10/06/04:
Crude Climbs To $52 Signalling A Cold Costly Winter
SUSIE GHARIB: Another milestone for oil prices today. They surged above $52 a barrel, the fifth record close in about two weeks. In New York trading, the November crude contract gained $0.93 to $52.02. Behind the rally, more concerns about supply and the upcoming winter heating season. Suzanne Pratt reports on the latest outlook for oil prices.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: With crude oil now comfortably above $50 a barrel, consumers are questioning whether prices will move much higher. The short answer is yes, probably. Traders and oil experts now estimate prices could climb as high as $60 a barrel in the coming weeks or months.
ERIC BOLLING, INDEPENDENT OIL TRADER: I really feel that any dip that we have in oil pricing-- if we see substantially $1.00, $1.50 or $2.00 lower in pricing- - that would be a good opportunity to buy contracts for the future, because I think we`re going to have very, very good demand in the fourth quarter and you`ll probably see mostly the other products rallying higher, and that will bring crude oil up with it.
PRATT: The reason is pretty much the same one that helped take crude to $50 a barrel, namely concerns about tight U.S. oil supplies in the face of rising demand. It`s now the impact of hurricane Ivan, not terrorism, that`s having the biggest effect on supply. But, many experts say with the political uncertainty in the U.S. and upcoming elections in Iraq, supply worries are likely to continue.
JOHN KILDUFF, ENERGY ANALYST, FIMAT USA: To go any higher from here, we will need yet another catalyst to get to that $60 plateau. My fear is that Iraq and the situation in Iraq may provide the catalyst to get there.
PRATT: Fueling additional supply concerns today are fresh inventory numbers released by the government. They show a modest pickup in crude and gasoline stockpiles in the U.S., the first in many weeks. But distillate supplies, which produce heating oil, fell. The drop in distillate inventories is particularly worrisome for consumers who use oil to heat their homes in the winter. The government now estimates that fuel bills are likely to be 28 percent higher this winter than last. But some experts say the small buildup in crude and gas supplies is at least a move in the right direction.
KILDUFF: I thought it was impressive that crude oil was able to build up, considering the problems we`re having in the Gulf of Mexico and the perceived importation issues surrounding the storms. That was good news for consumers. Also, crude oil imports are maintaining a 10 million a barrel per day plus level, also good news for consumers.
PRATT: Some experts say it`s possible that crude oil prices could fall to $40 a barrel in the coming weeks -- that is, if crude oil inventories continue to build. But other experts say that`s a very big "if." 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.
10/06/04:
Fannie Mae's Finances Now A Capital Concern on Capitol Hill
PAUL KANGAS: The CEO of mortgage financing giant Fannie Mae got grilled on Capitol Hill today over the company`s accounting problems. Franklin Raines defended Fannie against charges it deliberately manipulated earnings so its executives could get big bonuses. As Darren Gersh reports, the specifics of the bonuses and how they became publicly known, turned into a bone of contention, as well.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Under oath and under fire, Fannie Mae CEO Franklin Raines defended himself, his company and its accounting. It was Raines` first public appearance since regulators issued a report charging the company manipulated its books in order to boost executive compensation.
FRANKLIN RAINES, CEO, FANNIE MAE: Upon reading of this allegation in the report, the company undertook to assemble the relevant facts and we`ve learned of no facts and no other materials that support the allegation that the decision about the amount to book was related to bonuses.
GERSH: But regulators charge Fannie Mae created quote a cookie jar reserve, unquote, executives could use to smooth out earnings. The Office of Federal Housing Enterprise Oversight says in 1998 Fannie Mae hid $200 million in expenses related to mortgage prepayments. Now, regulators say, they are talking with Fannie Mae`s board about whether there should be changes in top management.
ARMANDO FALCON, DIR., OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT: The issues raised by our staff in this report certainly does cause doubts about whether or not there is sufficient confidence in management going forward, such that there should not be management changes at the top of the company.
