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09/14/04:
Wall Street Shouldn't Bank On Consumer Spending
JEFF YASTINE:There is more evidence tonight that the
traditionally strongest element of the economy, consumer spending, may be
on shaky ground. The Commerce Department reported retail sales fell 0.3 of
1 percent in August, the third decline in the past five months. And as
Suzanne Pratt reports, the outlook for consumer spending is still cloudy.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The $64,000 question
on Wall Street is, how will consumers spend in the months ahead? The latest
data suggests to many that consumers may be fairly tentative. According to
the Commerce Department, retail sales slipped 0.3 percent in August,
slightly more than expected. Much of the weakness was due to a sharp drop
in sales of autos. Excluding auto sales, the number showed a gain of 0.2
of 1 percent. Economists were divided as to how to view the most recent
gauge of spending. Some say it shows that consumers are emerging from the
second quarter soft patch. But others say today`s report was
disappointing.
STEPHEN GALLAGHER, SG CORP. & INVESTMENT BANKING: I wish they could have
been a little bit stronger. You know, in the range between decent to
somewhat healthy. They are at the lower end of that range. It`s not a
dismal consumer sector, but it doesn`t really have the punch that we`re
looking for at this time in the cycle.
PRATT: Most economists do agree, however, that today`s retail numbers will
not alter the near-term course of monetary policy at the Federal Reserve.
It`s still widely expected that policymakers will hike short-term interest
rates by a quarter-point when they meet next Tuesday. As for the future of
consumer spending, that`s less clear. Many experts say the lack of
visibility comes from the potential effects of higher oil prices and the
still modest rate of job growth. On top of that, some say uncertainty
regarding the presidential election could result in weakened consumer
confidence. As a result, they say it`s tough to forecast anything but
sluggish consumer spending in the months ahead.
DREW MATUS, SR. MARKET ECONOMIST, LEHMAN BROS.: I think we`re going to get
some moderation, which is economist speak for a slowdown. But I`m not
really sure that it`s something that we`re all going to have to worry
about. The bigger concern for me would be if businesses don`t start
spending money on a more sustained basis going forward.
PRATT: Even with the recent slowdown in retail sales, most economists still
expect to see a 3.5 percent increase in consumer spending in the current
quarter. That`s more than twice the pace we saw in the second quarter.
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.
09/14/04:
The PBGC May Have To File A New Flight Plan If The Airline Industry Doesn't Recover Soon
JEFF YASTINE: More turmoil tonight in the agency that backstops the nation`s
pensions. With U.S. Airways now back in bankruptcy and Delta Airlines on
the verge of joining it there, the Pension Benefit Guarantee Corporation is
facing big problems unless big changes are made. And as Stephanie Woods
reports, one congressman says he knows what changes to make.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The pension plans
in the airline industry are a mess. U.S. Airways is considering
terminating two of its pension plans. United Airlines says it can no
longer afford to meet its pension obligations and Delta Airlines is raising
the prospect it will dump its pension plan. That domino effect may put an
already shaky backstop, the Pension Benefit Guarantee Corporation, or PBGC
over the edge.
REP. JOHN BOEHNER (R), OHIO: If the PBGC is forced to assume the airline
industry`s nearly $30 billion in pension liabilities, workers and retirees
will be left with reduced benefits and taxpayers could be left with a huge
bill.
WOODS: The PBGC says it has enough cash on hand to pay claims for the next
several years. But some observers say the agency is in serious trouble
even without the airline liability.
DOUGLAS ELLIOTT, PRES., CENTER ON FED. FINANCIAL INSTITUTIONS: Right now
the PBGC, according to our model, has enough cash to last until 2020, even
though if you look at the full measure of its assets and liabilities, it`s
thoroughly broke.
WOODS: So Congressman John Boehner today outlined his plans to shore up the
defined benefit pension system. They include having employers use a set
interest rate to calculate pensions; requiring companies to fully fund
their plans; and clarifying the process by which companies can switch
traditional pension plans into cash balance plans.
BOEHNER: We can`t let companies dump their plans into the PBGC. We expect
employers to fund the promises they are making to American workers, and I
think it`s government`s responsibility to ensure that the regulatory
process for setting up these plans and operating these plans is efficient,
and not long, costly, and complicated.
