| 12/02/04:
The Oil Price Plunge Gets Deeper
SUSIE GHARIB: Oil prices plunged for a second straight day, but the
news didn't budge stocks on Wall Street. In New York trading, crude futures
tumbled $2.24 or almost 5 percent to $43.25 a barrel. Just yesterday, oil was
trading as high as $49. The two-day decline of nearly $6 is the biggest drop
since the 1991 Gulf war. Traders said today's move was a continuation of
yesterday's sell off, sparked by a report showing a much larger-than-expected
buildup in crude inventories. Where prices head from here may ultimately be up
to Mother Nature.
ERIC BOLLING, INDEPENDENT OIL TRADER: If we have a harsh winter, you're still
going to see some tightness in heating oil and natural gas and those will
probably bringing crude oil back up towards that $45-$50 area if you have the
winter that people are expecting. If on the other hand, the winter is a mild
winter, there's probably no end to the selling. It may see a $38 price.
GHARIB: OPEC will meet next Friday in Cairo to set output levels for the next
three months. But despite the big drop in oil prices and objections from Iran,
the cartel is expected to keep production steady.
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:
One On One With James Owens, CEO of Caterpillar
SUSIE GHARIB: That can mean more business for Caterpillar, giving the giant farm
equipment maker more reason to celebrate. Today executives were celebrating
the 75th anniversary of the company's listing on the New York Stock Exchange by
ringing the closing bell here at the NYSE. Caterpillar has been going full
throttle this year. Earnings are up more than 80 percent and sales have
increased 30 percent. When I met with Caterpillar CEO Jim Owens this morning,
I asked him how long this growth cycle will last.
JAMES OWENS, CEO, CATERPILLAR: Well, we think it's got licks. We're in the, I
think the early stages of a pretty strong global economic recovery,
particularly in a lot of the industries we serve. We're blessed to be serving
global mining, for example, which is a very strong infrastructure development
which has been a significant under investment in for several years. The
creation of additional sources of power, be it oil and gas or coal all lend
themselves to Caterpillar products. We think there is a tremendous amount of
growth potential in this old economy company.
GHARIB: What is your outlook for the U.S. economy and how might that impact
demand for your products?
OWENS: We look for another year of close to 4 percent real GDP growth next
year, continued pretty good strength in housing, the infrastructure
investments, the highway bill which will likely be passed will even have more
dollars for investment and infrastructure in this country. So we're pretty
optimistic about the demand in this country plus there's a pretty strong
replacement cycle for our type business that's going on. Our sales to users
have been very strong through our dealer organization and we're very confident
and they're very confident about the outlook for 2005.
GHARIB: And what did demand from Asia and other emerging markets? What's your
outlook there?
OWENS: Asia in particular continues to be quite strong as you - we've all heard
about the softening in China and certainly it has softened a little bit, but
we'll just have a record year in sales in China this year. We continue to grow
our presence in that very important country. So we're well positioned to
participate in good economic growth in Asia, in Latin America and in CIS (ph)
Russia and in the Middle East. All these countries fueled by stronger
commodity markets and good growth opportunities we think for our products in
their countries, in their economies.
GHARIB: Now I understand that higher raw material costs like steel have been an
issue for Caterpillar. Do you see them abating in 2005 or are they still going
to be a drag on earnings?
OWENS: We think those prices have peaked and a lot more capacities coming
online and we're working very hard with global sourcing practices to bring on
additional sources for those basic commodities that are so important to our
production. So we think that the peak of those prices has probably been hit
this year and we look for some easing in 2005.
GHARIB: Given the weak dollar, do you have pricing power that will offset these
rising costs?
OWEN: We have the capability of taking our prices up in the international
marketplace because most of our competition today comes out of Japan and
western Europe. And their currencies, with their currencies strengthening and
their pricing in most cases in yen or euros, it gives us the pricing power in
U.S. dollars to raise our prices.
GHARIB: A lot of people have been very concerned about the weak dollar. Is this
then -- it sounds like it's helping Caterpillar not really hurting you?
OWENS: Well, I think that yes, the weak dollar, because we're are a net
exporter from the United States it's slightly favorable to us but we do have a
pretty strong global manufacturing presence and therefore a bit of natural
hedge so our cost in Japan and our cost in Europe do go up but our relative
manufacturing competitiveness out of our U.S. manufacturing base is certainly
improved.
