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Program: Friday, November 14, 2003
11/14/03: Consumer Spending Slows And Stocks Slide
SUSIE GHARIB: Stocks on Wall Street finished the day and the week lower. The Dow lost 69 points and the NASDAQ fell 37. The sell-off was broad based, although tech stocks suffered the most in reaction to disappointing news on earnings and the economy. As Erika Miller reports, today`s batch of economic reports cast doubt on the strength of the recovery. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Consumer spending has been driving the nation`s economic recovery. So news that shoppers tightened their belts last month was not taken well by Wall Street. BILL DUDLEY, CHIEF U.S. ECONOMIST, GOLDMAN SACHS: The momentum in consumer spending has slowed sharply as we`ve gone into the fourth quarter. The real question is is it just the tax cut effects wearing off or is this the start of a more sustained slowdown in consumer spending? We don`t know yet. MILLER: A drop in sales at automobile dealerships and gas stations helped push the headline retail sales number down 0.3 percent, a bigger than expected drop. And there was more disappointing news. Inflation at the wholesale level rose sharply last month. The 8/10 of a percent jump in producer prices was far more than the 1/10 of a percent economists had forecast. The gains were broadly based, although food prices were a big standout, rising at their fastest rate in nearly 20 years. Even excluding food and energy, prices rose a half a percent. But economists say today`s inflation report isn`t likely to encourage the Fed to raise interest rates any time soon. STEVEN RICCHIUTO, CHIEF U.S. ECONOMIST, ABN/AMRO: Periodically you do get one off surprise economic data like this and you can`t change monetary policy on what could potentially be a one off number. MILLER: And today`s economic reports weren`t all gloomy. The University of Michigan`s Index of Consumer Sentiment soared to 93.5 in a preliminary reading for November. That was a much bigger jump than expected, and up from 89.6 in October. RICCHIUTO: Not only is the headline number on an upward trajectory, but we also saw the current conditions and the expectations components on an upward trajectory. And I think they`re telling you that even though consumers have pulled back a little bit at the margin, they`re still ready and willing to spend, and they`ll spend for the holiday season. MILLER: That holiday spending will be key to how fast the economy grows in the fourth quarter. Right now, economists predict growth will be solid, in the range of about four percent. But many retailers aren`t that optimistic. Erika 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.
SUSIE GHARIB: If you use a PC or a notebook computer, there`s a good chance it was made in Taiwan. Taiwan`s companies make the lion`s share of computer gear used worldwide, from motherboards to LCD monitors. And one of those companies has been in the business since the very beginning of the industry. As we wrap up our series Innovation Island, Washington Bureau Chief Darren Gersh introduces us to the founder of Acer Computer. DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: You could call it one of the first laptop computers. It`s the Micro Professor. Stan Shih put it together in 1981 to help teach programming to college students. How much memory did that have, do you remember? STAN SHIH, CHAIRMAN & CEO, ACER: 1K. GERSH: 1K? SHIH: 1K. GERSH: Shih is the Co-Founder, Chairman and CEO of Acer, the world`s seventh largest PC company and Taiwan`s only major PC brand. His role in shaping the island`s tech economy has earned him the nickname the Bill Gates of Taiwan. Acer has come a long way in the last two decades. Three years ago, after losing millions in its drive to crack the U.S. market, Acer restructured, spinning off its manufacturing arm and refocusing on marketing. So this is 1981 over here and this is 2003... SHIH: Yes, 1988, 2003. GERSH: 2003. Now Acer is back in the U.S., offering a new notebook with a twist. This is the TravelMate C300, a convertible tablet PC that`s a fitting product for a company that itself is a turnaround story. Products like these have made Acer Taiwan`s leading PC brand. Now analysts say the company has shortened the time it takes to get products to market And with competitive pricing, Acer is poised to gain market share. Acer`s strength is notebook computers and sales are booming, up 40 percent this year, and the company is predicting another 40 percent gain next year. In Europe, Acer is closing in on the notebook leader H.P. (HPQ) and could soon overtake IBM (IBM) to become the world`s fourth largest seller of notebook computers. Shih credits the growth to Acer`s new direct channel business model. By dealing directly with resellers like CDW (CDWC), Acer has cut inventory, reduced overhead and eliminated layers between the company and its customers. SHIH: I think it`s the beginning of our high growth momentum. But the key is when we do the engineering we all are talking about, the philosophy is simple, focused and forward looking. GERSH: And Acer is looking forward not only in the U.S. and Europe, but to China, which the company now considers its home market. Acer is building up its management team and opening 20 new markets on the mainland. Shih hopes to double revenues in China next year. SHIH: In some day not too far away, China will become second largest market next to U.S. But you`re looking into 20 years away, maybe China become the biggest market for many of our products. So China is very, very important to us. GERSH: But while Acer`s business is hot, sales of tablet PCs have been cool. The company had hoped tablets would account for 20 percent of sales, but they are running at just a quarter of that. Part of the reason is the price. Acer has complained the Microsoft charges more for the tablet operating system. Even so, Shih believes in the market. SHIH: After almost one year of the warm up, we are prepared to work with Microsoft to really take off on the tablet PC in the end of this year. GERSH: Shih is pushing Acer to innovate more, not only with tablet PCs, but with services, as well. SHIH: We are focused to develop an empowering technology. UNIDENTIFIED MALE: You can make enough. GERSH: It is a fitting message from a man who as much as anyone helped make Taiwan into an island of innovation. Darren Gersh, NIGHTLY BUSINESS REPORT, 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.
