11/10/04:
The Fed Raises Rates To 2%
SUSIE GHARIB: Another rate hike by the Federal Reserve for the
fourth time since June. As expected, the central bank raised a key short
term interest rate by 0.25 percent. The Fed funds rate now stands at 2
percent. So is the Fed done now raising rates for the year? Suzanne Pratt
reports.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It came as no
surprise to Wall Street that the Federal Reserve hiked short-term interest
rates by a quarter of a percentage point today. After all, job growth is
picking up. Oil prices are finally moderating, and of course, policymakers
have been telegraphing the move to financial markets for months. The
Federal funds rate charged on overnight loans between banks is now 2
percent. But experts say it`s still extremely low considering the health
of the U.S. economy.
MIKE MORAN, CHIEF ECONOMIST, DAIWA SECURITIES: The Fed raised interest
rates because the policy that they have in place right now is a policy that
we usually see when the economy is in recession. The economy is not
growing at an exceptionally rapid pace, but we are certainly not in a
recession.
PRATT: The only potential wild card at today`s Fed meeting was the
statement that accompanied the decision on rates. But there were no jokers
in that deck. The Fed repeated much of what it said in the September
communiqu,, including that it will continue to be measured in raising
rates. Policymakers also slightly altered their characterization of the
labor market conditions, describing them as improved, rather than modestly
improved.
STEPHEN GALLAGHER, CHIEF U.S. ECONOMIST, SG CORP. By dropping that little
adjective, they`re upgrading to a minor degree their expectations for the
labor markets and employment markets. That`s important for the Fed. They
move very gradually and that was a very gradual shift today.
PRATT: Before last Friday`s employment report, it was widely expected in
financial markets that the Fed may take a break from raising rates,
starting with its next meeting in December. A growing number of Fed
watchers now say that`s less likely, although there are still a few who
wouldn`t be surprised to see a pause in December.
MORAN: I think what happens in December is going to depend upon what
happens with the economic numbers over the next several weeks. My personal
view is that they hold steady, but I`m willing to change very quickly if
the numbers come in with a firm tone.
PRATT: Today`s hike in the Federal funds rate also triggered an increase in
the prime lending rate charged by commercial banks. It now stands at 5
percent. But by historical standards that`s still a low rate for prime.
Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
GHARIB: Joining us now for some analysis, Michelle Girard, senior economist at Greenwich
Capital Management and Mike Holland, New York money manager of his own
firm, Holland and Company. Michelle, let me begin with you. So it looks
like the Fed is on message. What do you expect to happen at the next Fed
meeting December 14?
MICHELLE GIRARD, SR. ECONOMIST, GREENWICH CAPITAL MANAGEMENT: That`s
obviously the key and the fact that there were so little changes made to
the statement that the Fed issued today I think suggests that in the Fed`s
mind, nothing has significantly changed. And so I think unless the data
take a sharp downward turn between now and that December meeting, the best
guess has to be that they`re going to follow up today`s move with another
25 basis point increase in rates when they meet that final time in
December.
GHARIB: Mike almost nothing happened in the market today, of course
everybody had been -- on Wall Street had been talking about that there
would be a quarter point hike abut I just want to still get your take on
the markets.
MIKE HOLLAND, CHAIRMAN, HOLLAND AND COMPANY: Well, just as you were
describing Susie, it was perfectly telegraphed by the Federal Reserve, Alan
Greenspan, this time around and Michelle and I have been not reluctant to
criticize when we thought something was not done well. He did it about as
well as he`s ever done it in terms of getting the market ready for it and I
think they were probably set up for a gradual increase up to the 3, 3.5
level, as Michelle just said. These increases are gradual and they`re
coming in a way that the markets are not being discomforted whatsoever.
GHARIB: Michelle let`s go back to what you were saying about the statement,
almost no word changes in there. So now we`re kind of in a new phase to
figure out where the Fed is going to go. From what you can do of reading
between the lines or also analyzing what various Fed governors have been
saying the last couple of weeks, where are rates going?
GIRARD: Well, you know, they did upgrade their assessment of the labor
market as was noted and also just acknowledging the economy is growing
modestly. I think the Fed basically thinks that a neutral level of
interest rates that`s neither stimulating nor restraining the economy is
somewhere between broadly 3 and 5 percent, but I think certainly we`re
probably headed up between 3 and 4 percent. It`s going to occur gradually
but I think it`s going to happen and it`s going to unfold in 2005 with the
Fed I think continuing to raise rates at most meetings until they get to a
level that they think is more consistent with the moderate pace of growth.
