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Program: Thurday, November 20, 2003
11/20/03: Terror Attacks In Turkey Send Shockwaves Through Wall Street
SUSIE GHARIB: A volatile day on Wall Street today following two terrorist attacks in Turkey and mixed news on the economy and earnings. The Dow lost 71 points and the NASDAQ was down 17. Both Indexes have declined eight times out of the past 10 sessions, raising investor concerns about the outlook for the stock market. Suzanne Pratt reports. SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: At first glance, it seemed today`s deadly terrorist bombings in Turkey might have powerful effects on stock markets here in the U.S. But that was not the case. Instead, the Dow meandered between positive and negative territory throughout the day, ending on a down note because of last minute technical selling. Traders were apprehensive, but most experts say only terrorist acts on American soil are likely to have a major impact on U.S. stock prices. ARTHUR CASHIN, FLOOR OPERATIONS DIRECTOR, UBS FINANCIAL SERVICES: What happened in Istanbul, from a market standpoint, is not what you might call an actionable item. It`s an item of concern. You keep it buried in the back of your head to be ready, heaven forbid, if something else pops up. But for now, it doesn`t look like, hopefully, the beginning of a brand new trend. PRATT: Experts say market activity has been dominated this year by positive economic data, particularly evidence of an improving job market. On top of that, corporate profits are looking better every day. Thanks to those factors, all of the major indexes have logged healthy gains this year, with the NASDAQ leading the pack. Still, whether the market can continue to surge through the end of this year is unclear. Investors are hopeful that a Santa Claus rally will help the markets end on an up note. But there`s also a growing concern that the consumer is already tapped out and that will translate into less holiday cheer on Wall Street this year. As a result, some pros predict a tug of war between the bulls and the bears in the next few weeks. RICHARD MCCABE, CHIEF MARKET ANALYST, MERRILL LYNCH: I think the rest of this year will be somewhat choppy, maybe even a downward tilt in the averages between now and year end. But if that does prove to be the case and it digests the big gains the market averages have had since March, it could set the stage for a second strong wave of advance in early and middle part of 2004. PRATT: McCabe says those 2004 advances could be quite impressive. He sees the Dow climbing as high as 11,000 next year and the NASDAQ surging to 2,400. 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.
SUSIE GHARIB: The interim Chairman of the New York Stock Exchange, John Reed, took his case for big board reform to a key audience today, U.S. senators. The Senate Banking Committee is questioning how the Exchange should be structured and Reed and SEC Chairman William Donaldson had answers. But as Angela Terrell Heath reports, some people are concerned they`re not the right answers. ANGELA TERRELL HEATH, NIGHTLY BUSINESS REPORT CORRESPONDENT: As part of his reform proposal, the NYSE Interim Chairman says once a new board of executives is established, he will recommend setting up a blue ribbon panel to review how the exchange is regulated. JOHN REED, INTERIM CHAIRMAN & CEO, NYSE: We want to make sure that we rebuild our regulatory capability to the best possible level. And the best way to do that would be to bring in a good peer review group to give us the benefit of their insight and the benefit of their talk. HEATH: A new board of directors was selected this week. Reed will meet with them Monday to discuss an ongoing review of specialist firms and discuss potential candidates for a new exchange chairman. Someone representing pension funds will also be placed on the new board of executives. But while Reed was defending his plan in Washington, nine state comptrollers were in New York City complaining his new reforms don`t go far enough. They want the SEC to do more. ALAN HEVESI, NEW YORK STATE COMPTROLLER: We now call on the Securities and Exchange Commission to fill the gaps, to make the changes and reforms. And they are empowered to do so. The problem institutionally with the Securities and Exchange Commission is its willingness to monitor, regulate and participate in reform of corporate America is spotty at best. HEATH: But SEC Chairman William Donaldson says the Commission has the appropriate role now. WILLIAM DONALDSON, CHAIRMAN, SEC: I do not think at this juncture that the SEC should be running stock exchanges. I think the SEC should have oversight responsibilities, as it does, and I think it should exercise those oversight responsibilities with vigor. HEATH: Donaldson says the SEC will vote on the New York Stock Exchange`s reform package before the end of the year. But analysts are divided on whether those reforms will be approved. Angela Terrell 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.
