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09/08/04:
It's The Economy According to Fed Head Alan Greenspan
SUSIE GHARIB:
An upbeat report card on the economy today from Alan Greenspan. But on Wall Street, stocks still closed on the downside. The Federal Reserve chairman told Congress that the economic recovery has regained some momentum after hitting a soft patch amid soaring oil prices. Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Alan Greenspan declared it is time to drop the soft-patch talk in favor of a more upbeat economic metaphor.
ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE BOARD: The most recent data suggests that, on the whole, the expansion has regained some traction.
GERSH: The Fed chairman says business investment is on a solid upward trend. Payroll growth picked up in August and there`s reassuring news on inflation. Greenspan told the House Budget Committee, setting aside oil companies, profit margin growth at most corporations has slowed, suggesting an easing in pricing power.
GREENSPAN: Moreover, increases in non-oil import prices have lessened, a development that, coupled with the slowing of profit margin growth, has helped to lower core consumer price inflation in recent months.
GERSH: But for now, the Fed chairman`s main concern is the recent spike in oil prices.
LYLE GRAMLEY, SENIOR ECONOMIC ADVISOR, SCHWAB SOUNDVIEW CAPITAL MARKETS: He spent a lot of time on that, yes. Interestingly, he didn`t talk about the possible effect of oil prices on inflation, but rather on growth. And it indicates, I think, that the Fed is a bit less optimistic about the economy`s future now than it was when Greenspan testified in July.
GERSH: Mr. Greenspan noted retail sales in August were mixed. That view was echoed today by Wal-Mart CEO Lee Scott, who told an investor conference that the business climate is quote, challenging since most of the customers who shop at the world`s largest retailer live paycheck to paycheck and are sensitive to rising gas prices. The Fed chairman returned to the issue of rising energy prices again and again.
GREENSPAN: If it weren`t for the oil price spike, I would be very optimistic about where the economy is going.
GERSH: One area where the Fed chairman is almost pessimistic is the outlook for the Federal budget as the baby boomers begin to retire. But in this election year, his calls for fiscal discipline bring applause but no action.
GRAMELY: There`s a constituency for higher expenditures. There`s a constituency for lower taxes, but there doesn`t seem to be a constituency for lower deficits.
GERSH: Analysts say Mr. Greenspan`s testimony signals the Federal Reserve still plans to raise interest rates on September 21, the last Fed meeting before the election. Darren Gersh, 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.
09/08/04:
Talking Politics With Thomas Gallagher of International Strategy and Investment Group
SUSIE GHARIB: President Bush and Senator Kerry have just eight more weeks to campaign before Americans cast their votes. Post-Labor Day polls point to a Bush lead, but the size varies significantly. Joining us now with some analysis on the presidential race and issues for investors is Thomas Gallagher, chief political analyst at the International Strategy and Investment Group. Hi Tom.
THOMAS GALLAGHER, CHIEF POLITICAL ANALYST, INTERNATIONAL STRATEGY & INVESTMENT GROUP: Hi. Thanks for having me on your show.
GHARIB: It`s our pleasure. You read polls for a living and we`ve seen in these recent post-Labor Day polls a big discrepancy by how much of a lead Bush is leading ahead of Senator Kerry. What do you look for in these polls?
GALLAGHER: There are a lot of ways that the polls can differ. The recent polls have been a little bit controversial because of the disproportionate number of Republicans or Democrats that have been surveyed. But really with so many polls coming out now, probably the best thing to do is just take a moving average of them. It seems like there is a poll about every other day and that`s probably a way to smooth out some of these differences in the polling and I think that approach suggests the closer race than these double-digit leads that were reported in some high-profile polls over the weekend.
GHARIB: Aside from the polls, what is Wall Street paying attention to?
GALLAGHER: I think the most immediate thing is to look at the economic policy agenda of each candidate and that`s what the market is going to react to. I also think you can`t overlook the foreign policy. It could well be that the foreign policy actions of the winner will have a bigger impact on the financial market performance than even the economic policy agenda will. But for now the focus is really on the economic agenda and probably the dividend tax issue stands out as the most important thing for the stock market and the bond market is worried about the budget deficit. Neither candidate really has a great approach to bring down the deficit in a credible way over the next few years.
GHARIB: Actually we just heard in the story that Darren Gersh did about that everybody seems to have a position on tax policy, but nothing about the deficit. What are the issues that investors should be focusing on or are focusing on in this campaign?
