09/29/04:
Crude Prices Downshift Amid A Supply Surprise
LINDA O'BRYON: Oil prices backed down from the $50 a barrel level today. New York crude futures price settled down $0.39 at $49.51 a barrel. That was after weekly government inventory data showed a surprise increase in crude supplies. As Stephanie Woods reports, a surge in imports added more than three million barrels to U.S. crude stockpiles.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Between hurricanes Ivan and Jeanne, oil tankers waiting off shore to unload made their way into port. That activity showed up in higher crude inventories, ending an eight-week-long draw down.
JOHN FELMY, CHIEF ECONOMIST, AMERICAN PETROLEUM INSTITUTE: Many people were concerned about crude stocks dropping down to a low level, such that the system wouldn`t function properly. If you get too little crude in the system, pipelines can`t operate, terminals can`t operate. They need physical volumes. I think this should reassure those folks that there`s ample crude to keep the system functioning smoothly.
WOODS: U.S. crude inventories usually start to build between the busy summer driving season and before demand for home heating oil heats up. But even with today`s pick-up, inventories are off 4 percent for the year, and it may be more difficult to replenish those supplies. Hurricane damage to oil rigs in the Gulf of Mexico reduced production by a half a million barrels of crude a day.
FELMY: We don`t know if that`s permanent loss or it`s just not being produced because damage assessment and required repairs.
WOODS: Crude prices also dropped on news of a cease-fire in Nigeria, where rebel forces threatened to shut down oil production. Worries of supply disruptions there and elsewhere, coupled with booming demand from China and India, are the factors fueling higher prices. OPEC`s president said today the group will take action to help stop oil prices from rising, but experts say OPEC can`t erase the fear factor.
ROBERT EBEL, ENERGY DIRECTOR, CENTER FOR STRATEGIC INTERNATIONAL STUDIES: My advice is watch what they do, not what they say. There`s really not much that they can do. Saudi Arabia has some spare producing capacity. They could put that on the market, but I think in terms of simple supply and demand, there`s adequate supplies of oil out there. It`s the factors beyond oil supply and demand that are pushing prices up.
WOODS: Higher oil prices have tempered the U.S. economic recovery. The International Monetary Fund today took down its U.S. growth forecast a notch and says sustained higher crude prices could reduce growth around the world.
RAGHURAM RAJAN, CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Our rule of thumb is that $5 increase for a year affects global growth by about -.3 percent.
WOODS: The Energy Information Agency will release its winter fuels outlook next week and says consumers can expect significantly higher heating costs this year. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
09/29/04:
The Road To The White House-The Role of Homeland Security
LINDA O`BRYON: Tomorrow (Thursday), George Bush and John Kerry will meet face to face in Miami for the first of three presidential debates. So this week, NIGHTLY BUSINESS REPORT is taking a look at some of the issues that will be top of the agenda for the debates. Tonight "on the road to the White House," we look at the issue of safety and the role of homeland security in November`s election. Diane Eastabrook reports.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: At this training facility, local SWAT teams are learning how to disable potential terrorists. Police officers are also tuning up their driving skills in case a terrorist takes them on a high-speed chase. The northeastern Illinois public service training academy, or NIPSTA, is less than two years old. But it has already given hundreds of public safety workers a crash course in crisis response. NIPSTA is funded by a combination of local and Federal dollars.
ROBERT LAHEY, EXEC. DIRECTOR, NIPSTA: Fire, police, public works, EMS personnel are working together by necessity. And therefore, our facility gives them a place to train together so that they`re better prepared.
EASTABROOK: Since the 9/11 terrorist attacks, America has been on high alert. The government is spending nearly 85 percent more on security this year than it did in 2001. The newly created Department of Homeland Security is coordinating the safety effort. It has used its budget to make U.S. airports safer. Today all checked bags are screened and re-enforced cockpit doors have been installed on all large passenger jets. The Department of Homeland Security has also improved security at the nation`s ports by screening high risk cargo. And it has helped cities like Chicago buy surveillance cameras that could capture terrorists in action.
MAYOR RICHARD DALEY, CHICAGO: They`re the next best thing to having police officers stationed at every potential trouble spot.
EASTABROOK: Still, some critics argue Americans are no safer today than they were before the September 11th terrorist attacks. They argue American corporations aren`t spending enough on security and the government isn`t demanding that they make the investment. The risk consulting firm Kroll estimates private industry controls roughly 80 percent of the nation`s critical infrastructure. It says energy pipelines, power plants and chemical manufacturers are prime targets for terrorism, but aren`t adequately protected. Kroll says cost is one problem, but a lack of cooperation from the Federal government is another.