WOODS: Analysts say while those measures would help the defined benefit
system, they won`t solve the problem.
ELLIOTT: You`ve got enough of a past problem. Money has to come from
somewhere, either from the corporations by catch-up premiums essentially or
from the taxpayer.
WOODS: But companies that fully funded their pension plans don`t want to
pay for those that didn`t and taxpayers don`t want to get stuck with the
bill either. Given those unpopular choices, lawmakers admit it will be
tough to get something passed. Stephanie Woods, 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.
09/14/04:
One On One With Terry Lundgren Chairman & CEO of Federated Dept. Stores
JEFF YASTINE: Well, shares of Federated Department stores finished $0.47
higher at $46.02 a share. That was one day after announcing a major
change.
Federated, parent of Macy`s, is dropping the names of its regional store
chains, like Burdines, Bon Marche and Rich`s. Next year, all of those
stores will bear only the Macy`s nameplate. I talked with Federated
chairman and CEO Terry Lundgren this afternoon and asked him why make that
name change. Mr. Lundgren, first just tell us why make this sort of an
announcement? Why make this kind of change, eliminating these regional
chains brands and going completely with Macy`s across the board?
TERRY LUNDGREN, CHMN. & CEO, FEDERATED DEPT. STORES: As you know, Jeff,
Macy`s is a name brand known internationally and nationally, made famous by
"Miracle on 34th Street" perhaps but also by the Macy`s Thanksgiving parade
and other major events we do. We just couldn`t expand stores like Burdines
and Rich`s across their borders. It was a great name, very very powerful in
the local community, but not something we could expand and this gives us an
opportunity to have a national presence of America`s department store,
Macy`s.
YASTINE: Are you hoping to get some efficiencies, those sorts of things?
Is there a cost benefit to this as well?
LUNDGREN: There will be. That`s not really the play, Jeff. There is no
question that there will be efficiencies because of the national potential
of marketing, but more importantly is the clarity of our message. We will
be able to advertise for the first time on a national scale using high
quality and high caliber marketing effectiveness tools that we couldn`t
afford before and I think that`s going to be the big message.
YASTINE: Is there a concern though about perhaps diluting the Macy`s brand
name? I mean as a kid growing up in New Jersey and Florida, I always
thought of Macy`s as being something a little more special than just what
you`d see with a regional chain. If there are a lot of Macy`s all over the
place, does it lose a bit of that specialness?
LUNDGREN: I don`t think so. In fact I think we enhance the brand image.
When we hyphenated the name 18 months ago beginning in Atlanta with Rich`s
and made it Rich`s-Macy`s, our business improved. When we hyphenated the
name in Miami in Florida with Burdines, Burdines-Macy`s this year, our
business has improved. I`m not saying that was the reason. I`m just
saying that certainly was not a negative. So I think the recognition of
this very powerful icon name Macy`s has very broad reach.
YASTINE: Let me get you to talk a little bit about retail sales here.
August retail sales nationally came out this morning, a little bit less
than expected. You guys warned a little bit about your September sales due
to hurricane Frances. How is that shaping up for you so far?
LUNDGREN: Certainly as you know, we are a very important retailer in the
state of Florida, so obviously the hurricanes have hurt us, even when the
hurricane, this particular one, Ivan does not look like it`s going to hit
us directly, at least our stores, the scare kept people away from the
Florida market. So it definitely hurt us for the month. We look at this
as temporary and our view is, as we look forward into the fourth quarter,
we forecast 1 1/2 to 3 percent comp store sales increases and we are
staying with that forecast.
YASTINE: When you see these other warnings that have been coming out from
other kinds of retailers and some of those sort of disappointing results,
do you get just a little bit concerned that perhaps those forecasts may not
come to fruition?
