10/04/04:
Oil Prices Rise Along With Optimism About The Economy
SUSIE GHARIB: It`s the economy that`s the big focus among investors. This week, corporate America begins releasing third quarter numbers and several reports come out giving investors a better idea of how the economy fared in September. On top of that, the economy will be a major topic of the presidential and vice presidential debates this week. Suzanne Pratt talked to some experts for their analysis of the U.S. economy.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the last few weeks, there has been a growing sense on Wall Street that the economy has turned the corner. That`s certainly been the case in the bond market in the past week, where prices have tanked and benchmark yields have surged. It`s also been reflected in the stock market, where prices have recently rallied. Pundits in both markets keep citing a new found positive feeling about the economy, one that suggests the scary summer soft patch is over. Just today, several Federal Reserve board governors and bank presidents echoed that sentiment, making positive comments about the health of the economy. But what exactly sparked this sudden change of heart? Most economists point to rebounds in construction, auto sales and manufacturing, underpinned by a consumer that is coming back to life.
MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES: The soft patch seems to be behind us, and the main thing that happened is that consumer spending has picked up. We saw slow growth in consumer spending during the second quarter, only 1.6 percent at an annual rate. With the numbers we now have for the third quarter, it looks like consumer spending is going to be above 4 percent.
PRATT: But what about those pesky high oil prices and what they`re supposed to do to consumer spending? Today the National Association for Business Economics said oil prices will reduce economic growth by a 0.5 percent point this year. The group lowered its overall 2004 GDP forecast to 4.3 percent from 4.7 percent. Economists say energy costs are the single biggest threat to growth in the coming months.
CARY LEAHEY, SR. ECONOMIST, DEUTSCHE BANK: Right now, consumers seem to be handling 40-plus oil prices. What I mean by that is they have not yet sent a message to you and me twice a month through the consumer sentiment reports saying we`re mad as hell and we`re not going to take it anymore. Confidence is holding up well. If that fell 10 or 15 points and the obvious culprit were oil, then you`d have a real problem.
PRATT: Experts say this Friday`s employment report could go a long way in making the case for an end to the economy`s soft patch. They say it`s crucial the data shows good job growth, because you can`t have sustained consumer spending without jobs. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/04/04:
Third Quarter Outlook With Chuck Hill, president of Veritas et Lux
SUSIE GHARIB: Earnings season kicks off this week with two Dow components. Alcoa and GE are expected to report their third quarter results on Thursday and Friday. Joining us now with a preview of this quarterly season, Chuck Hill, president of Veritas et Lux, a Boston consulting firm. Hi, Chuck.
CHUCK HILL, PRESIDENT, VERITAS ET LUX: Hi, Susie. Good to be back.
GHARIB: Great to have you, as usual. We`ve been hearing a lot of companies making pre-announcements. That`s usually bad news for earning. What are your thoughts on that?
HILL: I think there`s been a bit of an over reaction. I mean there`s always a negative cast to the pre-announcements. We got spoiled in the last three quarters where they were abnormally less negative than usual. So we are seeing them be somewhat more negative than what we were spoiled with. But you have to remember that we`re only back to close to where it normally is. That`s including in here in the third quarter a lot of warnings that are peculiar to the third quarter as a result of the hurricane and other abnormalities and aren`t reflective of what`s to come. So we`re doing pretty well in pre-announcements.
GHARIB: How well will corporate America do? When all the numbers are in on a percentage basis, how much will earnings be up?
HILL: The analysts right now are expecting earnings growth of 13.6 percent for the third quarter. But we always beat the final estimates so I think we`ll probably end up about 18 percent, give or take a point, for the third quarter.
GHARIB: Now that compares with 25 percent in the same period a year ago, third quarter 2003. Is that good? Is it bad? Is it neutral?
HILL: I mean on top of how strong the growth has been, it`s terrific. You have to remember that we had four quarters of over 20 percent, three of them over 25 and that was the result of all of the economic and fiscal stimulus we had. So we kind of had a little bubble there. We always get that coming out of every recession and then you decelerate back down to something more normal. Decelerating to 18 here in the third quarter and maybe 14 in the fourth quarter is still very good earnings growth.
