10/19/04:
New York's Attorney General Expands His Probe Of The Insurance Industry
SUSIE GHARIB: Eliot Spitzer rattled Wall Street again today.
Insurance stocks fell sharply on reports that the New York attorney
general is widening his investigation of the insurance industry to
include health insurers. Scott Gurvey has more on the latest
developments swirling through the insurance industry.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: New York Attorney
General Eliot Spitzer's probe into the insurance industry gained support
today as Connecticut and Pennsylvania said they are also studying the
matter. And there is word tonight that the investigation has moved
beyond property and casualty insurers and brokers and now also covers
life and medical insurers. Philadelphia-based Cigna says it has
received a subpoena from Spitzer and a Hartford, Connecticut, newspaper
is reporting that Aetna, based in that city, has also received one.
These reports touched off a major sell-off today of HMO and health care
stocks. Last week, Spitzer sued Marsh and McLennan, charging the
insurance broker rigs bids and accepts illegal payments in return for
steering business to certain insurers. Wall Street has been struggling
to judge the impact on the insurance sector if the widespread practice
known as contingent commission fees is outlawed. Another question is
how long will it take to resolve the investigation.
ANDREW KLIGERMAN, SR. INSURANCE ANALYST, UBS: I've seen the insurance
commissioners and the SEC take quite a long time, so whether it blows
over quickly or not, who knows. But I think it would be appropriate to
see a steady resolution. We don't know. It's a tough call at this time.
GURVEY: In addition to lower profits, there are also concerns brokers
may have to refund commissions earned in previous years and pay fines.
Shares of the major insurance brokers have fallen sharply since the
Spitzer lawsuit was filed. Marsh and McLennan shares, for example, have
lost nearly half their value. Shares of major insurance companies are
also down including AIG, where two executives are pleading guilty to bid
(ph) rigging charges. It has lost 14 percent of its value.
KLIGERMAN: The valuations are starting to get particularly interesting
in these life names like Hartford, Prudential, Nationwide. They're very
cheap here, and maybe it's worth taking the risk.
GURVEY: UBS has business relationships with AIG, Prudential and
Nationwide. Today, Legg Mason made a rating change based on valuation,
raising shares of AIG from "hold" to "buy." Scott Gurvey, 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.
10/19/04:
One On One With Bob Doll, President, Merrill Lynch Investment
Managers
SUSIE GHARIB: In exactly two weeks, Americans go to the polls to elect the
next president. So, the road to the White House is getting busy.
President Bush was in Florida today, assuring elderly voters they'll get
their flu shots. The Health and Human Services department said today an
additional 2 1/2 million doses of flu vaccine will be available in
January. Meanwhile, after crisscrossing Florida yesterday, Democratic
challenger John Kerry was in Pennsylvania and Ohio today. He criticized
President Bush's record on the economy and the president's plans to
privatize Social Security. And what is the impact of the presidential
race having on the markets? Joining us with some thoughts on that, Bob
Doll, president and chief investment officer of Merrill Lynch investment
managers. Hi Bob. Nice to have you, Bob.
BOB DOLL, PRESIDENT, MERRILL LYNCH INVESTMENT MANAGERS: Good evening,
Susie.
GHARIB: Let's fast forward to November 3, the day after the election.
What is your prediction of the impact the election is going to have on
the markets?
DOLL: Well, Susie, unfortunately with all the talk, we think it is
probably more talk and less impact. We can't lose sight of the fact
that the presidential candidates, whichever one gets elected, will end
up trying to do only a small fraction of the things they're talking
about and promising to do, and then the Congress is going -- only going
to let them do a small percentage of that. Don't forget, a president
can't spend a dime or do anything to taxes. It all comes through the
House of Representatives. The president either vetoes or signs the bill.
GHARIB: So are you saying that basically what happens in the market is
going to have more to do with just market fundamentals, what is going on
with the economy, what is going on with earnings, oil prices, more than
who ends up in the White House?
DOLL: Absolutely. There are so many other cross currents. Not that it
is unimportant, but I think we tend to talk about it a whole lot more
than actually makes a difference. I think the Eliot Spitzer story you
just talked about is a perfect example. Here is an exogenous event that
has come into the marketplace today that wasn't there yesterday and look
at the impact it has, bigger impact than the election is likely to have.
