12/10/04:
The Crude Cut May Have Backfired
SUSIE GHARIB: An OPEC decision to cut oil production today
sparked a big move in oil prices. At a meeting in Cairo, the
cartel agreed to slash production by a million barrels a day,
starting January 1. But instead of igniting crude prices,
the news sent them sliding to their lowest level in four and
a half months. In New York trading, January futures ended
down $1.82 at $40.71. Erika Miller reports.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: OPEC`s
plan to cut oil production by 3.5 percent had the opposite
effect the cartel intended today. Instead of propping up crude
prices, the news actually sparked a sell off at the New York
Mercantile Exchange.
WILLIAM WALLACE, OIL TRADER, MAN FINANCIAL: Everybody knew
the meeting was coming and knew that this had to be on the
agenda. So nobody was really shocked by it. So, in essence,
the market`s already factored in that news.
MILLER: Traders say they were also relieved that OPEC did
not officially reduce its production quota of 27 million barrels
per day. Instead, the cuts are intended to wipe out all excess
production. And traders say it`s doubtful that goal will be
achievable, since most OPEC nations are cheating.
WALLACE: OPEC isn`t really known for sticking to their quotas.
So, it`s sort of like show me that you`re going to cut.
MILLER: But oil analysts say today`s announcement is not
to be taken lightly. They predict the cartel will soon boost
its official price target for oil, because it`s outdated.
SAL ILAQUA, OIL ANALYST, MONNESS, CRESPI, HARDT & CO.: I
think the significance of what happened today is that OPEC
is obviously raising the price band in which they want to
keep future oil prices. You know, the price band had been
$22-28. If I had to guess it`s $35 plus from now on.
MILLER: But Ilaqua does not expect oil prices to get anywhere
near the record $55 a barrel mark hit in late October. Unless
the winter is bitterly cold or there`s a major terrorism incident,
he expects crude prices to hover near current levels, perhaps
even drift lower longer term.
ILAQUA: My own guess is that next year, prices will average
for the full year between $35 and $40.
MILLER: OPEC ministers plan to meet again at the end of January
to consider further cutting oil production. But analysts predict
that if crude prices stabilize near current levels, another
cut is unlikely. Erika Miller, NIGHTLY BUSINESS REPORT at
the New York Mercantile Exchange.
GHARIB: Joining us now for more analysis, Fadel Gheit, oil
analyst at Oppenheimer. Hi Fadel.
FADEL GHEIT, OIL ANALYST, OPPENHEIMER: How are you doing?
GHARIB: I want to start off with your analysis of what happened
with oil prices. OPEC cuts production; oil prices go down.
Why does that happen?
GHEIT: Number one, people are not really believing what OPEC
says. People are watching what OPEC does and what OPEC does
is totally opposite of what they say. They say they`re going
to cut production, but actually they increase. So they have
been doing that for the last six months, so the market really
does not put any faith on what they say.
GHARIB: But what is the supply and demand situation out there?
We`ve been hearing all summer long and for the past couple
months about shortages and that`s why prices were going up.
Now what`s going on?
GHEIT: Totally untrue. There has been no shortages whatsoever
with the exception of (INAUDIBLE). It`s the speculator that
drove the prices to $55. The fact of the matter, the oil supply,
all because they`re already talking about glut, the first
time they`ve said that in almost two years. There`s approximately
$2 to $2 1/2 million of oversupply every single day and if
we don`t have a cold winter, I think oil prices will come
down very sharply.
GHARIB: So what do you think the OPEC ministers are going
to do when they meet at the end of January? Will we see another
production cut?
GHEIT: No. They will talk about production cut, hoping that
by saying that prices will stabilize. But the reality is there
is oversupply and if the demand does not catch up with supply,
I think prices would be under tremendous pressure. What they
will do is that they will hold off any production cut until
oil prices go close to $30, then they might implement some
sort of production cut. But logical oil prices go down much
lower than the current level.
GHARIB: So if there is this oversupply, what does that mean
for like gasoline prices? Will we see gasoline prices at the
pump come down?