11/14/03: Market Monitor-Douglas Jimerson, President of National Investment Advisors PAUL KANGAS: My guest market monitor this week is Douglas Jimerson, President of National Investment Advisors, a money management firm based in Potomac, Maryland. And welcome back to NIGHTLY BUSINESS REPORT, Doug. Great to see you. DOUGLAS JIMERSON, PRESIDENT NATIONAL INVESTMENT ADVISORS: Thank you, Paul. It`s great to be back. KANGAS: You know, despite a lot of good news on the economy last week, like the 7.2 percent rise, or vault, you could say, in third quarter GDP, and the drop to six percent in the unemployment rate, the stock market had really kind of a muted rally, and not even a rally after today. What does all this mean to you? JIMERSON: You know, we have noticed since the middle of the summer, faded momentum on Wall Street, that the early boom in the market in the spring quickly died off. So the momentum really has dissipated on Wall Street. KANGAS: You know, on a visit with us about a year ago, you said that the stock market could go as low as Dow 5,500 before the bear market was over. Do you still think there`s a chance of that despite what`s happened since? JIMERSON: I think the question is how big is your picture? And I`m a very big picture man. And I`m looking at what we experienced over the last five years, you know, the big run up in `99... KANGAS: Let`s have a look at the chart of the Standard & Poor`s. JIMERSON: Sure. KANGAS: There we see it. And it`s had a big run from `97, of course, to the turn... JIMERSON: Right. KANGAS: Then down she went. JIMERSON: Right. And so what we saw after that big bubble like run up was three horrific years, 2000, 2001, 2002. And this year, we`ve recovered almost two thirds of the loss of last year for the Dow, the S&P and the NASDAQ 100. KANGAS: Right. JIMERSON: And now we`ve come to a resistance area based on that kind of a retracement. So the question is biased and that chart, you know, can we get back up to the shoulder of that? KANGAS: Let`s have a look at that chart once more, just to refresh our memories. We see 1,172.51. That`s the crucial level, isn`t it? JIMERSON: That`s the right shoulder of a head and shoulders pattern. KANGAS: OK. JIMERSON: And we don`t know whether that is complete. It would be nice in the long-term to know that that`s complete. If it`s not, then we`re going to go back down, retest the low on the S&P at 800 and most likely go down below to where you see that rally kick off at the beginning of `97. And on the Dow, that`s about 5,500. KANGAS: So it`s still a possibility... JIMERSON: It still is. KANGAS: ... maybe not a probability. JIMERSON: Well, I think it`s actually a 50-50 probability. KANGAS: Yes. But in the meantime, we`ve had this big rally. Don`t you feel like you`ve been left out, you`ve lost opportunities by being so conservative? JIMERSON: Well, we participated, but we were conservative. So with did miss out on probably, you know, a majority of the action. But I`m not discouraged because, you know, we have been able to participate and we feel that there are some better opportunities still to come. KANGAS: OK. Now, Doug, looking back on your last visit with us, you were still holding defense stocks like General Dynamics (GD) and Lockheed Martin (LMT) and a few others. There`s General Dynamics (GD), which is way up. That was a good one. Lockheed down about a point. And we had some others that you liked and you were holding, like Raytheon (RTN), which was down a little also. But Chevron (CVX) is nicely higher. And I think there were two others that you held on, Exxon Mobil (XOM) -- the news wasn`t too good on that today. JIMERSON: Right. KANGAS: But Cisco (CSCO) had a very nice run. Are you still holding all of these? JIMERSON: We`re holding these defensive stocks. We exited our growth stocks in the late summer. KANGAS: But you`re not buying any of those that we just saw? JIMERSON: I would say you could buy a little bit. You know, basically don`t have any of your money left in technology. KANGAS: OK. JIMERSON: Get out. KANGAS: All right. JIMERSON: And we had our toe in the water and we took our toe out. So... KANGAS: Now, you