LUNDGREN: Not for fourth quarter. For third quarter with all that is going
on with the Republican convention, prior to that the Democratic convention,
certainly that was a negative to our local business for our stores like
ours and then of course the hurricane in Florida, these are all temporary
situations and I think as we start moving into the fourth quarter, I mean
we`re a fashion retailer. That`s what we depend on. That`s what we focus
on and we`ve just come from fashion week here in New York and the product
looks very, very good as we are heading into the fourth quarter delivery
cycle. So we feel pretty confident about what we are seeing on the runways
will translate into clothes, our key customer will want in her closet.
YASTINE: When do you think you`ll start seeing that sort of a pickup in
your sales as we move into the fourth quarter in another month?
LUNDGREN: The key period for us is November and December, of course. We do
a very important part of our business and clearly an important part of our
earnings during those months and that`s what we`re looking for.
YASTINE: All right. Let me ask you one other thing. In some of your
releases, you talked about reinventing some of your stores. You have about
half I believe of Federated stores, reinvented meaning remodeled, that sort
of thing. How important is that towards the effort to drive more business
into the entire Federated set of units?
LUNDGREN: The reinvent strategy is very important and those stores who will
benefit from the name change will see this happening inside their stores,
including the Burdine`s. Macy`s division as an example will receive the
reinvent strategy where we`ll have upgraded fitting rooms for our customers
with seating lounges outside with television hookups outside for the
significant other to watch TV while she is changing and trying on clothes.
We`ll have price lookup machines. We`ll have new technology put into the
stores. All the things that worked so well in the initial rollout will be
rolled out into the stores, all these things that have worked so well in
the initial roll out will be rolled out now to these additional markets and
you`ll start to see that aggressively rolled out not just this year, but
all the way in through next year. We`ll 70 percent of our business done by
next year.
YASTINE: All right. We`ll leave it there. Mr. Lundgren, thank you very
much for appearing on the program.
LUNDGREN: You`re welcome, Jeff.
YASTINE: Our guest, Terry Lundgren, chairman, president and CEO of
Federated Department stores.
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.
09/14/04:
Commentary: Our Girlie Economy
JEFF YASTINE:
Tonight`s commentator says the U.S. economy is not looking very "macho"
these days. Here`s Alan Blinder, partner in the Promontory Financial Group
and former vice chair of the Federal Reserve.
ALAN BLINDER, FMR. VICE CHMN., FEDERAL RESERVE: On day one of the
Republican convention, California`s governator admonished us not to be
economic girlie-men. Apart from the homophobic slur, I`m not sure what
that means. I guess girlie-men are appalled that the payroll data show
over 1.6 million fewer private sector jobs since President Bush took
office, even though the adult population is almost 10 million larger.
If so, let me come out of the closet right now: I do worry about the
shortage of jobs. We economic girlie-men also think it`s terrible that
real wages are declining while worker productivity and corporate profits
soar and that health-insurance premiums have leaped 49 percent in three
years, while the ranks of the uninsured have grown by over five million. I
suppose economic manly men are those like President Bush, who claim that--
and I quote-- the economy is strong and getting stronger.
Well, the plain fact is that the U.S. economy is not looking very macho
these days. For example, both GDP growth and employment growth were
decidedly sub-par last quarter. Another manly man may be Commerce
Secretary Evans, who calls this the best economy in our lifetime. Whose
lifetime is that? I remember a much better economy under Bill Clinton just
four years ago -- with, by the way, policies that are virtually the
opposite of President Bush`s. So could it be that manly men hide behind
the skirts of misleading slogans, while girlie men face up to the facts? If
so, count me among the economic girlie men. I`m Alan Blinder.
JEFF YASTINE: And a program note for our viewers. Throughout this political
season, you will be hearing occasional commentaries on this program from
Republicans, Democrats, and others about the presidential candidates and
their economic policies.
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.
09/14/04:
Last Word: The Gold At The End of The Dog Walk
JEFF YASTINE: And finally, usually when you walk your dog, the only
payoff is a happier dog-- that is, unless you`re walking your dog in
Bedfordshire, England. That`s where a man found a 1,200-year-old gold
penny during his walk, and it`s worth more than a quarter of a million
dollars. The coin is the first new Anglo-Saxon gold penny to be found in
over a century, and it bears the name of a king who ruled over central
England in the middle ages. The coin goes up for auction next month in
London, Paul, and could bring much more than that estimated value.