11/20/03: One On One With Paul Haaga, Chairman of the Investment Company Institute PAUL KANGAS: New York State Attorney General Eliot Spitzer says he expects to level criminal charges in connection with his investigation of mutual funds. Also testifying on Capitol Hill today, Spitzer zeroed in on fund fees, saying there`s a huge disparity between fees that small investors and large investors pay. Spitzer cited Putnam Funds as an example, saying it charged small investors 40 percent more than institutional investors, some $290 million more. ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: The fee issue is so pervasive and cuts so deeply to the heart of whether or not these entities are living up to their fiduciary duty, that I do not want to settle with them unless and until we begin to address that issue. KANGAS: Meanwhile, Spitzer`s office and the SEC filed civil fraud charges today against the founders of the Pilgrim Baxter Mutual Fund family. Gary Pilgrim and Harold Baxter were also charged with breaching their fiduciary duties in connection with market timing of the firm`s mutual funds. The SEC says the pair`s illegal trades reaped almost $4 million in profits. It`s the first time fund company leadership has been directly charged in connection with illegal trading practices. Both Pilgrim and Baxter left their namesake firm last week. GHARIB: Joining us now to talk more about the scandals sweeping the mutual fund industry, Paul Haaga, Chairman of the Investment Company Institute, the mutual fund industry group. And he`s also Executive Vice President of Capital Research, an investment management firm. Welcome to NIGHTLY BUSINESS REPORT, Mr. Haaga. PAUL HAAGA, CHAIRMAN, INVESTMENT COMPANY INSTITUTE: Thank you for having me, Susie. GHARIB: Let me begin by just saying that every night we report on our program about a mutual fund company that`s being investigated or one that`s been fined. How many more shoes are going to drop before this whole thing is over? HAAGA: Well, the answer is we don`t know. The first shoe dropping was enough for us. This is a -- I`d like to sit here and say this is a problem of not enough rules or of governance or a structural problem, but it`s an ethical problem. And so once we found out that there were any people in our business that weren`t putting shareholders first, we really didn`t focus on the count. We focused on setting things right by shareholders. But, I hope not too many more. GHARIB: So what do you think needs to be done to correct the situation and set things right and to restore investor confidence? HAAGA: Well, again, focusing on this as an ethical problem, I think the first thing you need to do is have some people leave the business. And we`re already seeing that. If people have to go to jail, they should go to jail. I think we have to deal with the wrongdoers. One of the most positive aspects of this is that people are going to be getting out of the business, losing their jobs, maybe even going to jail for things that involved not putting shareholders first. That`s all there was to it. Many of these things that have been brought up are not even illegal. They didn`t even contravene any rules. They simply involved not putting shareholders first, and that`s got to be our mantra. GHARIB: Do you think that the legislation, the proposed legislation by the House yesterday that was passed, will that make a difference? I mean, what do you think of the proposals there? HAAGA: Well, we supported those proposals. I think there`s some language we may want to clean up in how we define the duties of directors with respect to certain things. But we supported it. We think it will be helpful. We want to make sure that we don`t deceive ourselves as an industry into thinking that all we needed was more rules and a little more independence in the governance structure. Those are good steps, but the big step is reminding ourselves and continuing to remind ourselves every day that shareholders come first. GHARIB: Your organization, the ICI, tracks the inflow and outflows of investor money into mutual funds. Are you seeing a large amount of withdrawals of investor money since this mutual fund crisis began? HAAGA: We are not. It`s always hard to separate, you know, what`s coming out because of the news and because of the ethical violations and what is going in or out because of the market or the time of year or 401(k) contributions or anything. But I think we`re seeing some shifts more than we`re seeing some money leaving the industry. But there are definitely some patterns. I think you`ve read about those in the paper. GHARIB: You know, there`s been criticism of SEC Chairman William Donaldson by New York`s Attorney General Eliot Spitzer on the whole handling of this mutual fund scandal. What are your thoughts about the SEC`s performance? HAAGA: Well, I`ll give a disclaimer first. I love the SEC. I worked there for three years back in the `70s. I`ve been involved in private practice dealing with the SEC and I`ve been in an industry for 32 years that`s very highly regulated by them. So I have a lot of experience and it`s been very favorable. I think the SEC does an excellent job. I think that the criticism is frankly -- frankly it`s over the top. I think they`ve done a very good job here. The fact that they didn`t spot this earlier, none of us spotted it either. We have a bunch of compliance people right on the job and we didn`t see it either. The late trading thing was a shock to us. In 32 years, I`ve never heard of a case of late trading. So I don`t blame them for not seeing it. GHARIB: OK. All right, we appreciate you coming on our program to talk about this tonight. HAAGA: Thank you very much for having me. GHARIB: We`ve been speaking with Paul Haaga, Chairman of the Investment Company Institute. GHARIB: Boeing`s newest plane, the 7E7, is going to be an international effort on a bigger scale than ever before. The company said today that sections of the new jet will be built in the U.S., Japan, Italy, Australia and Canada. Boeing will supply about a third of the structure and the Japanese about the same amount. That`s the largest Japanese contribution for any Boeing plane. The final product will be assembled in the United States at a location that hasn`t been announced yet. Boeing has never set a figure for the total cost to design and build the new plane, Paul, but aviation experts say it`ll run about $10 billion.