don`t -- I mean do you have any new recommendations right now? JIMERSON: I don`t have any new recommendations. KANGAS: You wouldn`t buy the stocks you recommended last time either? Just a little bit, you say? JIMERSON: A little bit in the defense stocks, I still think, and also in some of these funds, Fidelity Select Energy (FSESX), Fidelity Select Defense (FSDAX). KANGAS: Yes. So you are still holding the six stocks that you had recommended last time? JIMERSON: Those conservative stocks, I think they`re a long-term hold. KANGAS: OK. So are you strictly long, long-term oriented here. JIMERSON: Long term. You know, this is a question of long-term allocation planning. KANGAS: And be on the defensive. If the other shoe drops, what do you think will cause it? JIMERSON: Well, remember, we talked about how weak the dollar was last time. KANGAS: Yes. JIMERSON: It continues to look weak and to weaken further. KANGAS: All right. JIMERSON: So I am concerned about that issue. And obviously we have these other unsettled issues about where we go from here with the economy. KANGAS: Right. OK. Doug, still as defensive as you`ve been for a while. Thanks very much. JIMERSON: Thank you, Paul. KANGAS: My guest, Doug Jimerson President of National Investment Advisors.
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.
11/14/03: Commentary: The Toll of The Tax Cut
SUSIE GHARIB: Well, tonight`s commentator is talking taxes, with a bit of philosophy thrown in. Here`s Alan Sloan, Wall Street Editor of "Newsweek" magazine. ALLAN SLOAN, COMMENTARY: When it comes to tax policy, the Bush administration is using the same approach as the people in my business who claim to be experts on everything. -- often wrong, never in doubt. When something doesn`t work, just declare victory and do some more of it. Which brings us to taxes. We`re now looking at the biggest federal deficits ever, thanks largely to the Bush tax cuts. The original rationale for the cuts was to reduce the budget surplus. Then the surplus disappeared. So the rationale became to stimulate the economy. Well, we`re two years into an economic recovery and we`ve got fewer jobs now than we did when taxes first got cut. Although, finally, we`re at least adding jobs instead of losing them, more from low interest rates and house refinancings than tax cuts. So what are the Bushies planning to propose now? Balance the budget? Of course not. Rather, they want to give huge tax breaks to investors a way that helps high income people with ready cash a lot and lower income people only a little, or not at all. These cuts are very expensive long-term and add little or no economic stimulus for the near term. But the point won`t be to help the economy, no matter what sales pitch the Bushies use. These proposals are part of a long-term plan to eliminate taxes on income from investments and turn the income tax into a wage tax. On that, I`m not wrong. And I have no doubt whatever. I`m Allan Sloan.
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.
11/14/03:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street`s initial reaction to that laundry list of reports was positive, although the early upturn wasn`t very impressive. After 30 minutes of trading, the Dow was up a modest 38 points. The NASDAQ Index rose about 8.
Then buyers backed away due to the lackluster nature of the early rally. Leading the way lower were the tech stocks, targeted by profit takers after their recent surge. By early afternoon, the Dow was fractionally lower and the NASDAQ Index was down 13 points.
A brokerage`s cut in the earnings estimate for General Electric (GE) and a weak financial sector led to a deepening afternoon sell-off. The Dow Industrial Average finally closed with a 69 1/4 point loss, at 9,768.68. This week the Dow fell in four of the five sessions, for a net loss of 41.11. The NASDAQ Composite fell 37 points, to 1,930.26 today. It also fell in four out of this week`s five sessions, for a loss of 40 1/2 points. The Standard & Poor`s 500 Index dropped 8 points, to 1,050.35 today.
In the bond market, the 10-year note climbed 20/32 to par and 8/32, sending the yield down to 4.22 percent.