GALLAGHER: As I said, I think the dividend tax issue is going to be the most important one. That`s the reason that I think that the stock market will be nervous if it looks as though Kerry is going to be competitive and have a chance to win. In the past couple of times when the Democratic challenger beat a Republican incumbent, you saw big sell-offs in the fall. But if Kerry wins and he has a Republican House or Republican Senate, then I think investors will be much less worried about the tax issue. Then you`ll revert back to historical performances. Actually the stock market does a little better under Democratic presidents than under Republican presidents, so I think the tax issue is important, but then the composition of Congress will be an important factor for investors to weigh when they look at the election results.
GHARIB: As you saw Fed Chairman Alan Greenspan was in the spotlight today and there`s considerable speculation about who will replace him, whether a Bush victory or a Kerry victory. Does this make a difference in the way that investors will vote?
GALLAGHER: I don`t know that it affects how they vote, but it probably is the most or certainly one of the most important economic policy decisions that the winner will make. Chairman Greenspan will in all likelihood be gone from the Fed by early 2006, so the winner this November will pick his replacement. Senator Kerry has said he would pick someone like Bob Rubin, someone that the financial markets know or possibly Larry Summers, who was Rubin`s deputy at the Treasury Department. Bush has a lot of choices. Martin Feldstein, a Harvard professor, seems to be high on the list. I think that will be an important issue for the markets. It will be an important source of short-term anxiety because we won`t know how the new Fed chairman will perform. But I don`t know that it`s really going to affect many people`s votes this fall.
GHARIB: One quick last question. There`s also been a lot of speculation about what role if any former President Clinton will play in the campaign. Your thoughts on this?
GALLAGHER: Well, I don`t know that his recovery is going to allow him to make many appearances and he was a somewhat polarizing figure, but maybe that`s a way to highlight another important factor of this election. I think that the election may well less be about swing voters the way it has been in the past and more about turnout. And President Clinton is very popular among the Democratic base, so he could play a role, selectively, to try to generate turnout for example among African American voters where Clinton was strong and Kerry isn`t as strong. So he could play a role more in generating turnout as we get closer to the election.
GHARIB: All right. Thank you very much, Tom, a pleasure talking to you.
GALLAGHER: Thank you.
GHARIB: We`ve been speaking with Thomas Gallagher, chief political analyst at ISI.
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.
09/08/04:
Analysis Of The Airline Industry With Ray Neidl of Calyon Securities
PAUL KANGAS: As we`ve mentioned, major changes are in the winds for America`s airlines, including the major restructuring announced today by Delta. Joining us for some analysis on the industry is Ray Neidl, aviation analyst for Calyon Securities and welcome to NIGHTLY BUSINESS REPORT, Ray.
RAY NEIDL, AVIATION ANALYST, CALYON SECURITIES: Thank you.
KANGAS: Soaring fuel prices, major labor problems, multiple hurricanes disrupting flights, can it get any worse for the airlines?
NEIDL: Well, it seems like we`re at the bottom of the pit here with everything going wrong. The only hopeful thing is we appear to be in an upward economic cycle and long-term that should help the airlines.
KANGAS: Are we going to see only the discount carriers survive all of this?
NEIDL: No we`ll see some of the major legacy carriers survive. We do need the hub and spoke carriers. The problem now is we`ve got too many of them and too many hubs and the ones that reduce their costs the fastest while maintaining service are the ones that are going to survive.
KANGAS: Are the stocks worth buying at these depressed levels?
NEIDL: They`re too cheap to sell.
KANGAS: Too cheap to sell.
NEIDL: If you don`t think they`re going to go into bankruptcy and that they can get their cost structure down, there are some opportunities out there, I believe.
KANGAS: Can we expect Uncle Sam to step in with more financial help?
NEIDL: No, you`re not going to see any major future help from the government. I think the government realizes that the law of efficiency has to take effect here.
KANGAS: You know, you were with us just last Thursday and you predicted the major restructurings will continue and that`s exactly what`s going on today. So my compliments go out to you for that excellent prediction.
NEIDL: Thank you very much.
KANGAS: And we`re going to see more of it you say?
NEIDL: Yes, it`s going to continue. We`re going to see major restructuring at United to get out of bankruptcy and U.S. Airways and to a lesser degree Continental and Northwest are going to be doing some major restructurings also.