GHARIB: A lot of the talk that we've been hearing from Wall Street
strategists who come on our program saying that a Bush victory would be
good for the stock market. A Kerry victory would be good for the bond
market. First of all, do you agree with that and if you do, dissect it
a little bit more about how investors are supposed to use that information.
DOLL: Certainly, having said it is unimportant, there are clearly
patterns. And I think the macro pattern you are on probably makes
sense. Bush would seek to make permanent some of the temporary tax cuts
that favored dividends and capital gains. John Kerry would look to
reverse some of that. That means stocks probably fair somewhat better,
all else being equal, which is never the case, under President Bush than
under President Kerry and bonds, especially municipal bonds, could do
better under Kerry election.
GHARIB: You've also done some analysis of how a second Bush
administration or a Kerry presidency would affect various industries
like energy and health care, insurance. Give us your analysis on that.
DOLL: Certainly. In the energy sector, President Bush is likely to
encourage more traditional energy drilling, therefore the traditional
companies do better. A President Kerry would be more green friendly,
more environmentally friendly, therefore, would favor more alternative
energy companies. In health care, we think a Kerry administration would
be more likely to have regulatory propensities than a Bush second term.
So the pharmaceuticals do better under Bush than under Kerry. Those
are the sort of trends. Insurance you mentioned, Susie, tort reform,
something the president has talked a lot about, Kerry less likely to
move in that direction. Insurance companies therefore probably do
better under Bush, all else being equal.
GHARIB: All right. Just to wrap it up, we have just a few minutes left.
You said in a report that you just did that you studied the market
data after the Democratic and Republican conventions as a predictor of
who wins the election and in election years where the incumbent
political party retained the White House, the Dow had an average gain of
8.2 percent while in years where the incumbent party lost the election,
the Dow had an average gain of 3.7 percent. So far since the
conventions, the Dow is down, down 3.5 percent. So is this a warning to
President Bush?
DOLL: That certainly a concern, Susie, the Bush camp has to, to the
extent it pays attention to the market think that. This research I
think points out first of all, is normally a very strong period no
matter who wins and we've obviously gone the other direction as other
issues have come to the fore. But I think it's absolutely right. To
the extent it is a predictor, it certainly is not in the Bush camp.
GHARIB: We'll get the real results in two weeks. Thank you soy much
Bob. We've been speaking with Bob Doll of Merrill Lynch investment
managers.
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.
10/19/04:
"The Business of Broadway"- Putting Green In The Great White
Way
SUSIE GHARIB: Tonight, PBS begins a six-part series looking
at the theater scene, called "Broadway, the American Musical."
Besides providing a wealth of entertainment for millions of
Americans over the years, Broadway has also provided investment
opportunities, although they're not opportunities suitable
for everyone. As we continue our series, "the business of
Broadway," Suzanne Pratt looks at investing in the great white
way.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Rosemary
and Jim Delgiudice are avid theater goers, taking in as many
as 40 Broadway shows a year. Recently, they became more than
just audience members when they decided to invest in a Broadway
show. It all started after the couple responded to a letter
from the producer of "The Producers." He was looking for money
for a new show.
ROSEMARY DELGIUDICE, BROADWAY INVESTOR: He sent us a demo
of "Hairspray"-- it had to have been in February of '02 --
and I danced off that chair over there and said, "this is
like the music that was in 'The Producers.'" and I said, I
think we should do this and my husband agreed.
PRATT: The Delguidice's hairspray gamble has paid off nicely,
returning their $10,000 investment within the first year the
show opened. And since June 2003, they've also received eight
$500 checks. Steven Baruch is the producer who contacted the
Delguidices. He figures "Hairspray" is now paying his investors
about 20 percent a year. Baruch has produced more than 50
shows in his career; many of them hits. Every year he calculates
an index reflecting how someone would do if they invested
$10,000 in each of his shows.
STEVEN BARUCH, PRESIDENT, SCORPIO ENTERTAINMENT: As of last
December 31, that number was 38.71 percent. That is to say,
over 20 years they would have gotten an internal rate of return
of 38.71 percent every year if they had invested in every
show.