GHEIT: Gasoline prices will have to come down in line with
oil prices. There is actually plenty of gasoline; gasoline
is oversupplied in this country. Some of the companies now
are thinking of cutting back because there`s tremendous oversupply.
Having said that, again, if oil prices go down by $5, expect
gasoline prices to go up at least $0.15 per gallon.
GHARIB: Fadel, where do you see oil prices going over let`s
say the next six months? We`re now at about $40 a barrel.
GHEIT: Barring a very cold winter and supply disruption,
I do believe oil prices would actually go closer to 30 than
they are closer to 40.
GHARIB: When?
GHEIT: In the next six months.
GHARIB: In the next six months. And what would have to happen
for oil prices to get back to $50 a barrel?
GHEIT: The speculators, a lot of people think there is only
one (INAUDIBLE) and that`s OPEC. The fact of the matter that
the speculators have been more influential in the last 12
months on oil prices than OPEC. So the speculation will continue.
Anything happen anywhere around the world, it`s going to have
an impact on oil prices but it will be temporary.
GHARIB: Real quickly in just a few seconds, with oil prices
lower, is that good for airlines and the economy in general?
GHEIT: Absolutely because high oil prices, basically an additional
tax.
GHARIB: OK. Well we`ll just leave it there. We`ll have to
get you back when those prices come down. Thanks so much Fadel.
GHEIT: Thank you.
GHARIB: We`ve been speaking with Fadel Gheit of Oppenheimer.
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) 2003 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
The Insurance Industry --Florida's Fifth Hurricane
SUSIE GHARIB:After four hurricanes hit Florida this summer,
state lawmakers now want to make some changes in the state`s
insurance laws. Those changes are designed to help Florida
residents. But as Jeff Yastine reports, they may end up hurting
residents in the pocketbook.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The
odds were astronomical, four hurricanes in just two months,
all hitting parts of one state, Florida. And for some residents,
something else was astronomical: what they paid to their insurance
companies in deductibles. In Florida, as everywhere else,
if your home is damaged by a storm, you pay one deductible.
Now in this state, it can be up to 5 percent of your home`s
value and if a second, third or fourth hurricane slams through,
you pay that same deductible a second, third or fourth time.
TOM GALLAGHER, CFO, STATE OF FLORIDA: So that would mean
a person with a $300,000 house that had, this past summer,
three storms hit them, which did happen in some of our counties
in central Florida, they could easily be hit with a $45,000
total deductible. What`s happened is, we found that there
are people that cannot afford to pay that part of the deductible,
therefore cannot afford to repair their home. And that`s just
an untenable situation.
YASTINE: So Florida lawmakers are meeting next week in special
session to discuss changing the one storm, one deductible
rule. The prospect has the insurance industry concerned.
ROBERT HARTWIG, CHIEF ECONOMIST, INSURANCE INFORMATION INSTITUTE:
So in other words, if there`s going to be a shift of risk
from policyholders to insurers, the rates will obviously have
to reflect that. A policy which has a single deductible, irrespective
of the number of storms that strike, will be more expensive
than a policy that has a deductible that applies for each
storm.
YASTINE: Lawmakers will also debate restructuring and enlarging
Florida`s hurricane catastrophe fund, which serves as a backstop
to private insurers. This year`s storms cost the fund about
a third of the $6 billion in cash it has on hand. Underlying
all of this, a concern that insurers may decide once again
to stop writing policies in the state, because the hurricane
risks are too high and the potential for profit too low. 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) 2003 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
"Market Monitor"--Eugene Peroni, Senior Managing Director at Claymore Advisors
PAUL KANGAS: My guest "market monitor" this week is Eugene Peroni, senior
managing director at Claymore Advisors and it`s good to see you again,
Gene.
EUGENE PERONI, JR., SR. MANAGING DIRECTOR, CLAYMORE ADVISORS: Nice to be
back, Paul, thank you.
KANGAS: As one who relies largely on technical analysis to make your
investment decisions, give us your latest assessment of the stock market`s
behavior on a technical status.