KANGAS: Continental Airlines today joined the growing list of carriers now charging fees to use a reservation agent or airport counter to buy a ticket. Do you think these types of fees are going to be permanent?
NEIDL: They seem to be sticking. I didn`t think they would stick at first, but one airline after another is falling into line, so it just may stick.
KANGAS: And of course, they`re going to keep these special fees for high fuel charges. Do you think that will continue?
NEIDL: That will continue. The thing is, though, the airlines have not been able to put through enough fees for fuel charges. These are very limited charges. The airlines, because of all the capacity, have not been able to pass through all the fuel cost increases.
KANGAS: We just have about 20 seconds left Ray. Any last-minute thoughts for our viewers before we leave you?
NEIDL: No. Things are changing and the turmoil, there`s always opportunity for investors. Stay tuned.
KANGAS: They`re too cheap to sell but not quite ready to buy yet.
NEIDL: Exactly.
KANGAS: OK, fair enough. Thanks very much, Ray.
NEIDL: Thank you.
KANGAS: Our guest, Ray Neidl, aviation analyst for Calyon Securities.
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.
09/08/04:
The Expatriate Good Life Is Getting Scaled Back
SUSIE GHARIB: Living and working overseas used to be a great perk for Americans. Expatriates-- or expats, as they`re known-- were able to live a lavish lifestyle paid for by their employers. But as Karen Koh reports from Hong Kong, that`s not necessarily the case any more.
KAREN KOH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Christine Smith-Mann is well known to members of Hong Kong`s expatriate community. A public relations executive by profession, Man also owns and operates Ellespa , a daytime retreat located in the territory`s exclusive bay area.
CHRISTINE MANN, PUBLIC RELATIONS EXECUTIVE: Mainly expatriate mothers. They come, they drop off their kids at school, they come and grab a manicure, pedicure or a facial or a massage, a couple of treatments. It`s really a spa where people come either on a weekly basis or if not more than one week.
KOH: Life can be good for Hong Kong`s expatriates. A job in the territory with a multinational company generally comes with perks. The traditional expat package includes housing allowances, often amounting to more than $10,000 a month, memberships at exclusive clubs, school fees at expensive international schools, use of a luxury car and driver and business-class tickets home every summer. This lifestyle used to be wholly paid for by companies, looking to lure their executives overseas for a specific period of time.
But these days far fewer employers are offering these all expenses paid deals. They`re becoming far more selective about the perks that they`re giving their expatriate employees and they`re encouraging long-term expats to go local by giving up some if not all of their perks. So while the expat life can still be lived, executives now find they have to pay for it out of their own pockets.
Juergen Bremmer is executive chef for a new five-star hotel, which is due to open in the next few months. He`s lived and worked at five-star hotel properties in Hong Kong and China for nearly a decade, but even his level of expertise entitles him to no more than a housing allowance and a generous health care package.
JUERGEN BREMMER, EXECUTIVE CHEF: So very comprehensive medical insurance included, even with (INAUDIBLE) insurance which (INAUDIBLE) fly you back to your home country but no other benefits for myself.
KOH: Long term residents like Mann believe the era of the expatriate sweet heart deal ended when job descriptions began to change.
MANN: Now a lot of expatriate contracts are open-ended and they are also locally employed expatriates as opposed to actually transferring the people from the states or Australia or England. So from that standpoint, they are still good, but you don`t have that whole encompassing package.
KOH: Another factor that has contributed to the decline of the number of well-compensated expatriates in Hong Kong is the rise in the ranks of western educated locals and overseas-born Chinese. Aside from being able to speak one or more regional Chinese dialects, most of these ambitious executives enjoy the added advantage of understanding the local business culture and political environment. At the same time, they bring international experience from living and working overseas. They are increasingly perceived to be better hires. Hong Kong`s expatriates may not be as pampered as they were in the past, but it doesn`t diminish their importance to the territory`s business community.
BREMMER: You need to have international people working in the hotel industry and it`s not unusual in Europe and it`s not unusual in the states. Even in the states you look at Asians working, westerners working, there are South Americans working. So it`s international people in the hotel which make a great hotel.
KOH: And crucial if Hong Kong is to retain its edge over the rest of China as a world class city. Karen Koh for NIGHTLY BUSINESS REPORT, Hong Kong.
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.