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.
11/20/03: Last Word: Thanksgiving Dinner That's Out Of This World SUSIE GHARIB: There`s been a lot of talk lately about the need for corporate boards to have independent members. But just what makes someone independent? Tonight`s commentator has some answers to that question. Here`s Barbara Hackman Franklin, President of Barbara Franklin Enterprises and former U.S. Secretary of Commerce. BARBARA HACKMAN FRANKLIN, COMMENTARY: Two weeks ago, the SEC approved new listing standards proposed by the stock exchanges to elevate governance. As a director of five public companies, I welcome the changes. The new standards require that independent directors comprise a majority of the board and that three board committees -- audit, compensation and nominating -- be composed entirely of independent directors. An independent director has no material relationship with the company and several things disqualify a director from being independent. He or she cannot be an employee; receive compensation from the company other than board fees of more than $100,000 per year -- but for audit committee members, no other compensation is allowed; cannot be affiliated with or employed by the company`s auditor; be part of a compensation committee interlock; or be an executive officer or the immediate family member of an executive officer of another firm that makes or receives payments from the company in excess of two percent of that firm`s gross revenues or $1 million, whichever is greater. These standards strengthen the independent mindset of directors so they are more willing to question management vigorously and take a stand. The result is a more equal balance of power between management and the board, and that benefits shareholders. I`m Barbara Hackman Franklin. 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 GHAIRB: And finally tonight, Thanksgiving is just a week away. But for some Americans, Thanksgiving will be far away, and we mean really far away, like in space. The Thanksgiving menu for the international space station includes Turkey and all the trimmings, but it`s not like mom used to make. That`s because your mom probably didn`t dehydrate all the food and pack it in silver pouches. It might not look like traditional holiday food, but the astronauts say it tastes pretty good. Paul, one dish does get rave reviews from the astronauts. They say that the shrimp cocktail is just like you`d get back on earth. KANGAS: You know, I wonder, in the absence of gravity when you can tell really if you`re stuffed with shrimp and turkey. GHARIB: Yes, so you don`t have to maybe feel that Thanksgiving day stuffed feeling. You can keep on eating and eating.
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.