GHARIB: And besides what you talked about, the economic stimulus from last year, we`re also dealing I guess with higher oil prices. That`s got to have some impact on earnings this quarter.
HILL: It did have some. When you look at the benefits, because they did raise the energy company estimates considerably for the third quarter, there were some offsets particularly in the chemicals industry and a few other places where the high energy costs hurt. But on balance it didn`t, you know, there wasn`t that much negative in the third quarter net. As we go forward, if they stay at these rates or go higher, why, then the pressure gets greater.
GHARIB: What do you think that we will be hearing? What`s going to be the message and the trends that we`re going to be hearing from chief executives as they give guidance on their conference calls?
HILL: I think you`re going to hear a lot of them talking about, that are in the consumer-related areas, that maybe things are starting to pick up some. I think we`ll still hear from technology that business capital spending remains kind of lackluster and looks that way for a while. I mean it`s growing but this is not the kind of expectations that people had earlier.
GHARIB: All right. We`re just about to wrap up here. Looking ahead to the current quarter, fourth quarter and into 2005, what`s the earnings trend going to be?
HILL: As I said, 14 percent for the fourth quarter which will be terrific. It`s the first couple quarters next year that really worry us where you have the very tough comparisons to those strong year-ago quarters and where things are now starting to slow down in some of these areas. I mean we`re not going to see the kind of revenue growth that we had been. Margins are not going to stay at the levels they were. So I think we`re falling off to a more gradual uptrend.
GHARIB: All right. Chuck, sorry, we got to leave it there, but we will check in with you midway to see how everybody is doing. Thanks so much, Chuck. We`ve been speaking with Chuck Hill of Veritas et Lux.
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.
10/04/04:
Time To Tune Into HDTV
SUSIE GHARIB: Is your TV HD? Chances are, you are not watching NIGHTLY BUSINESS REPORT or anything else on a high definition television set tonight. But the chairman of the Federal Communications Commission wants to change that, and change it quickly. Stephanie Woods reports.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Michael Powell is taking a leading role in a campaign to educate consumers on high definition television, called DTV, get it. He`ll appear on an HDTV broadcast of Monday night football tonight, and he`s the force behind a new shoppers guide for consumers and a new web site.
MICHAEL POWELL, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION: The government invested itself in this transition. It`s not just a simple commercial transaction. It`s not just a sell of a digital TV set. Make no mistake, we have a very vested interest in seeing the transition proceed quickly and be successful.
WOODS: Once that transition from analog to HDTV reaches 85 percent of the market, broadcasters will hand their analog channels back to the government. But getting to that threshold is taking much longer than anticipated. Powell wants to speed up the transition so the analog spectrum can be freed up for public safety and new mobile devices.
POWELL: I think that`s why this transition really needs to get over with, so that the extra spectrum that now has been the hands of broadcasters nearly 10 years or more really starts to accelerate so we can get it back for the uses that it`s intended.
WOODS: But broadcasters say there will be unintended consequences under Powells` plan: millions of televisions will become obsolete. TV executives say they have a powerful ally in Congress.
MARK AITKEN, DIRECTOR OF ADVANCED TECHNOLOGY, SINCLAIR BROADCASTING: Congress is smart enough to recognize that millions of Americans, potentially being disenfranchised from the availability of a free service of some sort, it will cause pause in the way that they approach it.
WOODS: Analysts say one reason broadcasters are reluctant to move solely to HDTV is that they fear they would lose their leverage in the political battle over how they can use the digital airwaves.
RUDY BACA, MEDIA ANALYST, PRECURSOR GROUP: This is a battle between the very rich and the wealthy and it`s a battle for audience share. Because the broadcasters really don`t have the multiple income streams that the cable companies have and that the satellite companies have.
WOODS: Powell`s plan calls for the digital transition to be complete by 2009. He says the full commission should vote on his plan by the end of 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.
10/04/04:
"Commentary"-If It Ain't Broke Let It Fix Itself
SUSIE GHARIB: Well, it`s good to solve problems. But tonight`s commentator says sometimes problems can solve themselves. Here`s Mark Zandi, chief economist of economy.com.