9/08/04:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Stocks opened narrowly mixed as investors awaited
Fed chief Greenspan`s testimony. The airline sector was weak
after Jetblue issued an earnings warning and the beverage
stocks fell after Coca Cola Enterprises lowered estimates.
At midday, the Dow was off 27 points, NASDAQ down five.
Mr. Greenspan`s fairly upbeat remarks about the economy could
not lift the market out of its slump, so the Dow Industrial
Average came in with a closing loss of 29 1/2 points at 10,313.36.
The NASDAQ Composite lost nearly eight points to 1,850.64.
Standard & Poor`s 500 fell five points to 1,116.27.
One interesting note from the bond market today, direct bidders,
buying for their own accounts stood out in the five-year note
auction, buying a whopping $4.75 billion in debt. Typically,
purchases by direct bidders are no more than $145 million.
This helped the 10-year note rise 20/32 to 106 7/32, bringing
the yield all the way down to 4.16 percent.
The big board volume leader on 21.9 million shares, Motorola (MOT) losing $0.58. Merrill Lynch downgraded it from "buy" to "neutral" on concerns over weakness in the hand set market.
General Electric (GE) moved up $0.32.
Nokia (NOK) $0.12 gain.
Same story with Texas Instruments (TXN).
Then a big loser, Dean Foods (DF) plunging $6.73. That`s an 18 percent drop. The company cut its 2004 earnings guidance from the Street estimate of $2.24 all the way down to $2 to maybe $2.05 at best and it`s due largely to weak milk prices. CS First Boston brokerage downgraded Dean Foods from "outperform" to just a "neutral" rating.
Lucent Technologies (LU) dropped $0.04.
J.P. Morgan Chase (JPM) a $0.50 loser.
Pfizer (PFE) moved up $0.03.
Citigroup (C) $0.38 drop, tenth in volume.
EMC Corp. (EMC) $0.07 loss.
McKesson HBOC (MCK) plunging $4.85. Company sees second quarter earnings at only $0.20 to $0.25. The Street estimate was all the way up there at $0.50. This had a negative effect on some other major stocks in the drug distribution field.
AmeriSourceBergen (ABC) off $2.31.
Cardinal Health (CAH) off over $1.
Coca-Cola Enterprises (CCE) down $1.11. The company cut its 2004 earnings guidance from its previous estimate of $1.50 down to $1.21 to $1.25. This hurt other bottlers like Pepsi which was down $1.29.
And Coca-Cola (KO) off $2.20. Merrill Lynch cut Coke`s 2004 earnings estimate by $0.02, down to $2.10 a share, also lowered its price target on Coke stock by $3 all the way down to $53 a share.
Avon Products (AVP) dropped $2.80. The company sees 2004 earnings at $1.72. The Wall Street consensus had been $1.75.
Dow Jones & Company (DJ) losing $1.44 after the company said its third quarter earnings will be just about the same as a year ago.
Then SPX Corporation (SPW) losing $3.19. Ronald Winowicki, the controller and chief accounting officer, announced he`ll resign the 24th of this month, major hit on the stock.
Retail Ventures (RVI) moving up $1.01. Second quarter earnings, a turnaround, $0.03 versus a loss of $0.11 a share in the same period a year ago.
Movado Group (MOV), the watch maker, up $1.61. Second quarter earnings higher, $0.28 versus $0.23 last year. Same store sales were up 12 percent during the period.
And Dave & Buster`s (DAB) rising $2.12, $0.16 in second quarter earnings, well above last year`s $0.11.
RadioShack (RSH) gained $0.42. Company sees 2005 earnings rising 19 to 21 percent on a 4 to 6 percent jump in sales.
Florida Rock Industries (FRK) down $2.85. BB&T capital has downgraded it from "buy" to "hold" on a valuation basis.
Volume leader on NASDAQ Intel (INTC) down $0.17.
Microsoft (MSFT) dropped a dime.
Cisco System (CSCO) moved up $0.26.
eBay (EBAY) no change there.
TASER International (TASR) up almost $3, that was fifth in dollar volume.
Tellabs (TLAB) moved up $0.45.
QUALCOMM (QCOM) $0.18 gain there.
Yahoo! (YHOO) up $0.74.
Amgen (AMGN) gained $0.06.
Tenth in volume Dell (DELL) a rise of $0.25 a share.