GERSH: The chairman of the House committee on capital markets took aim at $245 million in bonuses Fannie Mae awarded to employees from 1998 to 2003 after the company met earnings targets. It was information Fannie Mae says should not have been released.
RAINES: ... has information on this chart that was provided to our regulator as confidential information and that it was information that was provided that is protected in our belief by the laws of the United States.
GERSH: Richard Baker, the chairman of the subcommittee and a long-time company critic, said he had been threatened by Fannie Mae`s lawyers with a civil lawsuit if he released the bonus information.
REP. RICHARD BAKER, CHAIRMAN, SUBCOMMITTEE ON CAPITAL MARKETS: To answer your legal point, I have the absolute right to display it, despite Mr. Ken Starr`s threats to the contrary, in the current context of a committee hearing discussing the policy of Fannie Mae`s compensation.
GERSH: But the Democrats supporting Fannie Mae today`s charge the hearing was politically motivated.
REP. WILLIAM LACY CLAY, (D) MISSOURI: This hearing is about the political lynching of Franklin Raines.
GERSH: Investors may want to note that regulators say they found no reason to doubt the safety and soundness of Fannie Mae`s overall finances, even if it is likely the mortgage giant will be forced to recalculate past earnings. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/06/04:
One On One With Ethan Siegal, analyst of the Washington Exchange
SUSIE GHARIB: A day after the vice presidential debate, President
Bush and Senator Kerry picked up where their running mates
left off. Both candidates came out swinging against their
rivals. Joining us now with some analysis, Ethan Siegal, analyst
of the Washington Exchange, a research firm providing political
analysis to institutional investors. Hi, Ethan.
ETHAN SIEGAL, PRESIDENT, WASHINGTON EXCHANGE RESEARCH GROUP:
Thank you.
GHARIB: Let`s start off by getting your take of the vice presidential debate last night.
SIEGAL: I thought Cheney did a slightly better job than Edwards. It was important for Cheney to stop the bleeding from Bush`s sub par performance last Thursday night. He did that. I thought he won one for the home team. I thought Edwards was OK, but not as good as Cheney.
GHARIB: So what do you think at this point is the key issue for swing voters and how important will be the second presidential debate between the candidates this Friday in St. Louis?
SIEGAL: I think Bush really has to do a good job on Friday night. And I think last night`s debate will be just a footnote once Friday night`s town hall meeting begins. Bush has to demonstrate and reconnect with both his own base and with swing voters and he can`t let Kerry be so aggressive. I think swing voters have a number of things on their minds, which is why this election is going to be so close. I think they have concerns about the economy, concerns about who is the better and stronger and more credible leader in the war on terrorism between President Bush and Senator Kerry. And I think they have concerns about the whole issue of Iraq and whether we should be there or not.
GHARIB: Well, certainly the economy will take center stage on Friday, because some of the analysts I`ve been talking to are saying that they`re expecting a strong employment report, the September employment report. If that`s the case, how do you think President Bush and Senator Kerry will spin it?
SIEGAL: I think the employment report on Friday morning could be a big plus for Bush, because not only might he get good numbers for September, but they will also recalculate the March, 2003 through March, 2004 overall number, and since we`ve been in a recovery, Bush is likely to get a second piece of good news. I think Bush will obviously have a better time of using it since jobs is so important in the Midwest and in those swing states. I think Kerry`s going to have to really be very sharp to still say, listen, this is not a good economy, people aren`t making as much as they should. Jobs are not of the highest quality. Health care benefits, pension benefits, I think he`ll be addressing all of those. But I think Bush could have the advantage if the reports are positive on Friday morning.
GHARIB: Ethan, I know you talk to a lot of Wall Street institutional investors and also hedge fund managers. When you`re talking to them, the ones who are on the fence, what are the issues for them? What are they saying are the pluses and minuses for both of these candidates?
