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Program: Wednesday, December 1, 2004

Oil Prices Slide And Stocks Rise
The Outlook For Oil From Bill O'Grady of A.G. Edwards
Cars Aren't Expected To Be A Hot Holiday Gift
Japan's Economic Outlook Continues to Improve
"Money File"-Inflation Protection
Paul Kangas' "Stocks In The News"
Market Stats

 

12/01/04: Oil Prices Slide And Stocks Rise

PAUL KANGAS: Oil prices plummeted today and on Wall Street stocks soared. January crude futures tumbled $3.64 to $45.49 a barrel, the biggest one day decline in more than three years. That pushed the Dow up 162 points and the NASDAQ up 41 points to its highest level since January. But now the big question is whether stocks can maintain this momentum through December. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Is today's big market move the start of a Santa Claus rally? While the optimists are keeping their fingers crossed, many professionals doubt this bull has legs. So far the Standard & Poor's 500 Index is up nearly 7 percent for the year. But the Dow 30 has gained only 1.3 percent, and both are well below the 26 and 25 percent gains they posted last year. Today, retail investors were greeted with a smorgasbord of good news: lower oil prices following an unexpected rise in inventories; better than expected personal income and spending numbers; and an increase in national manufacturing activity, which was also unexpected. Market watchers say that perfect storm of good news is rare and in the current market, it is dangerous to assume tomorrow will look like today.

DOUGLAS ALTABEF, MARKET STRATEGIST, MATRIX ASSET ADVISORS: Every day is a new day in the market and every day people approach, you know, the day with great conviction that this is somehow a trend and the next day it could be very, very different. It's very hard. We've seen a real cha-cha market this year and not one like last year, where there was a sustained movement in the market over a multi month period.

GURVEY: Markets watchers also note that volatility has increased in recent days, noting that the averages on Monday fell almost as much as they rose today. They say continuing concerns about energy prices and worries about the declining value of the dollar will add to the uncertainty of market moves. And finally, they note that December is usually a time of declining trading volume, a factor that can help restrain advances in stocks.

CHRISTINE CALLIES, CHIEF MARKET STRATEGIST, BESSEMER TRUST: It's not because the fundamentals wouldn't justify it, but as people start to take vacation in the second half of December, the markets can get a little illiquid and the institutional investors that very often are responsible for a good deal of the trading, are reluctant to trade if the markets are not really active.

GURVEY: Friday will see the release of the final employment report for 2004 and that is also an event which could also produce a major market move. 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.

12/01/04: The Outlook For Oil From Bill O'Grady of A.G. Edwards

SUSIE GHARIB: As we mentioned earlier, oil prices today saw their biggest one-day drop since September 2001. The slide was a reaction to a government report on crude inventories. It showed a greater than expected buildup over the past week, easing fears of supply shortages this winter. So have oil prices finally peaked? Joining us now with some insight, Bill O'Grady, director of futures research at AG Edwards. Hi, Bill.


BILL O'GRADY, FUTURES ANALYST, A.G. EDWARDS: Hi, Susie.

GHARIB: So have oil prices really peaked? Can we breathe a little easier that we're not going to be hitting $60 a barrel?

O'GRADY: Well, you must have went to church and prayed for warmer weather, because that's what we've had so far. A lot of this is going to be driven by temperature. Heating oil inventories are still very tight. If the weather remains mild, we probably won't retest those highs. On the other hand, we get winter coming back, we could see prices reverse just as fast as they fell today.

GHARIB: So is that the key issue, whether in terms of impacting the direction of prices, whether they go up and down, is that the most critical issue?

O'GRADY: For the next six weeks it is. This is the time of year where heating oil is the preeminent inventory. Inventories are as tight as they were 2000 when we were setting up the northeastern strategic heating oil reserve. Things are still tight, but we haven't noticed it because the weather has been mild. After the winter, then we start looking more at macroeconomic factors.

GHARIB: And like what?

O'GRADY: Well, we're going to be looking at not just the U.S. economy, but China's economy and the rest of the world economy and some of the data that we're seeing recently has been a little bit disappointing. The euro zone for example today released its NAPM data, like we did. Theirs was just a shade above 50, which suggests the euro zone economy may be sliding into a significant slowdown. Japan's economy has also been weak. So if we don't see the U.S. maintain this robust growth, we could start to see some diminishment of demand later in the first quarter, early second quarter of next year.

GHARIB: Let's talk a little bit about the energy report, the energy data that came out today for the United States. What is your analysis of those oil inventory numbers?