MICHAEL CHERKASKY, PRESIDENT & CEO, KROLL: For the pipeline industry to protect pipelines that go across, crisscross the United States, the oil and gas pipelines, to do it alone and not do it in concert with government and other corporations is a hard task. So really, the key is to build in teams and that`s not really what`s happened here.
EASTABROOK: But some experts say the U.S. cannot eliminate the threat of terrorism entirely.
THOMAS MOCKAITIS, HISTORY PROFESSOR, DEPAUL UNIVERSITY: Success is not like defeating Nazi Germany, where you can say, "the war is over; we`ve won, unconditional surrender." What you will do is reduce the threat to an acceptable level, something you can live with and at a cost that you are willing to pay.
EASTABROOK: Mockaitis says a safer U.S. also requires more cooperation and patience from the public, and he`s not sure Americans are willing to put up with the added inconvenience of more security. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.
O`BRYON: Joining me now to talk more about the road to the White House is Charles Gabriel, vice president and senior Washington analyst at Prudential Equity Group. Welcome back to NBR, Chuck.
CHARLES GABRIEL, SR. WASHINGTON ANALYST, PRUDENTIAL EQUITY GROUP: Thank you, Linda.
O`BRYON: Let`s begin with tomorrow night`s debate in which foreign policy and homeland security issues will likely dominate. What does each candidate need to do to win over voters in general and Wall Street in particular?
GABRIEL: Well, I think the president just needs to demonstrate his command of all the broad sets of foreign policy issues and concerns that confront America. So to lay out his views on everything from North Korea and Iran and Sudan and Iraq, but I think the bigger challenge certainly would go to Senator Kerry because he really needs to try to address, frankly, to turn around the dynamic in this campaign which doesn`t favor him. This is going to be the debate with the largest audience. If anything, this campaign seems to be marked by security moms compared to soccer moms or mutual fund mommas in the last couple of campaigns. And Bush has actually gained a little bit of a net advantage over Senator Kerry with women, which is really kind of unthinkable. That`s always been a real core constituency for any presidential candidate, so really Senator Kerry needs to go out there and try to at least reinforce a message, his message that he doesn`t believe that the world is more safe than it was a year or so ago ad counter President Bush.
O`BRYON: You mentioned security moms. As we just heard in Diane Eastabrook`s package, government is spending nearly 85 percent more on security this year than it did say in 2001. How big a factor is national security this election year?
GABRIEL: It really is a big factor and sometimes it seems as though the Democratic campaign is unwittingly making it a bigger issue. Senator Kerry has tried to articulate a clear position on Iraq, has gone back and forth. And now because he is being seen as flip-flopping on that issue and there are concerns given the ongoing problems with the insurgency over there, it continues to linger as an issue that really does eclipse the economy. He might be better off, frankly, if we were to have a refocus towards the economy. This is a really big, bold gambit he makes tomorrow by hitting head on the Bush advantage on Iraq, and if he duels even and measures up with the same kind of stature as the president on national security tomorrow in tomorrow`s debate, frankly the next two he could really have a much better set of terms of engagement for the second and third debate.
O`BRYON: Well, speaking of the economy, how big a factor is the recent run-up we have seen in oil prices?
GABRIEL: Not yet a large factor. There seems to be a lagging effect at the pump or with heating oil. You still have gas prices in most areas below $2 a gallon and you know, what`s interesting, there aren`t a lot of policy tools that the president can use. We actually opened up strategic petroleum reserve oil for loans to the Louisiana area, which was hard-hit by the hurricanes. The president finally did that and had many critics on the hill who had demanded that he do so and oil price went up. So I don`t think that... Oil prices just generally go into a general category of economic well being and in some key battleground states like Ohio, it will make a difference. But I don`t think over the next four to five weeks we`ll see a run-up in oil prices, in gasoline prices, I should say, that will make voters... Make that a decisive issue.
O`BRYON: Chuck, we just have about 30 seconds left. On the economic front, what`s the single biggest issue in your mind?
GABRIEL: I think on the economic front, really the single biggest issue is the welfare of Americans in these key battleground states, to be honest with you. I think Senator Kerry`s message about outsourcing has had some promise to yield him some net advantage over President Bush. Unfortunately, it`s being eclipsed by Iraq and the focus on national security.
O`BRYON: All right. Thank you very much.
GABRIEL: Thank you.