GHARIB: Mike, if rates do follow that path, 3-5 percent somewhere in that
range, what does that mean for the markets especially in a market where
we`re seeing decelerating earnings?
HOLLAND: If we got to 5 percent Susie, I think the only way we would do
that is because the economy gets so strong we begin to import from China a
new import and that would be inflation. I don`t see that yet, but that
would be a different outcome than we`re looking at right now. If we get to
3, 3 1/2, 4 percent over the next 12-15 months, I think it will speak a
strong economy and probably a good stock market as a result of that because
it`s low inflation at that level.
GHARIB: Michelle, looking between now and December 14, is there any key
economic report or any event that you`re going to be watching carefully
that will help decipher what the Fed will do on that day?
GIRARD: I do think that there are some important data points to watch.
This Friday we`re going to get retail sales so that will tell us how
consumer spending looks in the month of October. And then of course we get
another all-important employment report for November. The whopping job gain
that we had in October, 337,000 was probably overstated because of a
hurricane effect or rebound, but I think we`re going to get another solid
gain and I think that would be the confirmation the Fed is looking for,
that the economy is strong enough to weather another upward adjustment in
rates.
GHARIB: We just have a few seconds left. Mike what are the markets going to
be focused on between now and December 14? Is there going to be these
economic reports, oil prices, the dollar? What is it?
HOLLAND: The dollar is talked about a lot I think not paid attention to. I
think between now and the end of the year, there`s strength in the economy,
but particularly strength in earnings. The retail sales are going to be
very important. My guess is, it`s going to be positive news.
GHARIB: All right. Mike, Michelle, thank you both very much. We
appreciate you coming on.
GIRARD: Thanks Susie.
GHARIB: We`ve been speaking with Michelle Girard of Greenwich Capital
Management and Mike Holland of Holland and Company.
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.
11/10/04:
One On One With Pfizer CEO Henry McKinnell
SUSIE GHARIB: One key to the president`s reelection was the support of the
business community. Leaders from some of the nation`s biggest companies
met today for the Business Roundtable in Washington. Stephanie Woods sat
down with its chairman, Pfizer CEO Henry McKinnell, asking him what the
Roundtable`s agenda is for the next Bush administration.
HENRY McKINNELL, CHAIRMAN, BUSINESS ROUNDTABLE: The number one priority of
the Business Roundtable, which I chair, is economic growth, which creates
jobs for all Americans. So we`ll be working with the administration and
members of Congress to pass legislation and enact policy which encourages
more rapid economic growth.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: President Bush has
put tax reform at the top of his agenda. Specifically he`s talked about
closing loopholes. Will that mean higher taxes for some businesses?
McKINNELL: Closing loopholes implies higher taxes for some business. The
Business Roundtable sees an opportunity for more robust economic growth
which can create more jobs. Raising taxes does slow economic growth. So
we see an opportunity with the very strong labor productivity we`re seeing
in the market over the last three or four years for more rapid growth than
we have seen in many years which will create even more tax revenues.
WOODS: How concerned is the business community about the deficit and the
debt?
McKINNELL: Well the deficit at the moment is not really a problem. When
the rest of the world will lend to us that 4 percent for 10 years, there is
clearly no liquidity problem here. Long term budget deficits are a
problem. As the economy recovers however, we do expect that budget deficit
to decline and we would hope over a full cycle of recession recovery, we
would see a balanced budget. That`s going to require significant reductions
in spending.
WOODS: So do we grow our way out of it or do there have to be deep cuts and
do you believe as the president stated that he can cut the deficit in half
in five years without using budget gimmicks?
McKINNELL: Well, that looks achievable. It is a five year period, depends
most significantly on the rate of growth. We see non-farm labor
productivity of 5 to 7 percent during the recession now back to 3 to 4
percent. If you add 1 percent growth for jobs, you end up with 4 to 5
percent non-inflationary growth potential of this economy even with the
economy as strong as it is today, we`re still not approaching those kinds
of limits.
WOODS: A majority in Congress, including four of the six newly elected
Republican senators, support drug re-importation. Should drugs be allowed
to be re-imported from Canada so that people can pay lower prices?
McKINNELL: The answer is no. We`re now past the political season. I think
it`s time to talk about real problems, not politics. We do have a problem
in America with too much people not being able to afford access to
medicines and we need to focus on the real problem here. There`s no way
drugs meant to supply the population of Canada which is under 30 million
people, can possibly supply the United States with 270 million people.