O'GRADY: Well, the crude oil numbers were up more than we expected. This time of year, inventories usually decline. They typically decline from about now into early January and that was a little bit bearish. Gasoline inventories on the other hand rose. That's exactly what they're supposed to do. I think what really spooked the market was you had a very large increase in distillate inventories. Distillate is two portions, diesel and heat. And the diesel went up 1.8 million barrels. Heating oil went up a million. Heating oil inventories are again as I said earlier, about where they were in the tight year of 2000. Diesel inventories on the other hand do tend to rise this time of year and did go up but they did go up more than we thought they would.

GHARIB: This summer there were a lot of worries about supply concerns on oil. Is that still an issue?

O'GRADY: Well, it still is. We have seen a lot of commentary from OPEC about rebuilding capacity and starting to sell more oil. On the other hand, we're seeing some of it but not enough to where you'd really feel comfortable. The key issue for this market, I think, going forward, is going to be demand. And clearly high oil prices in and of themselves will slow demand, as will tighter policy and other macroeconomic concerns. Weather at this time of year is the key component of that.

GHARIB: Bill, you mentioned OPEC. They have an important meeting next week. What do you expect to come out of that meeting in terms of any news around production?

O'GRADY: Well, we don't expect them to change their quota levels. What we'll be watching, though, is this intricate dance that OPEC is working through on where they should set their target price. Right now the top end of their target band is $28 a barrel, which they obviously haven't been able to get oil prices down to for quite a while. Some of the members that have, don't have a lot of productive capacity want to raise that to a higher price, maybe $35 a barrel or higher. If they do that, though, that sends a signal to the world that OPEC will start reducing production if prices start to fall. And I'm not sure the Saudis are quite comfortable with that yet.

GHARIB: Real quick question, we have 30 seconds. We started 2004 with oil at about $28 a barrel. Will we see that level in 2005?

O'GRADY: I don't think we'll see it that far down. I wouldn't be at all surprised to see prices dip into the mid to low 30s, especially if the world economy starts to cool. That's really going to be the key focus going forward. What does the world economy do?

GHARIB: All right. Thank you very much. A pleasure always having you on our program.

O'GRADY: Thank you Susie.

GHARIB: We've been speaking with Bill O'Grady of AG Edwards.

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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.

12/01/04: Cars Aren't Expected To Be A Hot Holiday Gift

PAUL KANGAS: The nation's big auto makers were looking for customers last month. Sales figures for November were out today and they're numbers the U.S. auto industry would probably like to forget. Sales tanked for both General Motors and Ford; they were up modestly for Chrysler. And as Diane Eastabrook explains, the outlook for the next few months isn't looking much better.


DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Industry watchers say fewer incentives contributed to disappointing sales at two U.S. auto companies last month. In November, sales fell a whopping 13 percent at General Motors and a little more than 7 percent at Ford. But sales were up a modest 4 percent at Daimler-Chrysler. Many experts weren't surprised by November's tally and aren't optimistic about December either.

PHILIP GUZIEC, AUTO ANALYST, MORNINGSTAR: Until there is something that drives a major shakeout in capacity in the auto industry, especially for the domestic manufacturers, I don't see anything that is going to drive a major increase in sales. Mentioned Last Change
PH 76.15 1.11dollars or (1.43%)

EASTABROOK: A less than rosy forecast for the first part of next year also prompted General Motors and Ford to cut production for the first quarter of 2005. Analysts say the domestic auto industry continues to struggle with many of the same problems that have plagued it the last couple of years. Excess production capacity and competition from foreign auto makers are creating bloated inventories at U.S. dealerships. The domestics have responded with rebates and cut-rate financing to drive sales, but those deals are eroding profit margins and auto companies are only using them when it's absolutely necessary. Still, new product roll- outs have attracted some consumers. Chrysler has been able to boost sales with exciting products, like the 300 and Ford has scored a hit with the Freestyle. But analysts question whether other new products coming down the pipeline will attract even more buyers.

CHRISTOPHER STRUVE, AUTO ANALYST, FITCH RATINGS: I think the launch cadence that we're seeing in all of the OE's (ph) is pretty much permanent now. So will people perceive there's a lot of new product? Probably not.

EASTABROOK: Rising interest rates are another potential problem. They could make it harder for auto companies to offer no-interest loans and they could throw a wrench into mortgage refinancing, making it more difficult for some buyers to come up with extra cash for a new car or truck. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.