GHARIB: Let's talk a little about your stock given that today is your
anniversary for listing here at the New York Stock Exchange. You had a really
good year this year on the stock. If everything goes your way as you have been
forecasting here, how much higher do you go?
OWENS: I can't think of a company that's better positioned to win in the global
company that at least I foresee over the next five or six years in Caterpillar.
We've got a global manufacturing footprint. We're one of the best, most
efficient manufacturers worldwide. We have number one and number two position
for every major product on every continent. We're investing more in product
technology than any of our competitors and we've raised dividends 11 out of the
last 12 years. We would expect to be able to continue to do that, as well as
buy down shares and continue to invest in our products. So I think it's a
pretty exciting future and I'm glad those shareholders have stuck with us.
GHARIB: Thank you very much, Mr. Owens, appreciate you talking to NIGHTLY
BUSINESS REPORT.
OWENS: Susie, it's been a delight. 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.
12/02/04:
Public Pensions & Politics
PAUL KANGAS: There are new concerns tonight over the nation's public pension funds
and how they are managed. The spotlight fell on this issue yesterday, when
California's pension giant Calpers, ousted its president, Sean Harrigan. The
nation's public pension funds are some of the largest institutional investors
around. So as Darren Gersh reports, there's a lot at stake here.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: With $2.5 trillion
invested in the markets, public pension funds are a bully pulpit and
increasingly a political battleground.
NELL MINOW, THECORPORATELIBRARY.COM: No question about it, because
corporations love to apply political pressure. And they can't apply it to the
private investors like the mutual funds, so the public pension funds are their
best bet. The public pension funds have been the most outspoken so they also
are a little bit of a lightning rod there.
GERSH: That's because high-profile public pension funds are pushing agendas
that stretch the definition of corporate governance. At California's giant
pension fund, Calpers, Sean Harrigan was forced out as president in part for
using his investor clout on behalf of striking workers at Safeway. And
California Treasurer Phil Angelides, a likely candidate for governor, has also
prodded Calpers to support environmentally friendly technologies. New York
City's pension fund is pushing companies to adopt protections for gay and
lesbian employees. Connecticut's state pension fund wants companies to report
on the long-term risks of climate change. The U.S. Chamber of Commerce charges
many public pension funds are adopting a partisan agenda.
DAVID HIRSCHMANN, SR. VP, US CHAMBER OF COMMERCE: So it is almost an
intimidation game where you threaten a company by saying you have bad corporate
governance. But what's really behind that threat is a very well-known agenda
by organized labor.
GERSH: But labor groups say business critics are playing their own pension
politics.
RICHARD FERLAUTO, DIRECTOR, AFSCME: It is the members of the Chamber who are
getting the oversize CEO packages. It's the CEOs of the companies who make up
the Chamber who don't want to be more accountable to boards, so that they are
the ones with a vested political self-interest in this.
GERSH: But whether something is a genuine shareholder issue or a political
issue depends on your point of view. Consider the increasingly popular
resolutions against doing business with countries that sponsor terrorism.
MINOW: Now you could say that that is a political issue, but in reality as an
investment, that is a risk issue. Any country that sponsors terrorists is a
huge risk.
GERSH: But the bottom line here, Minow says, is the bottom line: public pension
officials who pursue a political agenda at the expense of investment returns
will face a backlash from beneficiaries. 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.
12/02/04:
Auto Nation Seems To Be On A Roll Despite Slow Car Sales
SUSIE GHARIB: The lots at many car dealerships are overflowing with vehicles
these days but not seeing enough customers. So how is Auto Nation, the
country's largest auto retailer, dealing with this bubble? Jeff Yastine
reports.
YASTINE: In the dealership business, it's all about inventories of unsold
vehicles sitting on the lots and how long it takes to sell them. Nationally,
right now, that's 90 days or more -- a long time by dealer standards-- to find
buyers for the flood of cars, SUVs, and pickup trucks coming out of Detroit.
The production cuts announced yesterday by Ford and General Motors will help,
but executives at Auto Nation, the country's largest auto retailer, expect more
of the same for next year.