PERONI: I remain very bullish on the market Paul and the reason is that
we`re seeing broad sector participation. I think that`s the single most
important factor and the one that I`ve been really focusing on for many
months. So we think that this will continue into 2005. A lot of this
breadth in terms of the sector participation really is traceable back to
the lows in the market in July and October of 2002.
KANGAS: How many major groups are participating in the upturn?
PERONI: Many, manufacturing, industrial products, home builders, medical
technology, hotels, leisure time, recreation.
KANGAS: Wow, OK.
PERONI: A lot of groups.
KANGAS: How about advance decline ratio, new highs, new lows, that looks
also strongly bullish to you?
PERONI: It does look positive, but we`re really focused on individual
stocks and then we categorize these attractive stocks into different
categories. What we`re seeing is a very nice balance of attractive stocks
among these many different sectors that are leading the market higher. So
that means that the market is not relying on any one sector for strength.
KANGAS: Understood. On your last visit with us in mid-June, you were quite
optimistic on the prospects for stocks, and you gave us a pile of them, 20,
too numerous to mention here. But you did concentrate on four stocks
particularly that you liked and let`s have a look and see how they did.
Can we have the graphics of those four stocks that you spent some time on?
Burlington Resources up 16.2 percent, you still like it?
PERONI: Yes I do.
KANGAS: and I.T.T. Industries, up only two tenths of a percent since mid-
June, but it`s up.
PERONI: I do like it too Paul. I would be a buyer of it.
KANGAS: All right. Let`s have a look, I think there were two others that
you spent some time on, Nucor, the steel stock, look at that, up almost 38
percent, congratulations on that one.
PERONI: Thank you.
KANGAS: And Whole Foods market, up 3 percent. I think it`s been higher,
but a lot of these have too.
PERONI: It has and it`s another stock that we rate as a buy at these
levels.
KANGAS: And you still like all four?
PERONI: I do.
KANGAS: And do you own any of them personally?
PERONI: No, I don`t, but I own the Peroni growth portfolio summer series
and those, that unit investment trust does hold all these stocks.
KANGAS: OK, well now you`re presenting a very bullish picture to us, so you
must have some new recommendations do you not?
PERONI: Yes, I do and these are all part of our new top 10 pick lists for
2005. I do own the Peroni top 10 pick trust, which holds these stocks.
KANGAS: OK. Let`s have number one.
PERONI: Eagle Materials, this is a building products company, gypsum and
other materials.
KANGAS: Wasn`t that spun off by Centex?
PERONI: Yes. That`s correct.
KANGAS: OK. It`s had quite a rise and you still like it despite the big
jump?
PERONI: I do. I think that the group and the home builders continue to
look very attractive here.
KANGAS: All right. Now we have Fed Ex up there. That`s another favorite of
yours.
PERONI: It is and here`s a company that has guided earnings up several
times this year. Technically it continues to look very attractive to us.
KANGAS: Very strong chart pattern there. How about number three?
PERONI: MGM grand, MGG is the symbol, they just, Mandalay just approved the
merger with MGM and I think this could make for a very compelling story
longer term. The hotel gaming group looks very good here across the board.
So here again, good depth of leadership in a strong category.
KANGAS: OK. We have time for one more.
PERONI: That`s Toro. The company just announced earnings much better than
expected and doubled their dividend.
KANGAS: Oh, boy. Now these charts have great similarity. They`re all very
strong, but you expect them, further gains ahead on all four?
PERONI: I do. What`s compelling here, not just the technicals but the fact
that there is good fundamental - many good fundamental factors behind these
moves.
KANGAS: And do you own these four stocks?
PERONI: I don`t own them personally, but I own them in the Peroni top 10
pick portfolio.
KANGAS: OK, very good indeed. All right. There we have to leave it Gene,
but thanks very much and the best market you`ve seen in 30 years, is that
right?
PERONI: It is, I think we have a lot to look forward to.
KANGAS: All right, we`re looking forward to that too. Thanks very much for
being with us.
PERONI: Thank you, Paul.
KANGAS: My guest market monitor, Eugene Peroni, senior managing director,
Claymore Advisors.