MARK ZANDI, CHIEF ECONOMIST, ECONOMY.COM: Sometimes doing nothing is the right thing. This applies to current economic policy. The president, if re-elected, will make the tax cuts passed in his first term permanent. Senator Kerry, if elected, will roll back those tax cuts for very high income and wealthy taxpayers, using the revenues to provide health care to many of the currently uninsured.
Neither is good policy, as both will result in large persistent budget deficits, the prospects for which will soon be our most pressing economic problem. Higher deficits ultimately prompt higher interest rates, which will insure that the economy won`t measure up. The president has argued that making the tax cuts permanent will induce hard-working Americans to work even harder, generating enough tax dollars to help pay for themselves.
There is no evidence to support this view. Such an argument had merit when President Reagan halved the top marginal rate from 70 to 35 percent, but it rings hollow when lowering it from 40 to 35 percent as President Bush has done. Expanding health care coverage, as the senator has proposed, is laudable. That 45 million of us don`t have consistent access to health care can`t be good for our economy. But running large deficits will ultimately result in large cuts in many other government programs upon which these same households rely. For "just do it" Americans doing nothing when there is a problem doesn`t sit well. But doing nothing is better than what either candidate has proposed. Let the tax cuts expire and reduce future deficits. I am Mark Zandi.
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.
10/04/04:
"Last Word"-A Trip To Wannado City
SUSIE GHARIB: When it comes to theme parks, we all know about Disney and Universal. But what about "Wannado City?" It`s a new indoor, role-playing theme park aimed at younger kids. And as Jeff Yastine reports, it may soon be coming to a mega- mall near you.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: You`ve never seen emergency crews like the kind they have at Wannado City. Here, children try out all those jobs they dream about, but never have a chance to do. The smoke and fire are fake, but the water and hoses are real and around the corner at the nearby gold mine, another group of kids looks for precious metals amid piles of sand. And over at the city hospital, new interns make their patient rounds.
All right, doctors. Please don`t touch anything until I explain what everything is, because all the equipment here is real.
YASTINE: It`s 140,000 square feet of child-sized metropolis, complete with police department, beauty parlor, live theater, dentist, bank and a lot of other business occupations. Wannado is the brainchild of Mexican entrepreneur Luis Laresgoite, (ph) who developed it into one unit in Mexico. Now the idea is to take the same concept and expand it to 10 of the largest U.S. markets, each with its own Wannado City. The first opened here, at the huge Sawgrass mills regional mall in southern Florida.
CLAUDIA SANTONI, MARKETING, WANNADO CITY: The concept is something I think that`s completely new. This is the first park of its kind in the United States and it`s really bringing a new concept to the theme park world or entertainment parks. And by being located at Sawgrass mills, we have a built-in audience. Sawgrass gets over 26 million visitors a year, so we`re essentially offering one more entertainment option for all those families visiting.
YASTINE: At roughly $25 per child and $15 per adult, entering this Wannado world can add up to a lot of money, or wongas, the official currency paid out to kids at the Wannado City Bank. But parents don`t seem to mind the cost.
LOURDES PINTO, PARENT: I think it`s incredible. It`s a wonderful opportunity. They`ve had so much fun, that they really get to see what different careers are like.
YASTINE: Wannado City is something of a novelty for kids. But novelties can wear off. Business planners say one of the keys will be getting repeat customers.
MICHAEL CONNOLLY, PROFESSOR, UNIVERSITY OF MIAMI: They come one time and they want to be police chief, and another time they`re running a fire engine and another time they`re a baker or doing something else so that is a plus.
YASTINE: The company has worked to attract fieldtrip visits from public and private schools, which helps weekday traffic. And after being open only about two months, executives say business has done well, and they`re ready to expand to New York and other U.S. markets. Jeff Yastine, NIGHTLY BUSINESS REPORT, Sunrise, Florida.
GHARIB: Looks like a lot of fun doesn`t it Paul?
KANGAS: Yes. I want to be a gold miner as long as it stays over $400 an ounce.
GHARIB: Always looking for the money angle. That`s NIGHTLY BUSINESS REPORT for Monday, October 4. I`m Susie Gharib. Good night, everyone. Good night to you, Paul.
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.