MICHAEL JACKSON, CHAIRMAN & CEO, AUTONATION: I think they're doing it in a
very prudent way. You don't want to make dramatic and extreme cuts and disrupt
the entire production system, but they want to be consistent into the second
quarter, perhaps the third quarter before they remove this bubble in inventory
and get the inventory inline with the sales rate.
YASTINE: Jackson says the economy itself is doing fine, but the market for new
cars is pretty flat, since buyers have been taking advantage of dealer
incentives for years now. With interest rates beginning to creep higher, it's
not just consumers' costs that are going up. The dealer cost of carrying
inventory is higher as well.
JACKSON: We had an unbelievably low interest rate environment. And we as
retailers were willing to work with the manufacturers and carry more inventory
than we normally would have. Well, that party is over. The rates are going
back up. We're in a rising rate environment and the cost of carrying inventory
is going up. And it's also clear that with an improving economy, were not
going to be able to have a sales rate that's equal to these inventories.
YASTINE: Of course, these days automakers produce a staggering array of makes
and models for consumers. Analysts say that still helps to bring new buyers
onto car lots, but it also raises the stakes when sales volumes decline.
CHRISTOPHER STRUVE, AUTO ANALYST, FITCH RATINGS: Is there too much product
from the perspective of the customer? No. I think from the perspective of a
retailer though, you have certain questions about if the OE fails to
differentiate that product or fails to adequately market or advertise that
product. It's very possible for a product to be left behind today far quicker
than in the past.
YASTINE: To keep its new vehicles from getting stale on the lot, Auto Nation is
focused on managing inventories and sometimes shifting vehicles from one
dealership to another if they can be sold more quickly.
JACKSON: We have reduced our inventories. In the third quarter, we went into
the third quarter with a 73-day supply. We came out of the third quarter with a
53-day supply.
YASTINE: That leaner supply situation has helped maintain the company's profits
and boost its stock price, which stands near multiyear highs. Analysts expect
dealers' inventory bubble to begin clearing in the second half of next year.
That's assuming a steady economy and more production cuts from automakers.
Jeff Yastine, NIGHTLY BUSINESS REPORT, Ft. Lauderdale.
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:
"Commentary"-The Great Currency Challenge
SUSIE GHARIB: American investors have been coping for months now with a falling dollar, but
tonight's commentator says we're not the only ones faced with a challenging
currency. Here's Lionel Barber, U.S. managing editor of the "Financial Times."
LIONEL BARBER, U.S. MANAGING EDITOR, "FINANCIAL TIMES": Americans beware: the
fall of the dollar means those cheap holidays to France and Italy are looking a
lot more expensive. Acquisitions in Europe look pricier, too and that's before
the cost of borrowing likely rises next year. But if Americans think times are
tough, spare a thought for the Europe's political elite. They have long
parroted the virtues of a strong euro; now, they will really have to live with
it.
The euro has risen by more than 50 percent against the dollar over the past
three years. Last week, it broke $1.30. Some analysts say $1.50 is easily
within reach. The European central bank has described the dollar's decline
as "brutal." It may be time to act more decisively, by cutting interest rates
in the euro zone as a contribution to world growth. But the ECB still sets
rates largely on the basis of conditions in the euro zone and the central
bankers are still fighting the last war, tamping down inflation rather than
kick-starting growth. Rates in Europe are more likely to rise short term. So
Europeans are reduced to calls for Americans to save more in order to cut the
budget deficit. Americans meanwhile urge the Europeans to boost demand. This
is a recipe for more transatlantic friction. The lesson: dollar weakness,
rather than dollar strength, was always destined to be the euro's first big
test. I'm Lionel Barber.
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:
"Last Word"-Spongebob Goes Missing
SUSIE GHARIB: Finally, theft is a difficult problem for any big corporation
to deal with, but theft of SpongeBob SquarePants? There's been a nationwide
crime spree involving the huge inflatable cartoon characters. Dozens of them
have been stolen right off the top of Burger King Restaurants that have housed
them. Now Burger King is fighting back. It's offering a reward, a year's supply
of whopper sandwiches for information leading to the safe return of the missing
SpongeBobs. Burger King says it's concerned about its missing massive sponge
inflatables and wants them back. Paul, one place it should look first is eBay.
A bunch of them are on sale now.
KANGAS: I'm afraid my feeble mind just can't absorb this SpongeBob business,
too deep for me.