SIEGAL: Well, I think the two things Wall Street cares most about is that the Bush administration has been very capital formation friendly with their tax cuts on dividends and on capital gains and would like to see those tax cuts either extended or even go lower. I also think they feel that the Bush administration has been extremely friendly on the regulatory side when it comes to pharmaceuticals and health care, energy, coal, drilling, nuclear. That`s why I think more than anything else they would like to see the Bush administration re-extended for four years.
GHARIB: The uncertainty of how this whole election is going to play out in the close polls has been hanging over the stock market for a long time now. We`re just a few weeks away from the election. When the election is all said and done and we finally have a victor, how do you think the market is going to respond?
SIEGAL: I think the market, because it does not like uncertainty, will respond positively no matter whether Kerry or Bush wins the race just to have the race over. And investors once they know who is in the White House and what their likely policies are, can then figure out how to make money or not make money off of Washington. So I think the key is just having the election over, and then seeing what policies might go forward.
GHARIB: That`s a very interesting thought. Thank you very much, Ethan. We appreciate your coming on the program.
SIEGAL: Thank you.
GHARIB: We`ve been speaking with Ethan Siegal of the Washington
Exchange.
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.
10/06/04:
"Money File"-The Economics of Housing Prices Don't Add Up
SUSIE GHARIB:For millions of Americans, a house is their biggest single investment. And over the last decade, the value of that investment has probably risen nicely. In the "money file" tonight, one view of why that may not be the case over the next decade. Here`s Eric Schurenberg, managing editor of "Money" magazine.
ERIC SCHURENBERG, MANAGING EDITOR, MONEY MAGAZINE: Nothing gets a commentator in more trouble than predicting that a market is topping out, whether it`s tech stocks in the `90s or real estate now. So I won`t. But history suggests that a market tends to peak not long after investors in it reach maximum certainty that they`ve discovered the key to riches.
In several hot housing markets now -- and you know who you are-- that moment may be drawing near. For one thing, homeowners` expectations of how much their castles will appreciate are beginning to sound like tech investors` fantasies during that bubble. Surveys say that homeowners anticipate double-digit growth for each of the next 10 years. It`d be nice, wouldn`t it? But here`s a reality check: over the long run, home prices has risen at around one percentage point over the rate of inflation.
Another concern: the boom is built on debt. Mortgages and home equity loans account for 45 percent of total home values, a record, and more than a third of new mortgages are adjustable rate. If rates rise, as they`re expected to do, some homeowners will have to sell and more "wanna-be" buyers will be squeezed out of the market.
Even at today`s interest rates, affordability is an issue. The median home now sells for twice what its occupants make and in the hottest markets, far more than that. This can`t last. At some point, sellers will run out of buyers who can pay the prices they want. And as the economists say, if something can`t go on forever, it won`t. I`m Eric Schurenberg.
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.
10/06/04:
"Last Word"-The Buzz on Budweiser's New "B to the E"
SUSIE GHARIB: And finally tonight, you could call it beer with a bigger buzz. Anheuser Busch is rolling out a new beer infused with caffeine, guar Ana and ginseng. It`s called "B to the E," where the "E" is for all those extras, and it`ll be priced slightly higher than Anheuser Busch`s Budweiser brand. The company will market the drink to what it calls quote, contemporary adults who are looking for the latest beverage to keep up with their lifestyle, end quote. And since I know that includes you, Paul, you should also know that the new brew will top out at about 6.5 percent alcohol content.
KANGAS: Maybe they can call it hops and schnapps. How does that sound?
GHARIB: I was waiting to see what you were going to come up with as a comeback.
KANGAS: And that guar Ana is a painkiller so you can get rid of the hangover before you get it.
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.
10/06/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Wall Street moved modestly lower this morning with little conviction for movement, up or down. Selling picked up a bit as oil prices rose after, as Suzanne reported, U.S. crude inventories did not rise as much as expected. Just before noon, the Dow was off 11 points and the NASDAQ Composite down five.