11/20/03: "Paul Kangas' Stocks In The News" PAUL KANGAS: Wall Street reversed yesterday`s upturn on the opening today, as investors were unnerved by that news of terrorist blasts in Istanbul and a false report of a plane violating the air space of the White House. At the outset of trading, the Dow fell 70 points. The NASDAQ down 17. Cutting those early losses was news of a 4/10 percent jump in the October leading economic indicators, which was twice the Street estimate. By early afternoon, the Dow rebounded with a 30 point gain and the NASDAQ Composite was up 17. But the recovery lost traction, partly due to caution ahead of tomorrow`s triple witching expiration of options on stocks, stock futures and indexes. The Dow Industrial average closed down 71 points, at 9,619.42. The NASDAQ Composite fell 17 3/4 points, ending at 1,881.92, while the Standard & Poor`s 500 dropped 8 3/4 points. Over in the bond market, the 10-year note climbed 22/32, to par and 25/32, sending the yield down to 4.15 percent. The most active New York Exchange issue, trading 18.6 million shares, Hewlett-Packard (HPQ), down $0.58. After the close, as we reported to you yesterday, fourth quarter earnings $0.36, a $0.01 better than expectations. The stock moved up a bit in after hours trading and gave that gain back today. G.E. (GE) down $0.52. AT&T Wireless (AWE) managed to gain $0.19. Pfizer (PFE) a $0.77 loss. Pfizer plans to seek FDA approval within a few years for a new cholesterol treatment whose sales could greatly exceed its current Lipitor product`s $10 billion a year. Advanced Micro Devices (AMD) down $1.10, fifth in big board volume. Lucent Technologies (LU) fell $0.03. Followed by Time Warner (TWX), which was down $0.06. And then Citigroup (C), a $0.17 drop there. Motorola (MOT) gained $0.06. El Paso Corp. (EP), tenth in big board volume, was up $0.08. Disney (DIS) closed with a gain of $0.11. And just after the close, the company reported fourth quarter earnings of $0.20, well up from last year`s $0.09 and a $0.05 better than the Wall Street estimate. In after hours trading, Disney`s stock got as high as $22.82 a share. Foot Locker (FL) up $2.46. Third quarter earnings $0.41, way above last year`s $0.29, $0.07 better than the Street estimate. And the company expects to exceed the $0.37 per share in earnings that Wall Street was expecting for the fourth quarter. The company also plans to double its quarterly dividend from $0.03 to $0.06 a share. Then NIKE (NKE) up $1.41. Now, Foot Locker and Nike`s relationship is definitely on the mend. They have a new marketing pact. And all of this should improve the results for both companies next year. Genesco (GCO), this is another footwear company, retailer, down $2.03. Third quarter earnings, $0.42, up from $0.41 last year, a $0.01 above the Street expectation. But the company forecasts its fourth quarter earnings will be $0.67 at best. The Street was looking for $0.80 a share, hence the drop in the stock. Claire`s Stores (CLE), another retailer, doing well today, up $4.08. Third quarter earnings more than doubled last year, $0.51 versus $0.25. Same store sales rose eight percent. The company sees fourth quarter earnings coming in at $1.10. The Street estimate only $1.03. Bombay Company (BBA), a furniture retailer, down $2.13. Third quarter earnings just break even, the same as last year, and that`s despite a 13 percent rise in same store sales. The company sees fourth quarter earnings coming in at $0.34 to $0.41. The Street was looking for $0.45 a share. Disappointment. Eldertrust (ETT) up $1.88. The company is in assisted living facilities and it`s going to be acquired by Ventas (VTR) for $12.50 a share in cash. Another decent gainer, Emulex (ELX) up $0.40. It traded as high as $28.95 after Baird & Company upgraded it from "neutral" to "outperform" with a $34 a share target and Merrill Lynch today reinstated coverage on Emulex with a "buy" recommendation. Northern Border Partners (NBP) limited partnership down $2.27. Smith Barney downgraded it from "buy" to "hold" on concern that Enron, which owns 82 percent, Enron`s termination of its pension plan would hurt this limited partnership. And a new issue today, Whiting Petroleum (WLL). Fifteen million shares offered at $15.50. The stock opened at $16.40. The high of the day $16.85. It backed off just a bit from the high. The NASDAQ`s most active, Intel (INTC), down $0.69. Then Microsoft (MSFT), a $0.25 loss. Amgen (AMGN) fell $0.35. Applied Materials (AMAT) a $0.58 loss. And Cisco (CSCO), fifth in volume, was down $0.11. Marvell Technologies (MRVL) down $3.09. Third quarter earnings $0.25, a $0.01 above the Street expectation. But the Street was disappointed that the company failed to raise earnings guidance in the months ahead. eBay (EBAY) fell $1.01. Dell Incorporated (DELL) down $0.52. The only gainer in the 10 most active NASDAQs. Electronic Arts (ERTS) up $0.15. And then Amazon.com (AMZN) losing $0.68 a share, tenth in volume. Callidus Software (CALD) went public today. Five million shares offered at $14, opened at $17.20, the high of the day $19. It backed off considerably from that, but still a good opening. And then Allegiant Bancorp (ALLE) up $3.92. National City (NCC) Bancorp (sic) is going to acquire this firm for $27.25 in cash or stock. Take your choice. 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.