WOODS: Two of Pfizer`s biggest drugs, Bextra (ph) and Celebrex have come
under a cloud of uncertainty about their safety and effectiveness. How can
you guarantee people that these drugs are safe and effective?
McKINNELL: Well, they haven`t really come under a cloud. Different drugs
are different chemical entities. Vioxx has been shown to raise blood
pressure and raise cardiovascular risk. We don`t have that kind of evidence
for Celebrex and Bextra. In fact the current information we have on
Celebrex shows that it might be protective of the heart and we`ve just
launched a two-year study to show that hopefully that this drug is cardio-
protective.
WOODS: There is some concern about some studies that were done in Canada
showing a correlation of cardiac risk.
McKINNELL: The FDA reviews all the data. They review all the events that
are spontaneously reported and their judgment is these drugs are safe and
effective when used as recommended.
WOODS: Mr. McKinnell, thank you.
McKINNELL: Thank you.
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.
11/10/04: "Rx Without Borders"-Filling
Prescriptions Outside America
SUSIE GHARIB: there`s a critical healthcare issue that will
face President Bush in his second term in office, the soaring
costs of healthcare and the soaring costs of prescription
drugs. It`s a challenge that affects literally every American.
Tonight, we begin a series of reports looking at prescription
drugs. In the first part of "RX without borders," Jeff Yastine
looks at the growing number of Americans buying their drugs
north of the border and the pros and cons of drug importation.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: There
are many people in the United States like Delores Gbur. She
suffers a variety of ailments, all requiring a trip to the
pharmacy each month to buy prescription drugs. She sorts her
pills here on her kitchen table, so she knows which to take
and what day of the week to take them. The cost of the prescriptions
add up.
DELORES GBUR, SUNNY ISLES BEACH, FL: Extremely large. It`s
several hundred dollars a month. Usually it`s between $500
and $600. And very often I get something in between; some
kind of an infection because my immune system from my health
record has not been very good. So I`ll get a bladder infection,
an ear infection, which means extra drugs.
YASTINE: Gbur hasn`t bought any of those drugs from Canada
yet, but she`s considering it. If she does, she`ll join the
4 percent of Americans who have gone across the border to
buy drugs from Canadian pharmacies. Under FDA rules, going
to Canada yourself to buy drugs is perfectly legal. But buy
them another way, like on the Internet, and you`re breaking
Federal law. Regulators and the drug industry say those laws
are there because of safety concerns.
LORI REILLY, V. P. POLICY RESEARCH, PHRMA: Concerns about
patients getting a medicine that they think is the medicine
that they intended to get, but it ends up not being the case.
There was a recent example that our Food and Drug Administration
testified about, where an individual purchased a breast cancer
medication from a Canadian pharmacy. The medication that she
received was not in fact that medication and as she took that
drug, her tumor continued to grow.
YASTINE: But supporters of drug re-importation dispute those
safety concerns.
SEN. BYRON DORGAN, (D) NORTH DAKOTA: There`s no safety issue.
Even the FDA admits that the chain of custody of the control
of drugs in Canada is virtually identical to ours. There`s
no safety issue in Canada or the U.S. So this safety issue
is just a specious issue raised by the pharmaceutical industry.
Why? Because they want to continue to have substantial profits
through monopoly pricing.
YASTINE: Dorgan introduced a Senate bill allowing drug re-importation.
The House passed a similar bill last year. Meanwhile, the
states have moved ahead with their own programs. Illinois,
Missouri, and Wisconsin together set up this web site designed
to make it easier for residents to order drugs from Canada.
The FDA has responded with letters like this one, admonishing
governors and a few mayors for encouraging the violation of
official Federal policy. The drug industry claims drug re-importation
could cost consumers far more in the long run, but that`s
a notion disputed by industry opponents. Jeff Yastine, NIGHTLY
BUSINESS REPORT, Miami.
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.
11/10/04:
"Money File"-Taking Stock of Your Portfolio Post Election
PAUL KANGAS:
In the money file tonight, the election is over. Now it`s
time to take care of your personal economy. Here`s Bill Barnhart,
financial markets columnist for the "Chicago Tribune."
BILL BARNHART,
FINANCIAL MARKETS COLUMNIST, CHICAGO TRIBUNE: The voter sentiments
that carried President Bush to victory send no clear message
to investors. To traditional liberals, an election said to
be based on moral values summons up troubling images of Elmer
Gantry. To traditional conservatives, the goals of smaller
government and fiscal responsibility remain unaddressed. Here`s
one way to cope with the election: forget about it. By most
accounts, a benign equilibrium holds sway in the global economy.