KANGAS: That`s my kind of coin, Jeff. Heads you win, tails you win.
YASTINE: It`s the best kind of odds to have.
KANGAS: Absolutely right.
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.
9/14/04:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street posted minor losses early today on that surge in oil
prices and on earnings warnings from AO Smith, Office Depot and LS Logic,
LSI Logic. The Dow and the NASDAQ indices fell just digits, single digits
throughout the morning however and then optimism that Oracle would post
solid results after the bell-- which it did, and we`ll have details on a
bit later -- helped the market firm up nicely this afternoon. So the Dow
industrial average closed up 3.40 at 10,318.16. The NASDAQ Composite rose
five points to 1915.40. Standard & Poor`s 500 gained 2 1/2 points to
1128.33. Over in the bond market, the 10-year note rose 3/32 to par and
31/32, putting the yield at 4.13 percent.
Most active big board issue on 14.6 million shares, Lucent Technologies
(LU) dropping $0.06.
And then EMC Corp. (EMC) $0.41 loss there.
Texas Instruments (TXN) still on the upside by $0.22 in a strong
semiconductor group.
NorTel Networks (NT) gained a penny,
While Pfizer (PFE) lost a penny and was fifth in big board volume.
Time Warner (TWX), which has bowed out from bidding for MGM, up $0.35
today.
The Kroger (KR) down $0.72. Second quarter earnings for Kroger down 25
percent from last year, $0.19 versus $0.25 then. The company cited a 141-
day strike in southern California as one reason for the lower earnings.
General Electric (GE) $0.07 gain there.
And Cardinal Health (CAH) moved up $2 a share even though the company`s
going to revise lower its results for the last three years and nine months
lower by some $28 1/2 million. However, the Thomas Weisel brokerage says
that it`s not as bad as expected, hence the rise in the stock today.
LSI Logic (LSI) down $0.50. The company cut its previous third quarter
earnings forecast from break even to a loss of $0.14 to $0.17 a share. And
meanwhile, Wachovia downgraded it from "outperform" to "market perform."
McDonald`s (MCD) a $0.43 gain there. The company will boost its annual
dividend by $0.15 to $55, $0.55 a share.
And Murphy Oil (MUR) a $2.34 gain. JPMorgan upgraded it from "neutral" to
"over weight."
A.O. Smith (AOS), which manufactures electric heaters or water heaters and
electric motors down $2.14. The company said higher steel prices will cuts
its third quarter earnings from its previous estimate of $0.42 to $0.46 to
just break even and 2004 earning will fall from $1.95 down to about $1.
Standard & Poor`s downgraded the stock from "accumulate" to "avoid."
Progressive Corporation (PGR), the big insurance firm, up $4.83.
Second quarter earnings $0.46, up from $0.38 last year, 11 percent rise in
net premiums and the company started a tender offer for 17.1 million of its
common shares. It`ll pay somewhere between $78 and $88 a share. Standard &
Poor`s repeated a "hold" recommendation" on the stock.
Pier 1 Imports (PIR) moving up $1.06, although it had second quarter
earnings sharply lower, $0.12 versus $0.20 last year, but that was in line
with the company`s lowered estimates. It sees third quarter earnings
bouncing back to $0.28 to $0.35 a share. The Street estimate is $0.30 a
share.
Volt Information Sciences (VOL) up $2.72. Sharply higher third quarter
earnings $0.60 versus only $0.14 last year. Sales were up 21 percent.
And then the Canadian helicopter manufacturer, CHC Helicopter (FLI) up
$2.23. Third quarter earnings $0.98, well above last year`s $0.61. That`s
on a diluted basis.
eBay (EBAY) topped the active list on NASDAQ, up $2.31. A lot of the online
companies doing well on a general belief that their earnings will be at the
high end of estimates for the third quarter.
Microsoft (MSFT) a $0.19 gain.
Intel (INTC) $0.03 drop.
Yahoo! (YHOO) moved up $1.33. The company will acquire Music Match, an
online music provider. The price: $160 million in cash.
Cisco Systems (CSCO) gained a dime. That was fifth in volume.