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:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Those disappointing November sales and mild profit taking from
yesterday's big gains led to a slightly lower opening on Wall Street. But
stocks rebounded on those falling oil prices. So by late morning, the Dow was
up 36 points, NASDAQ up 15. Afternoon trading saw gains in tech, airline and
drug stocks, while the oils, homebuilders, and golds were weak. The result was
a mixed closing.
The Dow Industrial Average ended down a little over 5 points at 10,585.12, but
the NASDAQ gained 5 points to 2143.57. The Standard & Poor's 500 lost a point
to 1190.33. In the bond market, the 10-year note fell 11/32nds, pushing the
yield to 4.41 percent.
Most active New York exchange issue on 29.6 million shares, Lucent Technologies
(LU) losing $0.02.
And then Corning (GLW) with a much bigger loss of $1.03. The company sees
fourth quarter LCD volume growth only flat with the third quarter or at best
maybe up 3 percent. Needham Security brokerage downgraded the stock
from "strong buy" to a "buy."
Pfizer (PFE) up $0.23.
NorTel Networks (NT) a $0.15 gain there.
EMC Corporation (EMC), fifth in volume was up $0.41.
Merck & Company (MRK) up $0.88.
Wal-Mart Stores (WMT) managed to gain $0.18 despite those rather disappointing
November same store sales.
Winn-Dixie Stores (WIN) a $0.02 gainer.
ExxonMobil (XOM) on that weak oil group of course with the precipitous drop in
crude, the whole group was down. We'll see more of it in just a moment.
Citigroup (C) was tenth in big board volume and lost $0.18 after a good gain
yesterday.
ChevronTexaco (CVX) another weak major oil losing $1.
Let's have a look at some others in the group, Amerada Hess (AHC), Apache
Corporation (APA), Burlington Resources (BR), ConocoPhillips (COP) and
Schlumberger (SLB) in the oil field area all on the downside today.
AMR (AMR) however, led the airlines higher with that gain of about 8 1/3
percent, $0.82 rise there.
And let's have a look at some more airlines stocks that were up, America West
Holdings (AWA), Continental Airlines (CAL) and Delta Air Lines (DAL) all
fractional gainers, but pretty good percentages because the prices are so low
these days.
U.S. Steel (X) down $2.27. Prudential Equities downgraded it from "neutral"
to "under weight" on a valuation basis and this weakened the steel group in
general.
Federated Department Stores (FD) dropped $0.15. Its November same store sales
fell 1.4 percent.
And The Gap (GPS) down $0.85. November same store sales were down 4 percent but
the company's board of directors approved the buyback of an additional $250
million of common stock.
Target Corporation (TGT) a $0.47 gainer. Its November same store sales were up
3 ½ percent.
AnnTaylor Stores (ANN) losing $1.78. November same store sales there dropped
8.3 percent. The Street estimate was for a gain of 1.8 percent. Also, AnnTaylor
said fourth quarter earnings will be $0.04 at best and maybe break even and the
previous estimate was as high as $0.32 a share in earnings.
Albertson's (ABS) fell $1.58. Third quarter earnings a bit higher, $0.32,
versus last year's $0.25. Sales were up 15 percent. Company sees 2005 earnings
however at the low end of its previous guidance of $1.40 to $1.60 a share.
And then Avon Products (AVP) did well, up $1.84. Morgan Stanley repeated an
overweight rating on Avon.
The NASDAQ 100 (QQQ) second day of trading there on this tracking stock for the
NASDAQ 100 Index and very active and up $0.15.
Microsoft (MSFT) $0.16 loss.
Intel (INTC) closed $0.39 lower, but after the close, issued a mid-quarter
update and boosted revenue guidance from about 9 billion to as much as $9 ½
billion. In after hours trading, I saw Intel stock as high as $24.50 a share.
Sirius Satellite Radio (SIRI) now moving above $7 a share.
eBay (EBAY) did well, up $3.19.
And we see Apple Computer (AAPL) down $2.58.
Google (GOOG) a $0.56 loss.
$0.05 gain in Cisco Systems (CSCO).
Yahoo! (YHOO) up $1.14.
And Amgen (AMGN) fell $1 - gained $1.98, tenth in volume.
Network Appliance (NTAP) up $1.60. First Albany brokerage increased fiscal 2006
earnings estimates by $0.03 to $0.79 a share.