Telecom and networking stocks led an afternoon rally after Verizon said it would increase spending in those sectors next year. So the Dow industrial average came in with a gain of 62.25 points at 10,239.92. The NASDAQ Composite rose 15.5 points to 1,971.03. Standard & Poor`s 500 up 7.5 points, ending at 1,142.05. In the bond market, the 10-year note fell 13/32, putting the yield up to 4.23 percent.
New York exchange volume leader on 50.2 million shares, Lucent Technologies (LU) moving up $0.27. The company will hold contract talks with two of its unions tomorrow. Their contracts expire at the end of this month.
Merck and Company (MRK) hitting a new 12-month low, down $1.76. The "Wall Street Journal" reports the company`s Vioxx arthritis drug may have led to 27,000 heart attacks before it was taken off the market last week.
Blockbuster (BBI) moved up $0.20. Viacom said the Blockbuster spin off was over subscribed.
American International Group (AIG) rose a dime.
EMC Corp. (EMC) a $0.20 gainer, fifth in big board volume.
$0.32 rise in Viacom B (VIA).
Pfizer (PFE) fell $0.11.
General Electric (GE) moving up $0.33.
Citigroup (C) $0.22 gain.
And ExxonMobil (XOM) in a strong energy group, rose $0.71.
Genentech (DNA) down $0.87, but just after the close, the company in with third quarter earnings, excluding items, $0.24 a share, $0.03 better than the Street estimate and way up from $0.14 last year and the company said its target now is to boost earnings 20 percent annually for the next several years. In after hours trading, Genentech was as high as $51 a share.
Then the Yum! Brands (YUM) edged up $0.06. The third quarter earnings were nicely higher, $0.61, versus $0.53 last year and the company boosted its full year guidance by $0.02 to $2.35. Also the company is testing its Pizza Hut delivery service in of all places, China.
CNF (CNF) up $2.43. Smith Barney brokerage upgraded it from "hold" to "buy" after UPS Corp. agreed to acquire the company`s Menlo Worldwide forwarding unit for $150 million.
Wolverine World Wide (WWW) that`s the maker of Hush Puppy footwear, in with third quarter earnings, $0.55, $0.08 above the Street estimate, way up from $0.40 last year. Revenues up 13 percent and the company also boosted 2004 guidance to $1.61 a share.
On the downside, Burlington Coat Factory (BCF) losing $0.86, traded as low as $21.53 after reporting a first quarter loss of $0.42, bigger than last year`s loss of $0.38 a share.
Jo-Ann Stores (JAS) fell $2.45. September same store sales were flat. The company cut its third quarter earnings guidance from the $0.47 to $0.52 a share range, all the way down to $0.30 to $0.35. The Key bank brokerage downgraded the stock from "buy" to just a "hold" rating.
Triumph Group (TGI) in the aircraft parts business, downgraded by Legg Mason from "buy" to "hold" due to the company`s slow profit margin recovery.
And then First Marblehead (FMD) Corp. up $2.84. The company said it facilitated $1.03 billion of private student loans in the first quarter. That`s up 66 percent from a year ago.
Microsoft (MSFT) topped the active list on NASDAQ, up $0.15.
And there you see it, Sirius Satellite Radio (SIRI) had a serious gain of $0.52 on that Howard Stern news.
Intel (INTC) down $0.19.
eBay (EBAY) moved up $2.73.
Cisco Systems (CSCO) $0.43 gain there, fifth in dollar volume.
Google (GOOG) coming down from a record closing high yesterday on profit taking, off $1.29.
Yahoo! (YHOO) no change.
Oracle (ORCL) a $0.03 gain.
Applied Materials (AMAT) down $0.09.
And then tenth in dollar volume was QUALCOMM (QCOM) gaining $0.63 a share.
Netegrity (NETE) had a good day, up $2.79. Computer Associates (CA) will acquire this ID software firm for $10.75 a share in cash.