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9619.42 -71.04 - .7
HIGH 9726.09
LOW 9613.72
NASDAQ COMP. 1881.92 -17.73 -.9
HIGH 1916.55
LOW 1880.91
VOLUME 1,294.1
PREVIOUS 1,322.2
UP VOLUME 361.1
DOWN VOLUME 922.0
DOW TRANSPORTS 2855.48 -11.39 - .4
DOW UTILITIES 245.28 -.92 - .4
CLOSING TICK +568
S&P 500 1033.65 -8.79 - .8
S&P 100 511.79 -5.03 - 1.0
MIDCAP 400 546.29 -2.97 - .5
REUTERS/CRB 250.98 -.94 - .4
NYSE COMPOSITE 5924.78 -42.35 - .7
VALUE LINE 338.04 -1.77 -0.52
RUSSELL 2000 523.08 -2.54 -0.48
WILSHIRE 5000 10077.82 -78.16 -0.77
U.S. TREASURIES
5-YEAR NOTE 3.375%
Nov. 15,2008 101 4/32 +13/32 3.14
10-YEAR NOTE 4.25%
Nov. 15,2013 100 25/32 +22/32 4.15
30-YEAR NOTE 5.375%
Feb. 15, 2031 105 12/32 +1 4/32 5.01
LEHMAN BROS.
LONG BOND INDEX 1742.04 +12.35
DOW CLOSE 9619.42 -71.04 - .7
ADVANCES 1259
DECLINES 2005
NEW HIGHS 123
NEW LOWS 13
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
HPQ Hewlett-Packard 21.59 -.58 -2.6
GE GE 28.95 -.52 -1.8
AWE AT&T Wireless 6.77 +.19 +2.9
PFE Pfizer 33.65 -.77 -2.2
AMD Advanced Micro 16.50 -1.10 -6.3
LU Lucent Tech 3.05 -.03 -1.0
TWX Time Warner 15.44 -.06 -.4
C Citigroup 45.77 -.17 -.4
MOT Motorola 13.29 +.06 +.5
EP El Paso Corp 6.25 +.08 +1.3
NASDAQ CLOSE 1881.92 - 17.73 - .9
VOLUME 1,793.2
PREVIOUS 1,802.2
ADVANCES 1203
DECLINES 1935
NASDAQ ACTIVES
INTC Intel 31.83 -.69 -2.1
MSFT Microsoft 25.10 -.25 -1.0
AMGN Amgen 59.75 -.35 -.6
AMAT Applied Matl 22.85 -.58 -2.5
CSCO Cisco Systems 21.94 -.11 -.5
MRVL Marvell Tech Gp 38.91 -3.09 -7.4
EBAY eBay 52.03 -1.01 -1.9
DELL Dell Inc 34.06 -.52 -1.5
ERTS Electronic Arts 44.25 +.15 +.3
AMZN Amazon.com 48.85 -.68 -1.4
AMEX CLOSE 1067.11 - 1.65 - .2
INDEX SHARES
DIA DIAMONDS TRUST 96.54 -.84 -.9
QQQ NASDAQ 100 33.86 -.31 -.9
SPY S&P DEP.RECEIPTS 103.78 -.94 -.9
STOCKS IN THE NEWS
DIS Disney 22.68 -.11 -.5
FL Foot Locker 20.76 +2.46 +13.4
NKE Nike 62.60 +1.41 +2.3
GCO Genesco 15.85 -2.03 -11.4
CLE Claires Stores 44.55 +4.08 +10.1
BBA Bombay Co 10.05 -2.13 -17.5
ETT Eldertrust 12.44 +1.88 +17.8
ELX Emulex 27.76 +.40 +1.5
NBP Northern Border 38.00 -2.27 -5.6
WLL Whiting Petroleum 16.27 +.77 +5.0
CALD Callidus Software 17.37 +3.37 +24.1
MRVL Marvell Tech Gp 38.91 -3.09 -7.4
ALLE Allegiant Banc 27.32 +3.92 +16.8
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