10/04/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Stocks extended Friday`s rally early today as oil fell below $50 a barrel and buyers continued to bid up the tech sector. The Dow rose 75 points at the outset, while the NASDAQ jumped 23. The rally lost some of its luster this afternoon as profit takers moved in, especially in recently strong groups like the home builders.
The Dow industrial average salvaged a closing gain of 23.89 points putting it at 10,216.54. The NASDAQ Composite came in with a gain of 10 points at 1952.40. Standard & Poor`s 500 rose 3 2/3 points at 1135.17.
In the bond market, the 10-year note rose 6/32 to par and 21/32, putting the yield at 4.17 percent.
Topping the active list once again Merck (MRK) today on 23 1/2 million shares, moving up $0.92. There`s a positive article about it in this week`s "Barron`s" financial magazine, saying the company`s very strong financially. Also the stock was recommended by this program`s guest market monitor last Friday night, John Dorfman.
Lucent Technologies (LU) gained a penny.
Pfizer (PFE) moving up $0.33. Long-term studies of its Celebrex pain killer show no signs of cardiac risks.
EMC Corporation (EMC) a $0.39 gain.
Motorola (MOT) moved up $0.24, fifth in big board volume.
Then Nokia (NOK) edging up $0.06.
Followed by Qwest Communications (Q) which showed no change.
Citigroup (C) down $0.14.
General Electric (GE) up $0.15.
And Viacom (VIA) be tenth in big board volume, rose $0.96.
AT&T (T) up $0.61 or 4 1/4 percent. It`s the subject of the "heard on the Street" column in today`s "Wall Street Journal" which suggests the company`s going to cut more jobs and tidy up its books, possibly in anticipation of a takeover bid.
SunGard Data Systems (SDS) had a good day, up $2.58. The company will spin off its disaster recovery business to shareholders, likely on a one for one share basis.
Varian Medical Systems (VAR) up $6.38. The company said in the fourth quarter, it`s seeing robust growth in its image guided radiation therapy business.
AK Steel Holding (AKS) was up $1.10. JPMorgan added the stock to its equity focus list with a $15 a share target for that stock.
Nu Skin Enterprises (NUS) tumbling $7.80 after the company cut its third quarter earnings guidance from about $0.30 a share down $0.27 to $0.28. The Street is expecting $0.31 a share. On top of that, Standard & Poor`s downgraded the stock from "accumulate" to just a "hold" rating.
ElkCorp (ELK) down $1.50. The roofing products manufacturer cut its first quarter earnings estimates from $0.43 to $0.46, all the way down to $0.31 to $0.32, citing tough pricing pressures, bad weather and things like that.
And then came the home builders. Hovnanian Enterprises (HOV) down $2.78. The profit takers were in there today. Let`s look at some other stocks in that group.
Beazer Homes (BZH) down over $4.
$3.61 loss in KB Home (KBH).
M.D.C. Holdings (MDC) off nearly $5.
And better than a $5 loss in Pulte Homes (PHM).
Ryland Group (RYL) down $3.90, rough day, but they`ve had big gains.
Royal Caribbean Cruises (RCL) was actually down $1.41. That indicates up that (ph) it was down $1.41. Recent hurricanes says the company, will cut third quarter earnings by $0.10 a share and it will hurt the fourth quarter by $0.02 to $0.03.
NASDAQ`s most active, Microsoft (MSFT) was down $0.13.
Followed by Intel (INTC) up $0.28.
Research In Motion (RIMM) gained $2.57.
Cisco Systems (CSCO) $0.03 rise.
eBay (EBAY) up $1.21.
Google (GOOG) hit a new closing high by $0.02, up $2.48.
Oracle (ORCL) a $0.03 loss.
Yahoo! (YHOO) down $0.12.
Dell (DELL) $0.35 loss there.
And Applied Materials (AMAT) off $0.14.
Elsewhere Siebel Systems (SEBL) up $1.15. Company boosted its third quarter revenue estimate from the Street estimate of $306 million to as high as $317 million.
SupportSoft (SPRT) down $3.41. Company sees third quarter loss of a penny to $0.04. Street was looking for a $0.09 gain.
And Allied Defense (ADG) group on the American exchange, hit as high as 20, had a good day. Our Friday market monitor guest John Dorfman said buy that stock.
And those are the stocks in the news tonight.
