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Program: Wednesday, December 24, 2003
12/24/03: Mad Cow Disease Mania Sparks A Stampede Of Fear JEFF YASTINE: On this day before Christmas, American consumers and investors showed concern about the first case of mad cow disease in the United States. On Wall Street, which closed early today, stocks of meat-packing companies and restaurants got slaughtered. In the commodities markets, futures prices plunged in everything from cattle to grains. We have two reports this evening looking at the financial impact of the mad cow scare. We begin with Darren Gersh in Washington. DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was all over in few minutes, trading opened at 9:05 a.m. Central time, and prices for cattle futures on the Chicago Mercantile Exchange immediately fell the maximum amount normally allowed in a day, down $0.011/2, closing at $0.8917 a pound. But analysts warned that`s only the beginning. CHUCK LEVITT, LIVESTOCK & MEAT ANALYST, ALARON TRADING: We`re probably in the process of losing our export market. That`s 2.6 billion pounds of our beef that`s not going to go out the door someplace else. We`re going to have reabsorb that amount of product back into our market. We have just wreaked havoc and wrecked our supply-demand balance. GERSH: Beef prices touched 10-year highs this year, but analysts say this one case of mad cow disease may be enough to chop prices at the meat counter by 15 to 25 percent. Already, more than a dozen countries have blocked imports of U.S. beef. Mexico, the nation`s second-largest export market, joined the list today, blocking shipments worth $1 billion a year. Overnight, Japan, the largest overseas market for the U.S., stopped $1.4 billion in imports. This year, U.S. cattlemen exported $3.6 billion of beef, or about 10 percent of their domestic production. That`s why the U.S. beef industry wants those bans lifted, arguing international scientific guidelines do not support shutting off exports based on a single case of mad cow disease. GREGG DOWD, NATIONAL CATTLEMEN`S BEEF ASSN.: We are approximately a $190 billion U.S. industry. And I think politically every effort will be made at all levels of our government to immediately set down with the Mexican government and the Japanese government and our other trading partners to address this issue in a way unlike it has ever been addressed before. GERSH: But an investigation is just beginning. At this dairy farm in Washington State, scientists are tracing the infected cow back to its birthplace where they believe it may have first caught mad cow disease. U.S. officials insist there is no risk to consumers, but 10,000 pounds of meat is being recalled from this slaughterhouse as a precaution. Analysts worry the U.S. may be about to relive Canada`s experience after a single case of mad cow disease was found in Alberta last May. LEVITT: The ban is in place all around the rest of the planet as far as Canadian beef and cattle products, and this is seven months later. Why should the rest of the world treat the U.S. any differently than it does Canada right now seven months later? GERSH: The true test of market reaction is likely to come next week as more is known about the investigation and trading volume gets back to normal levels after the holiday. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington. SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Scott Gurvey in New York, where the news of mad cow disease in America caught much of Wall Street out of town. Analysts rushed to update investment notes, often filing from holiday vacation locations. Pre-holiday trading volume today was extremely light. But investors still made their initial reactions clear. The list of stocks losing ground included scores of restaurants topped by McDonald`s, Wendy`s (WEN), and Outback Steakhouse (OSI), meat-packers lead by Tyson (TSN), and farm equipment makers like Deere (DE). Stocks gaining ground included poultry, pork, and organic food companies, like Pilgrim`s Pride (PPC), Cal-Maine (CALM), and Sanderson Farms (SAFM), restaurants like Buffalo Wild Wings (BWLD), and Landry`s (LNY), and biotech and pharmaceutical firms including Bio-Rad (BIO), which makes a test for mad cow. Industry leaders rushed to reassure consumers. McDonald`s, Wendy`s, and Tyson were among the many companies were among the many companies issuing statements of confidence in their meat suppliers today. MITCHELL SPEISER, RESTAURANT ANALYST, LEHMAN BROTHERS: I think as consumers get more educated, they`ll understand the risks involved, which are minimal, and folks will eventually come back and eat beef again. So for more of patient investor, I think this is an opportunity, although near-term I think there could be further downside because I think it will affect consumers` eating habits in the short run. GURVEY: Overall estimates of the total economic activity generated by the beef industry run as high as $175 billion annually. But most analysts see little impact from the crisis at its present size and with the economy in its current state. JAMES AWAD, CHAIRMAN, AWAD ASSET MGMT.: As we sit here now, it seems to be contained and is likely not to spread or to have any dramatic impact. Of course, we have to wait over coming days to see if its more than one cow, more than one herd, how many companies are involved. But as we sit here right now, it seems to me very contained and an almost negligible impact on the American economy. GURVEY: In fact, most food companies deal with a wide range of products, not just beef. That helps insulate them from problems with the meat supply, but it also makes it difficult for investors to find a pure play in the food sector without beef. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