O`BRYON: We`ve been speaking with Chuck Gabriel at Prudential Equity Group.
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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
09/29/04:
The Outlook for Bonds With Bill Gross of Pimco
PAUL KANGAS: Joining me now to discuss the latest movements in the bond market is Bill Gross, managing director at Pimco. Bill, welcome back to NIGHTLY BUSINESS REPORT.
WILLIAM GROSS, MANAGER, PIMCO TOTAL RETURN BOND FUND:
Thank you, Paul. It`s nice to be here.
KANGAS: You published a report today called haute con job where you liken those who say inflation is under control to carnival barkers. Tell me more about this high-class con job.
GROSS: It`s been going on for a few years, ever since the late 1990s, actually with the Clinton administration. But the government has really turned the CPI, the consumer price index, from a cost of living indicator into a quality of living indicator. What they`ve done is basically adjust downward the prices of consumer goods such as computers and television sets and even cars based upon their improved quality and while that`s fine in my opinion, you know, it inaccurately states what the true cost of living is for individuals. Because the CPI is reflected in social security payments and retirement payments and even raises for the average wage earner, you know, it grossly understates what they should be getting.
KANGAS: This is what you call hedonically adjusted prices?
GROSS: That`s correct. That`s the term that the government and economists use for this...
KANGAS: For whose pleasure is this done?
GROSS: Well, you know, the improved TV sets and the faster cars and computers in terms of memory power certainly benefit society and the individuals that use them, but they cost more than what the government suggests that they do. Because of that, that money actually comes out of pay checks and purses more than what the government assumes. So, in my opinion, the CPI, the inflation rate is much higher than what we`re normally used to seeing.
KANGAS: How much higher is it?
GROSS: According to our calculations, about 1 percent plus or minus. There is also what they call substitution biases, which reduce the rate of inflation according to government calculations. That is an unfair adjustment, in my opinion, as well.
KANGAS: What is the government`s motive behind these judgments you`re talking about?
GROSS: Well, this is not to infer a conspiracy here or the fact that anybody got together and decided to do this explicitly, but the fact is that no one can dispute that the lower the CPI, the fewer deficits or the lower the deficit and the fewer payments that go out in terms of Social Security payments and the like going forward. You know, I would estimate that if the CPI would be 1 percent lower than what it actually is, the government over a period of 10, 20, 30 years would wind up spending billions, hundreds of billions less in terms of actual payments to pension recipients.
KANGAS: Bill, we only have about a minute left, but do you feel that the bond market`s big rally is based then on not a true picture of what things are?
GROSS: Yes, I think to some extent. To my way of thinking in the last three months, the rally has been due to Chinese and Japanese buyers recirculating their surpluses, but nonetheless, if they think that the CPI is 2 percent as opposed to 3 percent, they`re being unfairly informed, as are those here in the United States, the Pimcos of the world and others that are basing their decisions on a true CPI adjustment.
KANGAS: So you feel bonds should be sold here, correct?
GROSS: I do. I think 4 percent on a 10-year is an overvalued level, and we`ve seen that today and probably will see that in the future days and weeks.
KANGAS: So get out of the bond market and into what, money market funds? That`s about it.
GROSS: Well, anything that takes advantage of higher inflation, yes.
KANGAS: All right. Very good, Bill, thanks so much for being with us.
GROSS: Thank you Paul.
KANGAS: My guest, Bill Gross, managing director at Pimco.
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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
09/29/04:
"Money File"-Impact of Presidential Politics on your Investments
LINDA O`BRYON: In the money file tonight, the impact of presidential politics on your investments. Here`s Harriet Brackey, personal finance columnist at the "Miami Herald."
HARRIET BRACKEY, PERSONAL FINANCE COLUMNIST, THE MIAMI HERALD: Heard these
lately? Stocks do better under Democrats. Returns are 5 percent
higher than under Republicans, says a study in the "Journal
of Finance." Or bonds are a better bet if the president is
reelected or the first couple of years of a president`s term
aren`t so good for investors. Why is it that every four years
someone seriously declares the presidential election will
have a profound impact on your investments? That might be
true, oh, once in a century -- say, if this were the depression
and Roosevelt were about to start a massive spending program.
But most of the time, stocks go up when profits are rising.
Bonds are better when things are not so good. What markets
do care about is making money, not politics. Do you check
who is in office before you decide what an investment is worth?
Sure, we talk about the economy`s troubles during an election.