10/04/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10216.54 +23.89 + .2
HIGH 10270.37
LOW 10191.40
NASDAQ COMP. 1952.40 +10.20 +.5
HIGH 1965.76
LOW 1950.17
VOLUME 1,540.8
PREVIOUS 1,589.5
UP VOLUME 1,014.2
DOWN VOLUME 492.7
DOW TRANSPORTS 3318.62 +19.82 + .6
DOW UTILITIES 299.18 +.86 + .3
CLOSING TICK +778
S&P 500 1135.17 +3.67 + .3
S&P 100 544.74 +1.63 + .3
MIDCAP 400 603.62 +1.83 + .3
REUTERS/CRB 281.79 -3.50 - 1.2
NYSE COMPOSITE 6677.75 +14.57 + .2
VALUE LINE 368.00 +2.29 + .6
RUSSELL 2000 589.09 +4.06 + .7
DJW 5000 11099.85 +41.15 + .4
U.S. TREASURIES
5-YEAR NOTE 3.375%
Sept. 15,2009 99 26/32 +1/32 + 3.42
10-YEAR NOTE 4.25%
Aug. 15,2014 100 21/32 +6/32 + 4.17
30-YEAR NOTE 5.375%
Feb. 15, 2031 106 17/32 +8/32 + 4.93
LEHMAN BROS.
LONG BOND INDEX 1750.61 -3.07
DOW CLOSE 10216.54 +23.89 + .2
ADVANCES 1953
DECLINES 1358
NEW HIGHS 416
NEW LOWS 10
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MRK Merck & Co 34.23 +.92 +2.8
LU Lucent Tech 3.17 +.01 +.3
PFE Pfizer 31.30 +.33 +1.1
EMC EMC Corp 12.41 +.39 +3.2
MOT Motorola 19.01 +.24 +1.3
NOK Nokia 14.45 +.06 +.4
Q Qwest Comms Intl 3.45 unch. unch.
C Citigroup 44.73 -.14 -.3
GE GE 34.12 +.15 +.4
VIAb Viacom "B" 35.55 +.96 +2.8
NASDAQ CLOSE 1952.40 + 10.20 + .5
VOLUME 1,862.5
PREVIOUS 1,589.5
ADVANCES 1881
DECLINES 1230
NASDAQ ACTIVES
MSFT Microsoft 28.12 -.13 -.5
INTC Intel 21.13 +.28 +1.3
RIMM Rsch In Motion 76.37 +2.57 +3.5
CSCO Cisco Systems 18.96 +.03 +.2
EBAY eBay 93.65 +1.21 +1.3
GOOG Google 135.06 +2.48 +1.9
ORCL Oracle 11.87 -.03 -.3
YHOO Yahoo! 34.91 -.12 -.3
DELL Dell Inc 35.66 -.35 -1.0
AMAT Applied Matl 17.16 -.14 -.8
AMEX CLOSE 1276.34 - 2.93 - .2
INDEX SHARES
DIA DIAMONDS TRUST 102.31 +.15 +.2
QQQ NASDAQ 100 36.28 +.14 +.4
SPY S&P DEP.RECEIPTS 113.81 +.16 +.1
STOCKS IN THE NEWS
T AT&T 14.97 +.61 +4.3
SDS SunGard Data Sys 27.00 +2.58 +10.6
VAR Varian Medical 41.02 +6.38 +18.4
AKS Ak Steel Holding 9.70 +1.10 +12.8
NUS Nu Skin Enterpr 16.46 -7.86 -32.3
ELK ElkCorp 26.40 -1.50 -5.4
HOV Hovnanian Enterp 37.87 -2.74 -6.8
BZH Beazer Homes 103.75 -4.44 -4.1
KBH KB Home 80.89 -3.61 -4.3
MDC MDC Holdings Inc 70.01 -4.95 -6.6
PHM Pulte Homes 56.33 -5.30 -8.6
RYL Ryland Group 88.99 -3.90 -4.2
RCL Royal Caribbean 45.75 +1.41 +3.2
SEBL Siebel Systems 9.34 +1.15 +14.0
SPRT Supportsoft 6.21 -3.41 -35.5
ADG Allied Defense 19.60 +1.00 +5.4
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