SUSIE GHARIB: Japan is second only to the United States as a golf mecca, with an industry valued about around $20 billion. But a new Japanese government report on the game recently issued a dire warning about it, predicting collapse unless drastic reforms make the sport more accessible to average Japanese citizens. As Lucy Craft reports from Tokyo, an American investment bank has become Japan`s top golf course company and is trying to popularize the game. LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was the British who brought golf to Japan at the turn of the 20th Century, and even today, 100 years later, the white glove treatment, stuffy etiquette and an elitist men`s club atmosphere linger at Japanese golf courses. But players are deserting the sport, and nearly half of all links operate at a loss. MICHIHIRO CHIKUBU, CEO, ACCORDIA GOLF CO.: Most golf courses are also targeted for entertainment, business-wise, but it`s not right to (UNINTELLIGIBLE) especially given these kind of economic conditions. You know, if the price is right and more casual, reasonable, we may have more players. The most important thing is how we can build up the new golf society to enjoy the golf. CRAFT: Goldman Sachs` (GS) subsidiary Accordia has emerged as Japan`s leading golf course operator with nearly 60 golf courses either owned outright or under its trusteeship. The U.S. investment bank has been forced to hack away not only at bloated balance sheets and overpriced suppliers, but also Japan`s crusty old rules of the green. Turf on the fairways and roughs, for instance, is now trimmed so short even duffers can swing a respectable putt or locate a lost ball. Rigid, British-inspired dress codes, laughably inappropriate for Japan`s sweltering climate, have been eased in favorite of casual wear. Brightening up gloomy clubhouses, not gouging patrons in the pro shops and building decent locker rooms to entice women into the sport, may seem like no-brainer ideas. But officials here say it took foreigners to chip Japanese golf off the rough. TAKASHI OMORI, EXECUTIVE DIR., JAPAN GOLF ASSN. (THROUGH TRANSLATOR): The Americans notice problems we don`t, and improve areas we had given up hope of reforming. Golf is growing unpopular in Japan because it costs too much and takes too much time. The foreign investors figured this out, and for instance, started allowing customers to play just nine holes, or to play through a round without stopping for lunch, in order to save time. That is the big difference. CRAFT: The other big difference is deep pockets. The U.S. investment banks won`t say how much it spent on snapping up Japanese golf courses, but with Japan still sitting on a mountain of bad debt, few if any domestic players could have raised the capital to build comparable golf empires. ORLANDO CAMARGO, CO-DIR., MEDIA RELATIONS, GOLDMAN SACHS, JAPAN: It was a puritan time where banks were very, very strapped, a there is still a lot of problems in the financial sector. And to have any financial sector player in Japan start investing in golf courses at that time would have been seen probably as a very difficult thing to do. The lack of risk money was probably the biggest issue, to be able to put your own capital and your own skills at risk. I think that was probably one of the factors that helped us initially. CRAFT: At least two other American companies are buying up and operating golf courses here in Japan. Eventually American companies like Goldman Sachs could end up owning about 10 percent of the some 2400 golf courses. Their success will depend on how well they can transform the way golf is played here from a sport for the rich to a pastime for the masses. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.
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. 12/24/03:"Money File"-Twas The Time To Think Taxes SUSIE GHARIB: And finally, if you`re planning to leave cookies and milk for Santa tonight, here`s a warning: Make sure he doesn`t sue you. The Center for Consumer Freedom suggests that Americans make Santa sign a legal waiver to protect against a lawsuit. Among the concerns: your failure to provide Santa with nutritional information on those cookies; your failure to caution him on the potential for overeating because the cookies are free; and your failure to offer healthier alternatives like tofu bars. The Center says it`s quite possible Santa has a trial lawyer on speed-dial, and may be ready to sock you with a suit if he gains weight on your snacks. Of course, Jeff, it`s also quite possible the Center thinks there are already too many frivolous lawsuits, and this is its rather subtle way of getting the point across. YASTINE: I`m sure the Bar Association would have something to say about that. I`m going to put the cookies out anyway. (LAUGHTER) GHARIB: Me too. And don`t forget those carrots for the reindeer.
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.