Take Jimmy Carter`s double-digit interest rates. Today, it`s
jobs and health care costs. But does anyone really think the
next president can turn all the right knobs to resolve these
issues? One guy doesn`t run our complicated economy from taxes
to trade, and he doesn`t control one of the biggest influences.
So far as I know, the White House does not set interest rates.
So politics, they can be interesting. But they aren`t much
of a basis for figuring out what to do with your money. I`m
Harriet Brackey.
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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
09/29/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Wall Street`s blue chips edged a bit lower at the opening on profit taking. But the selling was cushioned by a 3.3 percent growth rate in the final second quarter GDP numbers. That`s a 0.5 percent above the original second quarter GDP estimate.
The tech stocks were strong on a research firm`s upgrade of the chip and equipment stocks and that strength helped lift the Dow at noon to breakeven levels. The strong tech sector and falling oil prices gave the blue chips a nice boost this afternoon. So the Dow industrial average closed up 58.84 points at 10,136.24. The NASDAQ Composite was up just 24 points to 1893.94. Standard & Poor`s 500 gained 4 3/4 points ending at 1114.80.
In the bond market, the 10-year note fell 23/32 to 101 8/32, putting the yield at 4.09 percent.
Big board volume leader on 22 1/2 million shares, Lucent Technologies (LU) edging $0.03 higher.
And then Calpine (CPN) down another $0.13. Company`s in the midst of a $1.4 billion note offering. $725 million of those notes are convertible into the common stock which of course means a little earnings dilution there.
EMC Corp. (EMC) up $0.29.
Time Warner (TWX) a $0.16 loss.
Citigroup (C), fifth in volume, was up $0.39.
Then we see Pfizer (PFE) gaining a dime.
ExxonMobil (XOM) down $0.38. The company`s hopes of a big oil strike in the Caspian Sea faded a bit after the company`s first really deep well yielded only gas, that according to the Reuters news service.
NorTel Networks (NT) was up $0.22.
General Electric (GE) $0.14 gain, tenth in volume.
Texas Instrument (TXN) rising $0.62.
B oeing (BA) down $1.31, hurting the Dow a bit. Bank of America downgraded the stock from "buy" to "neutral" because of the big run up its had in the last 12 months as you can see by that chart.
Caterpillar (CAT) however another Dow stock, continuing to run up another $3.60, was nearly 2 1/2 yesterday on the company`s boost in its 2004 revenue estimate and its forecast of record 2005 profits and today, UBS increased earnings estimates and also its target price all the way up to $90 a share, a $3 increase.
Guidant (GDT) up $3.02. U.S. regulators plan to expand Medicare coverage of implantable heart defibrillators and that helped other stocks in that same sector like Medtronic (MDT) up just over $1.
St. Jude Medical (STJ) up $2.80.
On the downside, big loser, Pediatrix Medical Group (PDX) tumbling $11.27. The company cut its third and quarter and fourth quarter earnings guidance from $1.12 per share range all the way down to about $1.05 to $1.03 in those quarters respectively.
Freeport-McMoRan Copper & Gold (FCX) a $2.08 loss. JPMorgan downgraded it from "overweight" to "neutral" on valuation.
Then Clear Channel Communications (CCU) down a large fraction. Morgan Stanley downgraded it from "overweight" to "equal weight."
American Greetings (AM) moved up $0.88, a real turnaround here. Second quarter earnings of $0.10 versus a loss of $0.15 last year. Company also initiated a quarterly dividend of $0.06 a share.
International Game Technology (IGT) rising just over $2. The company boosted its quarterly dividend from $0.10 to $0.12 and Calion (ph) Securities began covering the stock with a rating of "add" to portfolios.
Central Parking Corporation (CPC) down $2.22. The company cut its 2004 earnings estimate from the $0.60 range all the way down to $0.40 to $0.45 a share and JMP Securities downgraded it from "outperform" to "market perform."
NASDAQ`s most active was Google (GOOG) up $4.22 and that is a new record high. Believe it or not, that stock is up 54 percent now since its initial public offering last month at 85.
Microsoft (MSFT) $0.31 gain.
$0.39 rise in Intel (INTC).
Yahoo! (YHOO) gained $1.20.
eBay (EBAY) up $1.92. Amtech (ph) Research boosted eBay`s fourth quarter revenue forecast.
Cisco Systems (CSCO) $0.24 gain.
And Orbitz (ORBZ) up $6.40. It`ll be taken over by Cendant for $27.50 and priceline, a competitor, also rose over $2 after hearing about this Orbitz buy out.
Applied Materials (AMAT) up $0.17.