PRATT: Baruch concedes his track record is exceptionally
good and it's numbers like those that entice theatergoers
to invest in numbers like these. Unfortunately, hits like
"The Lion King" don't roar through Broadway very often. Theater
experts estimate 60 to 80 percent of all shows are flops.
As a result, they say most theater investors should be prepared
to say curtains to their cash.
FREDERIC VOGEL, EXEC. DIR., COMMERCIAL THEATER INSTITUTE:
Before you contemplate investing, you should think of it as
a gamble, and that you should only think about investing in
the theater if you have disposable income, that if you lose,
you won't fail on your mortgage payments or your children's
dentist bill, or whatever.
PRATT: If that doesn't scare you away, theater experts say
get the latest copy of the "Price-Berkley (ph) Theatrical
Index." That's the theater industry's bible. It gives you
a heads-up on shows in development and people to contact.
Experts also recommend finding a producer with a solid reputation.
Often they'll have new projects in the pipeline. Most big
shows attract big money investors, but some will take as little
as $10,000 from an individual or small group.
BARUCH: The way the money flows, is all available cash flow
is paid back to the investors only, until they are fully recouped.
And once they have their investment back, every dollar thereafter
is considered profits and is split 50/50 between the limited
partners and the general partners, the investors and the producers.
PRATT: Whenever possible, experts say, spread the risk among
several productions. That's exactly what the Delgiudices did.
So far, they've invested in five shows, including "Hairspray"
on Broadway and two "Hairspray" road shows. While all three
of the "Hairspray" shows are expected to be profitable, the
couple has lost $25,000 on their other Broadway bets. But
as Rosemary Delguidice says, for her, it's really not about
the money.
DELGUIDICE: This had more of a heart. There's a big difference
between, I think, investing in Broadway and investing in another
commodity, which is that Broadway has a heart.
PRATT: In addition to heart, Broadway investors also get
perks. They can attend opening night and rub elbows with celebrities.
They get access to house seats during the run of the show
and finally, there's the glamour of it all, which, of course,
is priceless. Suzanne Pratt, NIGHTLY BUSINESS REPORT, on Broadway.
To Learn More about this topic, click
here.
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.
10/19/04:
"Commentary"-Moore's Law & The Race For The White House
SUSIE GHARIB: Tonight's commentator says there are lessons to be learned from the
economy that can be applied to other things like voting. Here's Daniel
Henninger, deputy editor of the editorial page of the "Wall Street
Journal."
DANIEL HENNINGER, WALL STREET JOURNAL EDITORIAL PAGE: The American
economy adjusted to the rigors of just-in-time manufacturing. Now the
American electorate has to learn just in time voting. Let me explain.
We've heard a lot in this election about the middle class squeeze on
incomes. John Kerry says George Bush caused the squeeze.
But it really started with Moore's law. Moore's law is the famous maxim
of the high-tech economy. It says that computing speed doubles about
every two years. In turn, this created huge efficiencies in
manufacturing and those efficiencies were captured by competitors in
China, India and elsewhere. That new competition is what has created
the middle class squeeze so, what to do about it?
Alas, there is no political equivalent to Moore's law. Our politics
runs by traffic-jam law, slow, slower and gridlock. The answer to the
income squeeze is to reduce the cost structure of U.S. business:
productivity costs, legal cost, productivity cost, so that businesses
don't try to find their savings in the hides of workers. John Kerry, by
my reading, isn't proposing that we do much to reduce overall economic
costs. George Bush's ownership society is a start, but he only brought
it up in the campaign. They say the outcome of this election is too
close to call. I disagree. We are betting the ranch on our ability to
stay competitive. The political squeeze is on you voters to decide which
man's plan will get us there -- just in time. I'm Dan Henninger.
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.
10/19/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: That mild pace of inflation and IBM's better than expected
earnings out late yesterday gave stocks a lift early on today. The Dow
rose nearly 50 points at the outset, while the NASDAQ was up 12. But
heavy selling in the insurance stocks on concerns about the widening
probe put the market into retreat this afternoon, as did a sell-off in
the steel stocks.