Inflation is under control here and abroad. Sustainable growth
appears to be widespread. Investment opportunities and capital
gains depend less and less on the jurisdictions or behavior
of politicians. What`s not to like? From this perspective,
there is no better time than now to begin or enlarge your
diversified retirement savings program. Getting the bitter
election out of the way removes one more excuse for inaction.
But while you take that important step, keep a firm grip on
your wallet. Outlooks for greater prosperity may be in synch
around the world, but so is the competition to grab your next
nickel. Government leaders promoting high-sounding values
invariably foster low-minded schemes that flourish in the
shadows of rectitude. Smart investors will become more self-reliant.
That`s the message from the election you shouldn`t forget.
I`m Bill Barnhart.
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.
11/10/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Stocks opened narrowly mixed ahead of that Fed meeting. The Dow
rose about 10 points early on but the NASDAQ was weak on a drop in Cisco
stock and a downgrade on Dell. By midday, the blue chips improved. The
Dow was up 35 points, but the NASDAQ was still off five points.
The Fed rate boost had little impact, but a weak dollar and higher oil
prices undermined stocks by the closing bell. The Dow industrial average
lost nearly a point at 10,385.48. The NASDAQ Composite was down 8 3/4
points to 2,034.56. Standard & Poor`s 500 Index fell 1.17, ending at
1162.91. The Treasury market showed modest losses. The 10-year note fell
4/32, pushing the yield up to exactly 4.25 percent.
The New York exchange volume leader today on 32 million shares was Pfizer
(PFE) losing $0.52. The "New York Times" reported an American Heart
Association study showed patients taking the company`s Bextra pain killer
had over two times the number of heart attacks or strokes as those taking a
placebo.
Lucent Technologies (LU) moved up $0.09. The company will get an $860
million tax refund from the IRS. That`ll boost fourth quarter results by
$0.16, up to $0.23 a share.
Merck & Company (MRK) a $0.41 gain.
Time Warner (TWX) down a penny.
Motorola (MOT), $0.51 gain, fifth in big board volume.
Viacom B (VIA.B) fell $0.43.
Hewlett-Packard (HPQ) down $0.73. UBS Securities downgraded Hewlett from
"buy" to just "neutral."
General Electric (GE) lost a dime.
And then the big gainer of the day, VISX (EYE) up $6.26. Advanced Medical
Optics will acquire VISX for about $1 1/4 million in cash and stock, just
over half a share of Advanced Medical and $3.50 a share cash for each VISX
share. Today that works out to a value of just under $25. Advanced Medical
Stock dropped $3.64 to close at $38.80 a share.
Texas Instruments (TXN) down $0.78, tenth in big board volume.
Computer Sciences (CSC) up $3.51. Higher second quarter earnings $0.68
versus $0.57 last year. Revenues up nearly 10 percent. CS First Boston
boosted its price target from $44 to $50 a share. Standard & Poor`s
repeated a "buy" recommendation.
Lion`s Gate Entertainment (LGF) up $1.21. The film producer reported second
quarter earnings of $0.08, versus a loss of a penny last year. The Street
was only looking for earnings of $0.04. There`s also speculation the
company could be a takeover target.
Chicago Bridge and Iron (CBI) up $4.40. The company got a $750 million
contract to build phase one of an LNG terminal in the country of Wales in
the United Kingdom.
Flowers Foods (FLO) up $2.50. The major bakery posted third quarter
earnings up 17 percent, $0.33 versus $0.27 last year. Revenues rose 11
percent.
Cisco Systems (CSCO) topped the active list on NASDAQ, down $1.31. As we
reported yesterday, higher earnings but revenues were lower than expected
and that`s what hurt the stock today, apparently.
Microsoft (MSFT) was a $0.04 loser.
Intel (INTC) $0.22 gain or I should say loss. The company however, is
boosting its quarterly dividend from $0.04 to $0.08, a double and it`s also
going to buy back 500 million of its common shares of the $6.3 billion
outstanding.
Google (GOOG) $0.84 loss.
TASER International (TASR) on the rebound, $3.84 gain there, fifth in
dollar volume.
Research In Motion (RIMM) up $2.43.
$0.63 drop in eBay (EBAY).
Dell (DELL) down $0.58. UBS downgraded it from "buy" to "neutral." Dell`s
third quarter earnings due tomorrow incidentally.