Research In Motion (RIMM) down $0.28.
And then Oracle (ORCL) a $0.07 gain, tenth in volume.
Two new offerings, 51job (JOBS), AD, American Depositary shares, this is a Chinese employment service. The 5.3 million share offering was priced at 14, opened at 18.98 and the high of the day 22.90 and then it receded a little bit, but not bad.
And Jamdat Mobil (JMDT), which makes phone handset computer games went public on 5.6 million shares, priced at 16. It rose $6.51 from there.
09/29/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10136.24 +58.84 + .6
HIGH 10136.24
LOW 10050.56
NASDAQ COMP. 1893.94 +24.07 +1.3
HIGH 1894.06
LOW 1869.95
VOLUME 1,406.9
PREVIOUS 1,397.2
UP VOLUME 835.3
DOWN VOLUME 550.4
DOW TRANSPORTS 3239.59 +31.01 + 1.0
DOW UTILITIES 294.48 -1.09 - .4
CLOSING TICK +666
S&P 500 1114.80 +4.74 + .4
S&P 100 536.56 +2.37 + .4
MIDCAP 400 589.02 +2.25 + .4
REUTERS/CRB 284.40 +2.67 + 1.0
NYSE COMPOSITE 6560.68 +17.29 + .3
VALUE LINE 357.84 +2.71 + .8
RUSSELL 2000 571.07 +5.41 + 1.0
DJW 5000 10885.89 +52.47 + .5
U.S. TREASURIES
5-YEAR NOTE 3.375%
Sept. 15,2009 100 2/32 -14/32 + 3.36
10-YEAR NOTE 4.25%
Aug. 15,2014 101 8/32 -23/32 + 4.09
30-YEAR NOTE 5.375%
Feb. 15, 2031 107 15/32 -1 7/32 + 4.87
LEHMAN BROS.
LONG BOND INDEX 1767.13 -14.23
DOW CLOSE 10136.24 +58.84 + .6
ADVANCES 1807
DECLINES 1481
NEW HIGHS 151
NEW LOWS 28
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.18 +.03 +1.0
CPN Calpine 2.88 -.13 -4.3
EMC EMC Corp 11.35 +.29 +2.6
TWX Time Warner 16.07 -.16 -1.0
C Citigroup 44.70 +.39 +.9
PFE Pfizer 30.18 +.10 +.3
XOM Exxon Mobil 48.15 -.38 -.8
NT Nortel Networks 3.51 +.22 +6.7
GE GE 33.45 +.14 +.4
TXN Texas Instrument 21.40 +.62 +3.0
NASDAQ CLOSE 1893.94 + 24.07 + 1.3
VOLUME 1,652.1
PREVIOUS 1,550.9
ADVANCES 2043
DECLINES 1015
NASDAQ ACTIVES
GOOG Google 131.08 +4.22 +3.3
MSFT Microsoft 27.58 +.31 +1.1
INTC Intel 20.07 +.39 +2.0
YHOO Yahoo! 34.00 +1.20 +3.7
EBAY eBay 92.16 +1.92 +2.1
CSCO Cisco Systems 18.31 +.24 +1.3
ORBZ Orbitz 27.17 +6.40 +30.8
AMAT Applied Matl 16.38 +.17 +1.1
RIMM Rsch In Motion 76.70 -.28 -.4
ORCL Oracle 11.43 +.07 +.6
AMEX CLOSE 1264.38 - 5.64 - .4
INDEX SHARES
DIA DIAMONDS TRUST 101.47 +.58 +.6
QQQ NASDAQ 100 35.11 +.54 +1.6
SPY S&P DEP.RECEIPTS 111.84 +.56 +.5
STOCKS IN THE NEWS
BA Boeing Co 51.01 -1.31 -2.5
CAT Caterpillar 80.50 +3.60 +4.7
GDT Guidant 66.67 +3.02 +4.7
MDT Medtronic 51.77 +1.01 +2.0
STJ St Jude Medical 75.50 +2.80 +3.9
PDX Pediatrix Medical 58.01 -11.27 -16.3
FCX Frprt-McM C&Gold 39.87 -2.08 -5.0
CCU Clear Channel 31.00 -.87 -2.7
AM American Greetings 25.07 +.88 +3.6
IGT Intl Game Tech 35.40 +2.01 +6.0
CPC Central Park 14.11 -2.22 -13.6
JOBS 51Job Ads 21.15 +7.15 +51.1
JMDT Jamdat Mobile 22.51 +6.51 +40.7
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