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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.

12/01/04: Japan's Economic Outlook Continues to Improve

SUSIE GHARIB: Japan's economic growth has been virtually a standstill for the second and third quarters of this year. But that slowdown hasn't fazed many economists, who say the outlook for Japan is the best it has been in years. From Tokyo, Lucy Craft reports.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: After more than a decade of flailing around, economists say Japan Inc is getting into shape at last. Once flabby with debt levels that at an average large Japanese company reached a staggering 60 percent of total capitalization, Japanese firms are now lean and mean.

JESPER KOLL, CHIEF ECONOMIST, MERRILL LYNCH JAPAN SECURITIES CO.: You have had tremendous improvement in the structure of the Japanese economy. The debt legacy has been paid back. Excess capacity has been taken out. Excess employment has been removed. So the starting point for a self-sustaining recovery is very, very good.

CRAFT: This Tokyo-based chain of fitness centers, which has seen moderate growth in recent years, has adopted a labor practice typical of most Japanese companies nowadays. They're abandoning the traditional and costly system of lifetime careers for all employees. Even prestigious blue chips like Toyota are turning to outsourcing, temps and part-time workers. This fitness chain now operates with just a skeletal permanent staff, managing an army of part-timers. Mentioned Last Change
PH 76.15 1.11dollars or (1.43%)

TRANSLATION OF: MASATOSHI SAWADA, PR SENIOR DIRECTOR, TIPNESS CO.: Japanese society still has a lifetime employment mentality, so if you hire people full-time, you're obliged to guarantee them a job until they retire. In order to avoid high fixed costs and maintain maximum flexibility, we rely on part-timers as much as possible.

CRAFT: It's exports, not domestic demand, that are powering the bulk of economic expansion in Japan. Recently personal consumption has shown unexpected resilience and one of the prime movers behind individual spending is Japan's burgeoning core of aging baby boomers.

MAMORU YAMAZAKI, ECONOMIST, BARCLAYS CAPITAL JAPAN: Actually consumption expenditure (ph) is stronger than the wage, income, gross wage and income. I believe that aged people is now spending more than the average.

CRAFT: Japanese consumers are increasingly forsaking the purchase of goods in favor of treating themselves to services, such as self-improvement, leisure and education.

KOLL: Japan is a post-industrial consumer. The goods economy, selling cars, selling widgets, right, is really not doing very well, but the consumption of services is really booming here in Japan. This is quite natural because people retire and as you retire, you don't need another television or another car, but you want to pamper yourself by going more often to a spa, for example.

CRAFT: Japan's recovery could yet be derailed by higher oil prices, a strengthening yen and a global economic slowdown. At home, Japanese policymakers still must tackle a staggering fiscal debt and pension reform, but if policymakers here stay the course, experts say Japan is poised to weather not only external shocks but could even stage a vibrant comeback. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.

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.

 

12/01/04:"Money File"-Inflation Protection

SUSIE GHARIB: In the money file tonight, some tips on dealing with inflation. Here's John Waggoner, mutual fund columnist for "U.S.A. Today."

JOHN WAGGONER, MUTUAL FUND COLUMNIST, USA TODAY: You may find yourself sounding a lot like your grandparents these days. $2 for a tomato? Are you crazy? Well, tomatoes aren't the only thing rising in price. There's gasoline, health care and college tuition, too. You can protect your mutual fund portfolio from inflation several ways, but the easiest way is with an inflation-adjusted bond fund. The consumer price index, the government's official measure of inflation, has risen 3.2 percent the past 12 months. That's not raging inflation, but it's higher than last year and the trend is worrisome. When inflation rises, the Federal Reserve typically raises short-term interest rates to slow the economy and put a damper on spiraling wages and prices. But rising interest rates are bad for both stocks and bonds. So what should you do? Well, an easy step would be to replace your bond funds with funds that invest in Treasury inflation protected securities, or TIPS. TIPS pay a set rate of interest, but the government adds to their principal value according to the rate of inflation. What's more, the government uses the CPIU, which includes the volatile food and energy components. If oil prices rise sharply, returns on TIPS should rise, too. Tips aren't without risk. If interest rates rise and inflation remains low, TIPS funds decline in value. And the risk of inflation hasn't exactly gone unnoticed on Wall Street, so TIPS aren't cheap. If you're really conservative, consider moving money from bond funds into a money market fund. A money fund's yield will rise as interest rates do, but there's very little risk that you'll lose money. '70s-style inflation probably isn't in the cards, but it wouldn't hurt to take some tips right now just in case.