Amazon.com (AMZN) another strong online stock, up $2.66.
Oracle (ORCL) dropped $0.07.
And Google (GOOG) still another strong online stock, up nearly $4 a share.
Applied Materials (AMAT) rose $0.20.
QUALCOMM (QCOM) tenth in volume, gained a half a dollar.
Kmart Holding (KMRT) did well today, up $3.66. UBS brokerage upgraded or
increased its price target for the stock from $85 to $101 a share.
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.
09/14/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10318.16 +3.40 + .0
HIGH 10340.13
LOW 10303.41
NASDAQ COMP. 1915.40 +5.02 +.3
HIGH 1917.74
LOW 1901.77
VOLUME 1,199.4
PREVIOUS 1,299.1
UP VOLUME 626.7
DOWN VOLUME 561.2
DOW TRANSPORTS 3225.00 +1.78 + .1
DOW UTILITIES 291.21 +.16 + .1
CLOSING TICK +333
S&P 500 1128.33 +2.51 + .2
S&P 100 546.93 +.82 + .2
MIDCAP 400 591.28 -1.42 - .2
REUTERS/CRB 273.39 -.08 - .0
NYSE COMPOSITE 6594.21 +12.40 + .2
VALUE LINE 360.72 -.40 - .1
RUSSELL 2000 570.96 -2.14 - .4
DJW 5000 10982.38 +16.85 + .2
U.S. TREASURIES
5-YEAR NOTE 3.375%
Sept. 15,2009 100 6/32 +3/32 + 3.34
10-YEAR NOTE 4.25%
Aug. 15,2014 101 +3/32 + 4.13
30-YEAR NOTE 5.375%
Feb. 15, 2031 106 17/32 +1/32 + 4.93
LEHMAN BROS.
LONG BOND INDEX 1755.35 +2.85
DOW CLOSE 10318.16 +3.40 + .0
ADVANCES 1612
DECLINES 1697
NEW HIGHS 105
NEW LOWS 14
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.41 -.06 -1.7
EMC EMC Corp 11.12 -.41 -3.6
TXN Texas Instrument 22.39 +.22 +1.0
NT Nortel Networks 4.02 +.01 +.3
PFE Pfizer 32.12 -.01 -.0
TWX Time Warner 16.80 +.35 +2.1
KR Kroger Co 15.98 -.72 -4.3
GE GE 33.82 +.07 +.2
CAH Cardinal Health 47.49 +2.00 +4.4
LSI LSI Logic 4.75 -.50 -9.5
NASDAQ CLOSE 1915.40 + 5.02 + .3
VOLUME 1,527.3
PREVIOUS 1,761.3
ADVANCES 1421
DECLINES 1626
NASDAQ ACTIVES
EBAY eBay 94.41 +2.31 +2.5
MSFT Microsoft 27.44 +.19 +.7
INTC Intel 20.77 -.03 -.1
YHOO Yahoo! 33.20 +1.33 +4.2
CSCO Cisco Systems 20.35 +.10 +.5
AMZN Amazon.com 42.67 +2.66 +6.7
ORCL Oracle 10.55 -.07 -.7
GOOG Google 111.49 +3.99 +3.7
AMAT Applied Matl 17.22 +.20 +1.2
QCOM Qualcomm 40.90 +.50 +1.2
AMEX CLOSE 1248.54 + 2.36 + .2
INDEX SHARES
DIA DIAMONDS TRUST 103.50 unch. unch.
QQQ NASDAQ 100 35.63 +.04 +.1
SPY S&P DEP.RECEIPTS 113.65 +.18 +.2
STOCKS IN THE NEWS
MCD McDonald's 27.60 +.43 +1.6
MUR Murphy Oil 83.22 +2.34 +2.9
AOS A.O. Smith 23.36 -2.14 -8.4
PGR Progress Corp Oh 84.98 +4.83 +6.0
PIR Pier 1 Imports 18.90 +1.06 +5.9
VOL Volt Info Sciences 25.59 +2.72 +11.9
FLI CHC Helicopter 36.55 +2.23 +6.5
KMRT Kmart Holding 89.00 +3.67 +4.3
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