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 10585.12 -5.10 - .1
HIGH 10629.16
LOW 10544.77
NASDAQ COMP. 2143.57 +5.34 +.3
HIGH 2156.14
LOW 2131.65
VOLUME 1,772.5
PREVIOUS 1,772.2
UP VOLUME 715.4
DOWN VOLUME 1,023.8
DOW TRANSPORTS 3729.94 -6.85 - .2
DOW UTILITIES 317.58 -4.04 - 1.3
CLOSING TICK +699
S&P 500 1190.33 -1.04 - .1
S&P 100 566.45 +.24 + .0
MIDCAP 400 643.07 -2.61 - .4
REUTERS/CRB 283.85 -4.47 - 1.6
NYSE COMPOSITE 7074.82 -22.50 - .3
VALUE LINE 395.18 -.60 - .2
RUSSELL 2000 642.51 -1.17 - .2
DJW 5000 11724.35 -11.19 - .1
U.S. TREASURIES
5-YEAR NOTE 3.50%
Nov. 15,2009 98 27/32 -6/32 + 3.76
10-YEAR NOTE 4.25%
Nov. 15,2014 98 23/32 -11/32 + 4.41
30-YEAR NOTE 5.375%
Feb. 15, 2031 104 16/32 -22/32 + 5.06
LEHMAN BROS.
LONG BOND INDEX 1724.01 -2.93
DOW CLOSE 10585.12 -5.10 - .1
ADVANCES 1259
DECLINES 2066
NEW HIGHS 524
NEW LOWS 14
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.97 -.02 -.5
GLW Corning 11.81 -1.03 -8.0
PFE Pfizer 28.46 +.23 +.8
NT Nortel Networks 3.76 +.15 +4.2
EMC EMC Corp 14.44 +.41 +2.9
MRK Merck & Co 28.60 +.88 +3.2
WMT Wal-Mart Stores 53.00 +.18 +.3
WIN Winn-Dixie Strs 4.11 +.02 +.5
XOM Exxon Mobil 50.17 -.98 -1.9
C Citigroup 45.76 -.18 -.4
NASDAQ CLOSE 2143.57 + 5.34 + .3
VOLUME 2,420.8
PREVIOUS 2,317.4
ADVANCES 1638
DECLINES 1480
NASDAQ ACTIVES
QQQQ Nasdaq 100 40.07 +.15 +.4
MSFT Microsoft 27.09 -.16 -.6
INTC Intel 22.71 -.39 -1.7
SIRI Sirius Satellite 7.26 +.28 +4.0
EBAY eBay 116.98 +3.19 +2.8
AAPL Apple Computer 65.21 -2.58 -3.8
GOOG Google 179.40 -.56 -.3
CSCO Cisco Systems 19.20 +.05 +.3
YHOO Yahoo! 39.14 +1.14 +3.0
AMGN Amgen 62.94 +1.98 +3.3
AMEX CLOSE 1402.85 - 10.96 - .8
INDEX SHARES
DIA DIAMONDS TRUST 105.88 +.21 +.2
QQQ NASDAQ 100 40.07 +.15 +.4
SPY S&P DEP.RECEIPTS 119.33 +.04 +.0
STOCKS IN THE NEWS
CVX ChevronTexaco 52.48 -1.00 -1.9
AHC Amerada Hess 82.54 -2.41 -2.8
APA Apache Corp 49.85 -2.00 -3.9
BR Burlington Res 42.75 -2.21 -4.9
COP ConocoPhillips 85.95 -3.33 -3.7
SLB Schlumberger Ltd 62.05 -1.58 -2.5
AMR AMR Corp 10.63 +.82 +8.4
AWA America West Hldg 6.37 +.39 +6.5
CAL Continental Air 12.53 +.42 +3.5
DAL Delta Air Lines 7.90 +.60 +8.2
X US Steel Corp 49.95 -2.27 -4.4
FD Fed Dept Strs 55.07 -.15 -.3
GPS Gap Inc 21.63 -.85 -3.8
TGT Target Corp 52.40 +.47 +.9
ANN AnnTaylor Stores 20.51 -1.78 -8.0
ABS Albertson's 24.20 -1.58 -6.1
AVP Avon Products 39.79 +1.84 +4.9
NTAP Network Appliance 33.73 +1.60 +5.0
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