So the Dow industrial average closed off almost 58 3/4 points at
9897.62. The NASDAQ Composite was down 13.62 at 1922.90. Standard &
Poor's 500 down 10 3/4 points, ending at 1103.23. The treasury market
was mixed. The ten-year note rose 2/32, putting the yield at 4.04
percent.
Big board volume leader on 32 ½ million shares, Lucent Technologies (LU)
moving down $0.12.
And then Marsh & McLennan (MMC), which is at the center of the insurance
investigation, down another $1.47.
Texas Instruments (TXN) moved up $1.46. As we reported after the close
yesterday, the company had a better than expected 26 percent rise in its
third quarter earnings.
Motorola (MOT) a $0.03 gainer. As the market closed, Motorola reported
third quarter earnings of $0.20 versus only a nickel last year. That
was a penny above the Street estimate, but sales were below consensus
and in after hours trading, Motorola stock fell about $1.
Unitedhealth Group (UNH) down $6.85. Standard & Poor's downgraded it
from "accumulate" to "hold," another weak health stock.
Pfizer (PFE) showed no change today.
And American International Group (AIG) yet another weak insurance
company, down $1.98.
EMC Corp. (EMC) was up $0.13.
Cox Communications (COX) gained $0.94.
And there you see Ford Motor (F), tenth in volume, down $0.46, those
good earnings overpowered by the news of the accounting investigation
apparently.
IBM (IBM) helped the Dow by nearly 25 points with that gain of nearly
$3.50 today. As we reported after the close yesterday, big blue had
third quarter earnings of $1.17, $0.03 above the Wall Street estimate,
nice reaction on the stock today.
McDonald's (MCD), another down issue, was down $0.20. Third quarter
earnings were a record, $0.61 versus $0.43 last year, but the stock has
been moving up apparently in anticipation, you can see on the chart.
Boise Cascade (BCC), the big paper company, down $3.77. Third quarter
earnings were higher, $0.63 versus $0.48 last year, but as you can see,
the company is bracing for weak holiday sales.
Boston Scientific (BSX) down $2.66. Third quarter earnings were higher,
$0.47 versus $0.16 last year, a penny above the Street estimate, but the
company cut its fourth quarter estimate to the low end of its previous
forecast and that's what hurt the stock apparently.
Stanley Works (SWK), the tool manufacturer, up nearly $4 a share. Third
quarter earnings $0.76, up from $0.51 last year, a nickel above the
Street estimate. The company boosted its full year earnings estimate as
well.
Parker Hannifin (PH) up $5.12. First quarter earnings $1.11, way up from
$0.48 last year. That was $0.28 above the Wall Street estimate.
LeapFrog Enterprises (LF) leaping the wrong way, down $6.21. The company
says its third quarter earnings will only be around $0.33 a share. The
Street expecting $0.61 a share.
The Great Atlantic & Pacific Tea Company (GAP) up $0.27. The company cut
its second quarter loss to $1.67 from a big $2.17 a year ago.
Nucor Corporation (NUE), weak steel company, down on concerns that
global demand may be slowing and also that inventories might be building
a bit.
Let's have a look now at some more of the weak insurance stock group.
Aetna (AET), CIGNA (CI), Humana (HUM) and UNUMProvident (UNM) all on the
down side.
The volume leader on NASDAQ, Intel (INTC) gained a penny.
Microsoft (MSFT) down $0.23.
Research In Motion (RIMM) off $1.73.
Google (GOOG) coming off a record high yesterday.
And Cisco Systems (CSCO) gained a nickel, fifth in dollar volume.
eBay (EBAY) down $2.26.
Yahoo! (YHOO) a $0.66 drop.
TASER International (TASR) up $2.18. Third quarter earnings for Taser
$0.19, $0.04 better than the Street expected.
Apple Computer (AAPL) down $0.33.
QUALCOMM (QCOM) down $0.80.
And finally Robert Mondavi (MOND), that's the wine producer, up $12.01.
Constellation Brands is offering to acquire the company for $53 a share
cash for the A stock and $61.75 for the B stock. Constellation stock
fell $3.25 to 36 ¼.