I'm John Waggoner.

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.

12/01/04: Paul Kangas' "Stocks In The News"

PAUL KANGAS:That sharp drop in oil prices encouraged buyers on Wall Street this morning. Also helping, as Scott mentioned, better than expected reports on personal spending and income and manufacturing. The Dow rose steadily to a 120 point gain at noon with the NASDAQ up 31 points. The rally strengthened this afternoon as oil prices fell further and scared bears frantically covered short positions. So the Dow Industrial Average vaulted to a closing gain of 162.20 at 10,590.22. The NASDAQ Composite was up 41.42 at 2,138.23. Standard & Poor's 500 up 17.5 points at 1191.37. Over in the bond market, the 10-year note fell 4/32, lifting the yield to 4.37 percent.

New York exchange volume leader Lucent Technologies (NYSE:LU) trading 38.6 million shares, edging $0.06 higher, although the Bears brokerage downgraded the stock from "out perform" to "neutral" because it's up 40 percent this year. And also Bear cuts its price target from $5 to $4 a share and that's where it is today, just about.

Pfizer (NYSE:PFE), second in volume moved up $0.46.

Then NorTel Networks (NYSE:NT) $0.14 gain.

Calpine (NYSE:CPN) down $0.15.

General Electric (NYSE:GE) moved up $0.66, fifth in big board volume.

EMC Corporation (NYSE:EMC) up $0.61.

Wal-Mart Stores (NYSE:WMT) after two days of rather sizable losses, gaining $0.76.

Time Warner (NYSE:TWX) a half dollar gain.

CEMEX S.A. (NYSE:CX), that's the big Mexican cement producer, up $1.30.

And then Citigroup (NYSE:C) had a good day. The financials were firm today, up $1.19 on

Citigroup, tenth in volume.

IBM (NYSE:IBM) gaining $1.64. The company signed outsourcing contracts with two large Danish corporations for a total value of about $1 billion over the next 10 years.

CIGNA (NYSE:CI), big insurance firm, up $5.78, 8 1/4 percent rise. The company boosted its estimate of fourth quarter and full year income.

Humana (NYSE:HUM) up $2.31. Company sees fourth quarter earnings coming in at $0.26 a share. That's right at the high end of its previous guidance of $0.23 to $0.26 and it also sees 2005 earnings rising at least 15 percent.

Louisiana-Pacific (NYSE:LPX) up $2.50, 10 1/4 percent rise there. Smith Barney notes that North American wood products companies like this one have better than expected supplies available than generally thought and similar companies like Weyerhauser and Georgia Pacific also were firm in trading today.

Chico's FAS (NYSE:CHS) up $5.05. After the close yesterday, the casual clothing retailer came in with third quarter earnings, $0.41, up from $0.30 last year, $0.03 above the Street estimate and today Wachovia upgraded it from "market perform" to "out perform." Standard & Poor's repeated a "buy" recommendation.

Wendy's International (NYSE:WEN) up $2.61. The company will close 15 to 18 of its poorly performing Baja Fresh restaurants and the charges resulting from that should result in a first quarter loss, fourth quarter loss of about $1.15 or so. Standard & Poor's says still buy the stock and Merrill Lynch also made positive comments on Wendy's.

Universal Compression Holdings (NYSE:UCO) in the natural gas business down $2.80. Weatherford International sold 4 million of these shares at $35.45, reducing its stake to 21 percent.

NASDAQ 100 (AMEX:QQQ), now this is transferred over from the American Exchange. This is the exchange traded fund which tracks the NASDAQ 100 Index. First day of trading here, 102 million shares and the stock up $0.80.

Microsoft (NASDAQ:MSFT) up $0.44.

Intel (NASDAQ:INTC) $0.72 rise.

Google (NASDAQ:GOOG) down $2.02.

Cisco Systems (NASDAQ:CSCO) $0.40 gain there, fifth in dollar volume.

Applied Materials (NASDAQ:AMAT) down, up $1.08.

$1.49 gain in eBay (NASDAQ:EBAY).

Apple Computer (NASDAQ:AAPL) up $0.74.

Sirius Satellite Radio (NASDAQ:SIRI) challenging the $7 a share now.

And Dell (NASDAQ:DELL) $0.84 gain there.

GeoPharma (NASDAQ:GORX) up $2.38 and at one point this morning was up $11.25. The FDA approved its Mucotrol product to treat pain after chemotherapy.