12/24/03: "Paul Kangas' Stocks In The News" JEFF YASTINE: Investors reacted with concern of their own today, but it was mostly the mad cow reaction moving markets, not that poor economic data. With a 1 p.m. Eastern close, traders got the selling over with quickly. The Dow fell 30 points at the open, driven in part by McDonald`s. The NASDAQ also headed lower early as its food and restaurant stocks were hit. That index bounced back quickly to just below break-even levels. In the last hour, the already light trading activity slowed even further and prices faded as traders left for the holiday, with the Dow ending at its low of the day, down 36 points to 10,305.19, the NASDAQ falling 5 1/2 to 1969.23, and the S&P 500 closing off almost 2 points at 1094.04. In the bond market, that weaker durable goods number helped bring in buyers after yesterday`s sharp drop in Treasury prices. The 10-year note gaining 19/32 to 100 16/32. That puts the yield at 4.19 percent. And topping the most actives, McDonald`s (MCD) losing $1.32. You heard the news about mad cow. The company having 16 million shares trading hands on its stock today. Micron Technology (MU) rising $0.28 on those better-than-expected results released late yesterday. The company breaking even in its fiscal first quarter, turning around a $0.52-loss from the year-ago period. Nokia (NOK) off $0.20. Ford Motor (F) gaining three pennies. Liberty Media (L) up $0.23. More speculation today that Chairman John Malone is prepping that firm for sale. Lucent Technologies (LU) falling $0.03. Pfizer (PFE) gaining $0.20 for today. Tyson Foods (TSN) losing $1.08. Again, mad cow worries hurting the big meat producer. The company says none of its beef came from the Washington slaughterhouse where that one case of mad cow was found. TV Azteca (TZA) losing $0.87. This is Mexico`s second-largest broadcaster. A "New York Times" story detailed an ongoing dispute between executives in Mexico and its lawyers in the U.S. Apparently the company is reluctant to make certain disclosures so it can comply with the Sarbanes-Oxley law. The disclosures are said to involve transactions that netted the chairman profits of more than $100 million. The New York law firm Akin Gump Strauss may withdraw as the company`s counsel. Rounding out the most actives, General Electric (GE) falling $0.21. On our widely-helds, General Motors (GM) shares gaining $1.37. UBS raised its ratings on GM, saying the company is financially stronger than both Ford or DaimlerChrysler (DCX). The analyst sees yearly earnings at $8 a share over the next three years. Wendy`s (WEN), another big fast food chain hit by those mad cow woes, down $1.87, or about 5 percent. And here`s a look at some of the other restaurants from fast food to steakhouses being hit by those worries: Jack in the Box (JBX) down $1.23; Steak N Shake (SNS) losing $0.79; Outback (OSI) down more than $2; Rare Hospitality (RARE), which owns the Longhorn Steakhouse chain, down $1.88. On the flip side, Landry`s (LNY), the seafood restaurant chain benefiting, rising $0.85. Also to the upside, as Scott mentioned, Pilgrim`s Pride (PPC), the big poultry producer, that rose $1.79 today. Archer Daniels Midland (ADM) rising just two pennies. The soybean producer and feed maker holding its own amid the mad cow talk. On our New York Exchange gainers list, Franklin Covey (FC), the maker time management products like planners and schedules, rising $0.99, or a whopping 63 percent. No news and no word from the company on that one. Metrogas (MGS) up $0.95 or about 14 percent. This is an Argentine natural gas distributor. The company is restructuring its unsecured debt. More creditors have apparently agreed to the company`s bond buyback offer at about half the face value of the bonds. The deadline for that offer has also been extended through late January. On the downside, Christopher & Banks (CBK) falling $1.89. The company reporting a third-quarter profit of $0.29. That was in-line with estimates but it does see a sharp decline in December same-store sales. Investors not liking that today. On the NASDAQ, some - a little different activity here. We`re going by share volume, not our normal dollar volume. Sirius Satellite Radio (SIRI) rising $0.20. BMW is going to make that part of new 5 Series cars. Microsoft (MSFT) falling $0.11. VI Technologies (VITX) gaining $0.38. It makes blood pathogen and virus bacteria testing facilities. Research In Motion (RIMM) down $1.56, profit-taking following yesterday`s large gain. Sun Micro (SUNW) losing a little bit today. As well, looking at Intel (INTC), losing three pennies. Oracle (ORCL) down $0.08. Cisco (CSCO) down $0.07. Yahoo! (YHOO) up more than $1. Applied Materials (AMAT) losing $0.08. On our NASDAQ actives here, California Amplifier (CAMP) rising almost $4. It had good earnings for today, and also announced the acquisition of a company called Vytek. Shares Invitrogen (IVGN) gaining more than 6 percent. The company signed a deal to acquire BioReliance (BREL) in a $500 million deal. And over on the American Exchange, shares of Bio-Rad Labs (BIO) soaring $10, or 20 percent. This company makes a diagnostic test for mad cow disease, which is expected to win approval soon from U.S. authorities. Those kits are already widely used in Europe and Japan. And those are our "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.
