping again after the losses of recent days. The
Dow opened higher and kept building in slow but steady fashion
throughout the day. The blue chips got a nice boost with shares of
General Electric and IBM, even Kodak notched a 3 percent gain today. At
midday the Dow was up over 60 points at the 9800 level. The NASDAQ
picked up strength as well, thanks to an acquisition announced on its
Cisco Systems and the usual buying the dips action on the chip stocks.
In late trading, the Dow pierced the 9850 level and then backed off, but
did go on to close with a gain of 111 points at 9848.
Meanwhile, the NASDAQ Composite rising more than 42 points to 1973 and
the S&P 500 climbing almost 12 to finish at 1058 1/2.
In the bond market, the 10-year note rising 11/32 to 98 26/32. That puts
the yield at 4.4 percent.
And here's the reaction in Ford (F). Shares rising $0.75. That's Ford's
highest closing price is more than a year.
GE (GE) rising $0.59. GE's chairman, Jeff Immelt said he sees
strengthening in orders and signs of an economic recovery in GE's business.
PFIZER (PFE) advanced $0.75. A new study showed Pfizer's Lipitor
anti-cholesterol drug was more effective than a rival drug made by
Bristol-MyersSquibb.
LUCENT (LU) dipped $0.03.
But MERCK (MRK) shares gained $0.38. The drug maker said it was ending
clinical trials for a new anti-depression drug because it was proven
ineffective. However, Prudential noted its 3.3 percent dividend yield on
the stock and it had gained on about double the usual volume.
TAIWAN SEMICONDUCTOR (TSM) picking up $0.38. The chip and chip equipment
makers were all very strong today.
Here's another one, ADVANCED MICRO (AMD) jumping $1.46, a new 52-week
high for AMD.
TIME WARNER (TWX) rising $0.42. The media giant expects to name a
winning bidder November 20th for its music publishing and recording
business. Edgar Bronfman and EMI are among the bidders there.
MOTOROLA (MOT) gained $0.31.
And EMC (EMC) picking up $0.60.
COMPUTER SCIENCES (CSC) surging more than $3.00. Second quarter profits
climbed 16 percent as the company gets more Federal government contract
work in its Dyncorp (ph) unit. Third quarter earnings may also jump as
high as $0.70 a share because of that increased government contract work.
Shares in CORUS GROUP (CGA) bolting (ph) over $1.00 higher. Analysts
think cash from a new stock they're offering will help the steel maker's
balance sheet and restructuring plans.
AMCOL INTERNATIONAL (ACO) surging more than $1.50. The specialty
minerals firms boosting its quarterly dividend by a penny to $0.05 a share.
NIPPON TELEGRAPH (NTT) rising 2 1/4. First half profits rose by a factor
of 10 because of strong subscription growth at the company's cell phone
unit, NTT DoCoMo. Full year profits are expected to easily double last
year's levels.
And there's a look at shares of CNA FINANCIAL (CNA) rising $1.70. The
company's largest shareholder Lowe's has pledged nearly $1 ½ billion to
help the Chicago-based insurer boost reserves for insurance claims and
bettors obviously betting - investors rather betting that the worst may
be over there.
MAXTOR (MXO) climbing $1.03 thanks to a "buy" recommendation from Argus
Research.
And FRIEDMAN'S (FRM) sank $4.68. The S.E.C. is widening its probe, its
probe into the jewelry retailer's finances and recordkeeping. The CFO
has been placed on leave.
LEXMARK INTERNATIONAL (LXK) jumped $4.28 today. UBS upgrading the stock,
raising its 2004 earnings estimate and also upping the price target. It
expects strong sales in laser printers next year which should benefit
Lexmark quite a bit.
Here's a look at NASDAQ stocks today.
MICROSFOFT (MSFT) gaining $0.18. European regulators once again looking
into antitrust issues at Microsoft.
INTEL (INTC) rising $0.69.
APPLIED MATERIALS (AMAT) rising $0.54. It traded over $26 in after
hours. After the close, Applied Materials saying it earned $0.06 a
share. The company's first profit in nearly a year. The company's CEO
says he sees the industry upturn has arrived and by the way, he will be
on "NIGHTLY BUSINESS REPORT" tomorrow night.
IDEC PHARMACEUTICALS (IDPH) plunging two pennies.
CISCO SYSTEMS (CSCO) advanced $0.62, a new 52-week high there. The
company announcing the acquisition of Latitude Communications for $80
million in cash or about $3.95 per Latitude share. Latitude makes
software for Internet conferencing application.
ECHOSTAR (DISH) climbing $1.09, rebounding from yesterday's 12 percent
decline on disappointment about fewer subscribers in the quarter and
profits and revenues also coming in less than analyst forecast.
SANDISK (SNDK) jumping more than $3.00.
DELL COMPUTER (DELL) gaining $0.66. Dell is reporting quarterly earnings
tomorrow after the markets close.
BIOGEN (BGEN) climbing three pennies.
AMGEN (AMGN) up $1.30.
AMAZON (AMZN) rising almost $2. Moody's upgrading Amazon's debt
slightly, although still in junk bond territory. Amazon also saying it's
adding a gourmet food store to its Internet retail offerings.
Here's a look at the reaction on LATITUDE (LATD) which advanced $.84.
Roughly 4 million shares traded today. Average volume is about 40,000
shares.
FARO TECHNOLOGIES (FARO) off about $2. Faro's going to do a private
placement of nearly 2 million shares. They're priced at $21.50 a share
and of course that's about 14 percent below Tuesday's closing price so
investors were selling on that one.
And finally, WARNACO GROUP (WRNC) climbing $1.68. This is the maker of
Calvin Klein and Speedo brand, says it's still facing a challenging
sales environment and the yearly results could be revised lower if
things do not improve.
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.
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