And finally OmniVision Technologies (NASDAQ:OVTI) up $1.58. Second quarter earnings $0.28, comfortably higher than $0.23 last year and $0.04 above the Street estimate.

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.

12/02/04: Market Stats


                                      NET    PERCENT
CLOSE CHANGE CHANGE DOW CLOSE 10590.22 +162.20 + 1.6 HIGH 10590.22 LOW 10425.76 NASDAQ COMP. 2138.23 +41.42 +2.0 HIGH 2138.32 LOW 2104.58 VOLUME 1,772.2 PREVIOUS 1,554.4 UP VOLUME 1,391.7 DOWN VOLUME 368.1 DOW TRANSPORTS 3736.79 +78.08 + 2.1 DOW UTILITIES 321.62 -4.17 - 1.3 CLOSING TICK +738 S&P 500 1191.37 +17.55 + 1.5 S&P 100 566.21 +8.74 + 1.6 MIDCAP 400 645.68 +8.41 + 1.3 REUTERS/CRB 288.32 -2.62 - .9 NYSE COMPOSITE 7097.32 +91.60 + 1.3 VALUE LINE 395.78 +5.73 + 1.5 RUSSELL 2000 643.68 +9.91 + 1.6 DJW 5000 11735.57 +167.03 + 1.4 U.S. TREASURIES 5-YEAR NOTE 3.50% Nov. 15,2009 99 2/32 -1/32 + 3.71 10-YEAR NOTE 4.25% Nov. 15,2014 99 2/32 -4/32 + 4.37 30-YEAR NOTE 5.375% Feb. 15, 2031 105 5/32 -3/32 + 5.01 LEHMAN BROS. LONG BOND INDEX 1726.94 -4.31 DOW CLOSE 10590.22 +162.20 + 1.6 ADVANCES 2336 DECLINES 1026 NEW HIGHS 486 NEW LOWS 3 NET PERCENT NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE LU Lucent Tech 3.99 +.06 +1.5 PFE Pfizer 28.23 +.46 +1.7 NT Nortel Networks 3.61 +.14 +4.0 CPN Calpine 3.73 -.15 -3.9 GE GE 36.02 +.66 +1.9 EMC EMC Corp 14.03 +.61 +4.6 WMT Wal-Mart Stores 52.82 +.76 +1.5 TWX Time Warner 18.21 +.50 +2.8 CX Cemex SA 33.51 +1.30 +4.0 C Citigroup 45.94 +1.19 +2.7 NASDAQ CLOSE 2138.23 + 41.42 + 2.0 VOLUME 2,317.4 PREVIOUS 1,900.3 ADVANCES 2123 DECLINES 1020 NASDAQ ACTIVES QQQQ Nasdaq 100 39.92 +.80 +2.0 MSFT Microsoft 27.25 +.44 +1.6 INTC Intel 23.10 +.72 +3.2 GOOG Google 179.96 -2.02 -1.1 CSCO Cisco Systems 19.15 +.40 +2.1 AMAT Applied Matl 17.72 +1.08 +6.5 EBAY eBay 113.79 +1.49 +1.3 AAPL Apple Computer 67.79 +.74 +1.1 SIRI Sirius Satellite 6.98 +.35 +5.3 DELL Dell Inc 41.36 +.84 +2.1 AMEX CLOSE 1413.81 + 7.73 + .6 INDEX SHARES DIA DIAMONDS TRUST 105.67 +1.34 +1.3 QQQ NASDAQ 100 39.92 +.80 +2.0 SPY S&P DEP.RECEIPTS 119.29 +1.40 +1.2 STOCKS IN THE NEWS IBM IBM 95.88 +1.64 +1.7 CI Cigna 75.80 +5.78 +8.3 HUM Humana 27.13 +2.31 +9.3 LPX Louisiana Pacific 26.97 +2.50 +10.2 CHS Chico's FAS 43.65 +5.05 +13.1 WEN Wendys Intl 38.28 +2.61 +7.3 UCO Universal Compress 34.50 -2.80 -7.5 GORX Geopharma 6.81 +2.38 +53.7 OVTI Omnivision Tech 19.42 +1.58 +8.9

 

 

 

 

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NBR appreciates the support of its national underwriters -- A.G. Edwards, Inc. and Franklin Templeton Investments. The program is produced by NBR Enterprises/WPBT2 and distributed by American Public Television.

   

 

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