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10305.19 -36.07 - .4
HIGH 10341.48
LOW 10305.12
NASDAQ COMP. 1969.23 -5.55 -.3
HIGH 1974.31
LOW 1964.88
VOLUME 517.5
PREVIOUS 1,149.1
UP VOLUME 224.2
DOWN VOLUME 279.5
DOW TRANSPORTS 2990.15 -16.46 - .6
DOW UTILITIES 264.75 -.10 - .0
CLOSING TICK -93
S&P 500 1094.04 -1.98 - .2
S&P 100 542.01 -1.41 - .3
MIDCAP 400 571.95 -.82 - .1
REUTERS/CRB 256.06 +.30 + .1
NYSE COMPOSITE 6350.34 +12.86 + .2
VALUE LINE 357.95 -.93 -0.26
RUSSELL 2000 552.35 -2.68 -0.48
WILSHIRE 5000 10638.82 -18.32 -0.17
U.S. TREASURIES
5-YEAR NOTE 3.375%
Nov. 15,2008 100 27/32 +13/32 3.19
10-YEAR NOTE 4.25%
Nov. 15,2013 100 16/32 +19/32 4.19
30-YEAR NOTE 5.375%
Feb. 15, 2031 105 24/32 +34/32 4.99
LEHMAN BROS.
LONG BOND INDEX 1742.45 +12.66
DOW CLOSE 10305.19 -36.07 - .4
ADVANCES 1613
DECLINES 1494
NEW HIGHS 308
NEW LOWS 4
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MCD Mcdonald's 23.96 -1.32 -5.2
MU Micron Tech 13.44 +.28 +2.1
NOK Nokia 16.65 -.20 -1.2
F Ford Motor 16.20 +.03 +.2
L Liberty Media 11.62 +.23 +2.0
LU Lucent Tech 2.83 -.03 -1.1
PFE Pfizer 34.72 +.20 +.6
TSN Tyson Foods 12.90 -1.08 -7.7
TZA Tv Azteca 8.93 -.87 -8.9
GE GE 30.89 -.21 -.7
NASDAQ CLOSE 1969.23 - 5.55 - .3
VOLUME 643.7
PREVIOUS 1,326.1
ADVANCES 1373
DECLINES 1612
NASDAQ ACTIVES
SIRI Sirius Sat Radi 2.40 +.20 +9.1
MSFT Microsoft 27.04 -.11 -.4
VITX VI Technologies 1.22 +.38 +45.4
RIMM Rsch In Motion 68.05 -1.56 -2.2
SUNW Sun Microsys 4.48 -.04 -.8
INTC Intel 31.08 -.03 -.1
ORCL Oracle 12.97 -.08 -.6
CSCO Cisco Systems 23.87 -.07 -.3
YHOO Yahoo! 44.77 +1.09 +2.5
AMAT Applied Matl 22.25 -.08 -.4
AMEX CLOSE 1161.05 + 14.80 + 1.3
INDEX SHARES
DIA DIAMONDS TRUST 103.20 -.26 -.3
QQQ NASDAQ 100 35.87 +.03 +.1
SPY S&P DEP.RECEIPTS 109.62 -.11 -.1
STOCKS IN THE NEWS
GM General Motors 53.35 +1.37 +2.6
WEN Wendy's Intl 37.79 -1.87 -4.7
JBX Jack In The Box 20.77 -1.23 -5.6
SNS Steak N Shake 17.21 -.79 -4.4
OSI Outback Steakhse 42.40 -2.23 -5.0
RARE Rare Hospital 23.69 -1.88 -7.4
LNY Landry'S Rest 26.35 +.85 +3.3
PPC Pilgrims Pride 16.85 +1.79 +11.9
FC Franklin Covey 2.55 +.99 +63.5
MGS Metrogas 7.76 +.95 +14.0
CBK Chrstphr & Bank 18.76 -1.89 -9.2
CAMP California Amp 14.00 +3.95 +39.3
IVGN Invitrogen Corp 69.55 +4.40 +6.8
BIO Bio-Rad Labs 59.82 +10.04 +20.2
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