The most active New York Exchange issue on 32 million shares, Pfizer (PFE) moving up another $0.63. It traded as high as $34.46. The stock strong on optimism Congress will pass a plan for Medicare to cover prescription drugs for the elderly and disabled.
Then General Electric (GE) down $0.46, at a four month closing low. Today, Merrill Lynch cut 2004 earnings estimates by $0.05 a share, down to $1.60, citing higher expenses and a weaker businesses in some of the company`s units.
Johnson & Johnson (JNJ) gained $2.02. Not only the Congress action on Medicare could help that stock, but there`s a rotation going on from the high flying tech stocks to the laggard pharmaceuticals.
Lucent Technologies (LU) down $0.04.
And then ExxonMobil (XOM) down $0.26. You just heard about that nearly $12 billion jury award against the company in Alabama.
Charles Schwab (SCH) lost $1.06. As you heard, it founds cases of improper trading.
Citigroup (C) a $0.67 loss.
Wal-Mart Stores (WMT), which came up a $0.01 short on its earnings yesterday, down $0.52.
Texas Instruments (TXN) fell $1.36 in the weak high tech sector.
But Merck & Company (MRK), another one of those firm pharmaceuticals, up $0.78, tenth in big board volume.
American Express (AXP), this is a Dow stock, down $0.47. The company says regulators have contacted its financial advisers unit regarding its mutual fund trading practices. But it does not expect any probe will have a material impact on its finances.
Then we see LaBranche & Company (LAB), one of the major specialist firms for the big board. Class action lawsuits are being filed against some of these specialist trading firms for illegal trading practices. And, incidentally, LaBranche`s specialist unit`s CEO, Robert Murphy, resigned, but not, apparently, because of this investigation.
Other companies in this sector were weak on the news.
Bear Stearns (BSC) off $3.21. That Company owns Bear Wagner specialist firm.
FleetBoston (FBF) was down $0.14.
Goldman Sachs (GS) owns Spear Leeds Kellogg, a major specialist firm. The stock down $2.22.
And Van der Moolen (VDM) down $0.46 a share.
Progressive Corp. (PGR), the big insurance company, up $3.22. October net premiums were up 21 percent from a year ago and the stock reacted very favorably to that.
Then we see a good gain in Storage Technology (STK), up nearly a $1. And the story here, it traded as high as $26.85. The company sees 2004 revenues rising five to eight percent. Both the Robert Baird and C.S. First Boston Brokerages upgraded the stock from "neutral" to "outperform."
Univision (UVN) up $1.40. Third quarter earnings doubled to $0.16 versus $0.08. Revenues up 19 percent. And those earnings were higher thanks partly to the acquisition of Hispanic broadcasting. The company sees 2003 earnings around $0.52 to $0.54, as you see.
And then the Brazilian aircraft manufacturer Embraer Empresa (ERJ) down $1.42. Third quarter earnings fell to $0.11 versus $0.23 last year. Sales were down 24 percent and the company now sees delivery this year of 102 aircraft instead of the previously announced 110 aircraft.
Intel (INTC) topped the active list, down $0.98.
Followed by Microsoft (MSFT), a $0.19 loss.
Applied Materials (AMAT), the weak high tech sector, down $1.26.
Amgen (AMGN) fell $1.70.
Cisco Systems (CSCO), fifth in volume on NASDAQ, down $0.44.
Dell (DELL) down $0.40. A lot of analysts disappointed over the company`s forward looking statement yesterday.
Yahoo! (YHOO) off $1.67.
eBay (EBAY) fell $1.85.
BEA Systems (BEAS) losing $1.46. Third quarter earnings came in at $0.07, up from $0.06 last year, but a $0.01 below the Street estimate.
And then Ameritrade Holding (AMTD) down $0.47, tenth in volume.
Superconductor Technology (SCON) had a super gain of $1.22, over 23 percent. A publication called "Change Wave Investment Research" issued a "buy" on Superconductor Technology.
And then Portal Software (PRSF), look at that loss, almost 45 percent, as the stock plunged $6.86. The company is forecasting a loss for the third quarter of $0.27 to $0.31 a share. The Street was looking for a loss of only about $0.04 a share.
And over on the American Exchange, Medifast (MED), which sells diet and nutrition products, down $3.68 a share. Third quarter earnings plunged to only $0.04 versus $0.18 last year.
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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