Those are the stocks in the news tonight.
10/19/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9897.62 -58.70 - .6
HIGH 10020.55
LOW 9894.89
NASDAQ COMP. 1922.90 -13.62 -.7
HIGH 1952.85
LOW 1922.60
VOLUME 1,733.4
PREVIOUS 1,377.5
UP VOLUME 485.9
DOWN VOLUME 1,210.8
DOW TRANSPORTS 3345.34 -37.37 - 1.1
DOW UTILITIES 299.75 -1.68 - .6
CLOSING TICK +502
S&P 500 1103.23 -10.79 - 1.0
S&P 100 531.80 -3.38 - .6
MIDCAP 400 583.86 -4.28 - .7
REUTERS/CRB 285.41 +2.23 + .8
NYSE COMPOSITE 6530.39 -41.98 - .6
VALUE LINE 355.12 -2.32 - .7
RUSSELL 2000 567.41 -4.62 - .8
DJW 5000 10810.68 -84.19 - .8
U.S. TREASURIES
5-YEAR NOTE 3.375%
Oct. 15,2009 100 10/32 -1/32 + 3.31
10-YEAR NOTE 4.25%
Aug. 15,2014 101 23/32 +2/32 + 4.04
30-YEAR NOTE 5.375%
Feb. 15, 2031 108 6/32 +8/32 + 4.82
LEHMAN BROS.
LONG BOND INDEX 1773.01 +3.65
DOW CLOSE 9897.62 -58.70 - .6
ADVANCES 1163
DECLINES 2124
NEW HIGHS 127
NEW LOWS 68
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.38 -.12 -3.4
MMC Marsh & McLennan 24.10 -1.47 -5.8
TXN Texas Instrument 22.55 +1.46 +6.9
MOT Motorola 18.75 +.03 +.2
UNH Unitedhealth Group 66.50 -6.85 -9.3
PFE Pfizer 29.00 unch. unch.
AIG Amer Intl Group 57.70 -1.98 -3.3
EMC EMC Corp 12.28 +.13 +1.1
COX Cox Communication 34.39 +.94 +2.8
F Ford Motor Co 12.93 -.46 -3.4
NASDAQ CLOSE 1922.90 - 13.62 - .7
VOLUME 1,723.5
PREVIOUS 1,512.0
ADVANCES 1203
DECLINES 1888
NASDAQ ACTIVES
INTC Intel 20.80 +.01 +.1
MSFT Microsoft 28.18 -.23 -.8
RIMM Rsch In Motion 83.95 -1.73 -2.0
GOOG Google 147.94 -1.22 -.8
CSCO Cisco Systems 18.70 +.05 +.3
EBAY eBay 92.45 -2.26 -2.4
YHOO Yahoo! 34.64 -.66 -1.9
TASR Taser Intl 40.25 +2.18 +5.7
AAPL Apple Computer 47.42 -.33 -.7
QCOM Qualcomm 42.80 -.80 -1.8
AMEX CLOSE 1286.55 + 5.17 + .4
INDEX SHARES
DIA DIAMONDS TRUST 99.10 -.53 -.5
QQQ NASDAQ 100 35.89 -.26 -.7
SPY S&P DEP.RECEIPTS 110.74 -.96 -.9
STOCKS IN THE NEWS
IBM IBM 89.37 +3.45 +4.0
MCD Mcdonald's 29.00 -.20 -.7
BCC Boise Cascade 30.15 -3.77 -11.1
BSX Boston Scientific 35.15 -2.66 -7.0
SWK Stanley Works 45.00 +3.98 +9.7
PH Parker-Hannifin 68.53 +5.12 +8.1
LF Leapfrog Entrprs 11.99 -6.21 -34.1
GAP Great A & P 6.47 +.27 +4.4
NUE Nucor 39.45 -4.35 -9.9
AET Aetna 86.17 -11.57 -11.8
CI Cigna 59.73 -6.85 -10.3
HUM Humana 18.02 -1.18 -6.2
UNM UnumProvident 12.19 -1.33 -9.8
MOND Robert Mondavi 51.88 +12.01 +30.1
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