Applied Materials (AMAT) down $0.41.
QUALCOMM (QCOM) a $0.16 loss.
Oracle (ORCL) a $0.03 gain, but after the close, PeopleSoft rejected
Oracle`s best and final $24 a share buyout bid and a majority of PeopleSoft
shareholders reject the offer. Oracle said it will terminate it.
Over on the American exchange, Adams Resources & Energy (AE) sharply higher
earnings, third quarter $1.03 versus $0.16 and the company boosted its
annual dividend by 30 percent. It`ll go from $0.23 to $0.30 a share.
And finally we have ILX Resorts (ILX) down $4.89. It`s going to sell about
416,000 shares at $9 each to selected institutions and private investors.
And those are the stocks in the news tonight.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may be
posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly Business
Report is not and should not be considered as investment advice.
Copyright (c) 2004 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
11/10/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10385.48 -.89 - .0
HIGH 10439.40
LOW 10378.59
NASDAQ COMP. 2034.56 -8.77 -.4
HIGH 2047.25
LOW 2032.37
VOLUME 1,505.6
PREVIOUS 1,455.5
UP VOLUME 832.1
DOWN VOLUME 639.8
DOW TRANSPORTS 3574.36 -13.35 - .4
DOW UTILITIES 322.44 +.15 + .1
CLOSING TICK +449
S&P 500 1162.91 -1.17 - .1
S&P 100 555.54 -1.36 - .2
MIDCAP 400 621.31 +1.47 + .2
REUTERS/CRB 283.36 unch. unch.
NYSE COMPOSITE 6891.22 +4.88 + .1
VALUE LINE 378.82 +.89 + .2
RUSSELL 2000 609.61 +2.97 + .5
DJW 5000 11399.04 +1.56 + .0
U.S. TREASURIES
5-YEAR NOTE 3.375%
Oct. 15,2009 99 23/32 -3/32 + 3.56
10-YEAR NOTE 4.25%
Aug. 15,2014 100 1/32 -4/32 + 4.25
30-YEAR NOTE 5.375%
Feb. 15, 2031 105 31/32 -11/32 + 4.97
LEHMAN BROS.
LONG BOND INDEX 1740.78 -6.63
DOW CLOSE 10385.48 -.89 - .0
ADVANCES 1961
DECLINES 1374
NEW HIGHS 278
NEW LOWS 13
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 27.47 -.52 -1.9
LU Lucent Tech 3.76 +.09 +2.5
MRK Merck & Co 26.41 +.41 +1.6
TWX Time Warner 17.03 -.01 -.1
MOT Motorola 17.18 +.51 +3.1
VIAb Viacom "B" 35.58 -.43 -1.2
HPQ Hewlett-Packard 18.97 -.73 -3.7
GE GE 35.32 -.10 -.3
EYE Visx Inc 24.36 +6.26 +34.6
TXN Texas Instrument 23.97 -.78 -3.2
NASDAQ CLOSE 2034.56 - 8.77 - .4
VOLUME 1,863.7
PREVIOUS 1,723.1
ADVANCES 1650
DECLINES 1426
NASDAQ ACTIVES
CSCO Cisco Systems 18.44 -1.31 -6.6
MSFT Microsoft 29.73 -.04 -.1
INTC Intel 22.86 -.22 -1.0
GOOG Google 167.86 -.84 -.5
TASR Taser Intl 54.84 +3.84 +7.5
RIMM Rsch In Motion 81.34 +2.43 +3.1
EBAY eBay 103.84 -.63 -.6
DELL Dell Inc 36.85 -.58 -1.6
AMAT Applied Matl 15.96 -.41 -2.5
QCOM Qualcomm 38.84 -.16 -.4
AMEX CLOSE 1335.23 + 8.58 + .7
INDEX SHARES
DIA DIAMONDS TRUST 104.39 +.18 +.2
QQQ NASDAQ 100 37.79 -.10 -.3
SPY S&P DEP.RECEIPTS 116.97 +.09 +.1
STOCKS IN THE NEWS
CSC Computer Science 53.64 +3.51 +7.0
LGF Lions Gate Enter 11.40 +1.21 +11.9
CBI Chicago Bridge 37.38 +4.40 +13.3
FLO Flowers Foods 27.98 +2.50 +9.8
ORCL Oracle 13.38 +.03 +.2
AE Adams Res & Energy 17.35 +2.82 +19.4
ILX ILX Resorts 11.01 -4.89 -30.8 |