And Zoran Corporation (ZRAN) which is involved in integrated circuits, down $1.67. Company cut its third quarter revenue guidance from $130 million all the way down to $117 million.
Those are the stocks in the news tonight.
10/06/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10239.92 +62.24 + .6
HIGH 10240.14
LOW 10157.99
NASDAQ COMP. 1971.03 +15.53 +.8
HIGH 1971.04
LOW 1947.24
VOLUME 1,423.9
PREVIOUS 1,418.9
UP VOLUME 1,050.4
DOWN VOLUME 352.4
DOW TRANSPORTS 3388.72 +53.12 + 1.6
DOW UTILITIES 301.35 +1.50 + .5
CLOSING TICK +1050
S&P 500 1142.05 +7.57 + .7
S&P 100 547.89 +3.41 + .6
MIDCAP 400 605.90 +3.78 + .6
REUTERS/CRB 285.76 +1.29 + .5
NYSE COMPOSITE 6717.43 +38.18 + .6
VALUE LINE 369.77 +2.71 + .7
RUSSELL 2000 592.66 +5.32 + .9
DJW 5000 11164.28 +74.48 + .7
U.S. TREASURIES
5-YEAR NOTE 3.375%
Sept. 15,2009 99 17/32 -9/32 + 3.48
10-YEAR NOTE 4.25%
Aug. 15,2014 100 7/32 -13/32 + 4.23
30-YEAR NOTE 5.375%
Feb. 15, 2031 105 31/32 -18/32 + 4.97
LEHMAN BROS.
LONG BOND INDEX 1746.52 -5.56
DOW CLOSE 10239.92 +62.24 + .6
ADVANCES 2230
DECLINES 1019
NEW HIGHS 321
NEW LOWS 18
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.39 +.27 +8.7
MRK Merck & Co 31.67 -1.76 -5.3
BBI Blockbuster 8.04 +.20 +2.6
AIG Amer Intl Group 66.60 +.10 +.2
EMC EMC Corp 12.68 +.20 +1.6
VIAb Viacom "B" 35.77 +.32 +.9
PFE Pfizer 31.18 -.11 -.4
GE GE 34.38 +.33 +1.0
C Citigroup 44.74 +.22 +.5
XOM Exxon Mobil 50.03 +.71 +1.4
NASDAQ CLOSE 1971.03 + 15.53 + .8
VOLUME 1,938.9
PREVIOUS 1,722.4
ADVANCES 1921
DECLINES 1150
NASDAQ ACTIVES
MSFT Microsoft 28.53 +.15 +.5
SIRI Sirius Satellite 3.87 +.52 +15.5
INTC Intel 21.13 -.19 -.9
EBAY eBay 96.60 +2.73 +2.9
CSCO Cisco Systems 19.53 +.43 +2.3
GOOG Google 137.08 -1.29 -.9
YHOO Yahoo! 34.96 unch. unch.
ORCL Oracle 12.24 +.03 +.3
AMAT Applied Matl 17.24 -.09 -.5
QCOM Qualcomm 41.82 +.63 +1.5
AMEX CLOSE 1289.79 + 3.11 + .2
INDEX SHARES
DIA DIAMONDS TRUST 102.60 +.56 +.6
QQQ NASDAQ 100 36.66 +.30 +.8
SPY S&P DEP.RECEIPTS 114.62 +.71 +.6
STOCKS IN THE NEWS
DNA Genentech 50.26 -.87 -1.7
YUM Yum! Brands 41.56 +.06 +.1
CNF CNF Inc 47.06 +2.43 +5.4
WWW Wolverine World 28.90 +2.53 +9.6
BCF Burlington Coat 22.04 -.86 -3.8
JAS Jo-Ann Stores 26.10 -2.45 -8.6
TGI Triumph Group 31.88 -2.29 -6.7
FMD First Marblehead 52.35 +2.84 +5.7
NETE Netegrity 10.54 +2.79 +36.0
ZRAN Zoran 14.56 -1.69 -10.4
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