Sierra Wireless (SWIR) up $3.18. The company is in a pact with Intel to develop wireless networking products.
And palmOne (PLMO), the story here down $4.57 after "The Wall Street Journal" reports the company`s new products will be getting tough competition from Nokia (NOK) and Research in Motion (RIMM).
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.
09/08/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10313.36 -29.43 - .3
HIGH 10361.22
LOW 10305.18
NASDAQ COMP. 1850.64 -7.92 -.4
HIGH 1870.04
LOW 1850.05
VOLUME 1,249.5
PREVIOUS 1,213.8
UP VOLUME 422.5
DOWN VOLUME 809.6
DOW TRANSPORTS 3188.79 +7.79 + .2
DOW UTILITIES 290.75 -2.81 - 1.0
CLOSING TICK +568
S&P 500 1116.27 -5.03 - .5
S&P 100 543.12 -1.88 - .3
MIDCAP 400 582.54 -5.62 - 1.0
REUTERS/CRB 270.54 -.11 - .0
NYSE COMPOSITE 6534.09 -21.55 - .3
VALUE LINE 353.30 -2.76 - .8
RUSSELL 2000 557.79 -5.14 - .9
DJW 5000 10847.15 -53.01 - .5
U.S. TREASURIES
5-YEAR NOTE 3.50%
Aug. 15,2009 100 19/32 +13/32 + 3.36
10-YEAR NOTE 4.25%
Aug. 15,2014 100 22/32 +20/32 + 4.16
30-YEAR NOTE 5.375%
Feb. 15, 2031 106 7/32 +30/32 + 4.95
LEHMAN BROS.
LONG BOND INDEX 1750.35 +13.74
DOW CLOSE 10313.36 -29.43 - .3
ADVANCES 1337
DECLINES 1934
NEW HIGHS 155
NEW LOWS 16
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MOT Motorola 15.10 -.58 -3.7
GE GE 33.66 +.32 +1.0
NOK Nokia Corp 12.71 +.12 +1.0
TXN Texas Instrument 18.83 +.12 +.6
DF Dean Foods Co 30.40 -6.73 -18.1
LU Lucent Tech 3.09 -.04 -1.3
JPM JPMorgan Chase 39.37 -.50 -1.3
PFE Pfizer 32.77 +.03 +.1
C Citigroup 46.82 -.38 -.8
EMC EMC Corp 10.54 -.07 -.7
NASDAQ CLOSE 1850.64 - 7.92 - .4
VOLUME 1,462.2
PREVIOUS 1,326.1
ADVANCES 1152
DECLINES 1930
NASDAQ ACTIVES
INTC Intel 19.72 -.17 -.9
MSFT Microsoft 27.26 -.10 -.4
CSCO Cisco Systems 19.31 +.26 +1.4
EBAY eBay 89.10 unch. unch.
TASR Taser Intl 35.55 +2.99 +9.2
TLAB Tellabs 9.57 +.45 +4.9
QCOM Qualcomm 39.51 +.18 +.5
YHOO Yahoo! 30.38 +.74 +2.5
AMGN Amgen 59.98 +.06 +.1
DELL Dell Inc 35.46 +.25 +.7
AMEX CLOSE 1239.03 - 1.12 - .1
INDEX SHARES
DIA DIAMONDS TRUST 103.49 -.15 -.1
QQQ NASDAQ 100 34.29 -.11 -.3
SPY S&P DEP.RECEIPTS 112.58 -.28 -.3
STOCKS IN THE NEWS
MCK McKesson 26.98 -4.85 -15.2
ABC AmerisourceBergen 54.27 -2.31 -4.1
CAH Cardinal Health 46.68 -1.14 -2.4
CCE Coca-Cola Enterp 19.48 -1.11 -5.4
KO Coca-Cola Co 43.45 -2.20 -4.8
AVP Avon Products 42.86 -2.80 -6.1
DJ Dow Jones & Co 40.36 -1.44 -3.4
SPW SPX Corp 33.30 -2.94 -8.1
RVI Retail Ventures 7.40 +1.01 +15.8
MOV Movado Group 16.60 +1.61 +10.7
DAB Dave & Busters 18.12 +2.12 +13.3
RSH Radioshack 29.57 +.42 +1.4
FRK Florida Rock Ind 46.73 -2.85 -5.8
SWIR Sierra Wireless 29.79 -4.57 -13.3
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