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) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
"Last Word"-Santa's Porfolio
SUSIE GHARIB:
And finally tonight, while the Dow is flat for the year, Santa Claus`
portfolio is up 26 percent, because he`s diversified. The Southwest Bank
of Texas tracks Santa`s investments and here`s its annual report. Among
his investments, Apple Computer, up more than 200 percent on the popularity
of the iPod music player. Because he buys reindeer and sleigh supplies,
Santa also owns Petsmart, which is up 49 percent. He does have some coal
in his stocking, including jewelry seller Tiffany`s, down 29 percent and
toymakers Mattel and Hasbro, both down 2 and 9 percent respectively. But
Santa does like the occasional splurge and his stock in high-end retailer
Neiman Marcus is up 25 percent this year. So Paul, with that kind of
portfolio performance, for Santa, it is a wonderful life.
KANGAS: And a miracle on Wall Street.
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) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
"The Week Ahead"
SUSIE GHARIB: Here`s a look now at what`s happening for next week. Our Friday "market
monitor" guest is John Murphy, chief technical analyst at stockcharts.com.
On the economic calendar: Monday, November retail sales and October
business inventories come out. Tuesday, the Federal Reserve meets to set
interest rates. Thursday, weekly jobless claims and November housing
starts. And then on Friday, it`s the consumers, October`s consumer price
index.
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) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Stocks came under some early selling pressure on that OPEC
production cut and the bigger than expected 0.5 percent rise in producer
prices in November. The Dow fell 25 points at mid-morning while the NASDAQ
was off eight. The market turned narrowly mixed for the rest of the day
and even that sharp drop in oil prices couldn`t offset normal pre-weekend
selling activity, so the Dow Industrial Average closed down 9.60 points at
10,543.22.
And this week, the Dow rose twice, fell three times, had a net loss of 49
points. The NASDAQ Composite lost nearly a point today to 2128.07. It fell
twice and rose three times this week for an overall loss of just about 20
points. Standard & Poor`s 500 down 1 1/4 points to 1188 even today. Over
in the bond market, the 10-year note rose 5/32 putting the yield at 4.16
percent.
The most active big board issue on 40.3 million shares, Sprint FON Group
(FON) down $0.14, traded as high as $25.57 during the day on speculation
the company will merge with Nextel. That stock dropped a nickel.
Then came Motorola (MOT) down $1.39. Now analysts say this company could
lose some handset business if Nextel does merge with Sprint. Bear Stearns
made some negative comments in that respect.
General Electric (GE) moving up $0.67. Good news for shareholders there.
The company is boosting its cash dividend by $0.02 to $0.22 a share
quarterly. It also plans to buy back up to $15 billion of its own common
stock.
Pfizer (PFE) down $0.28.
Lucent Technology (LU) a $0.04 loss. That was fifth in big board volume.
Then Time Warner (TWX) moving up a dime.
Citigroup (C) down $0.53.
Seagate Technology (STX) $0.24 loss.
Nokia (NOK) down $0.42.
And Guidant (GDT) fell $2.20 even though the "Wall Street Journal" is
reporting Johnson & Johnson is very close to a pact to acquire Guidant for
somewhere around $24 billion. Of course Guidant stock is way up from a 12-
month low of 50, plenty of room for profit taking. J&J stock was off $1.06
incidentally today.
United Technologies (UTX) moved up $1.58. The company affirmed its 2004
earnings guidance of $5.50 a share. That`s at the high end of the range and
sees 2005 earnings at a better than expected $6.05 to $6.30 a share.
Then we see Beazer Homes USA (BZH) jumping $8.19. The company has declared
a three for one stock split and it will continue the annual dividend at
$0.40 on the split shares. That in essence is a 300 percent increase.
And a lot of the home building stocks were strong today, especially D.R.
Horton (DHI) and Hovnanian Enterprises (HOV) and that`s because Bank of
America Securities issued "buy" recommendations on both of those home
builders today.
Vimpel-Communications (VIP) up $3.28 making a comeback after recent
weakness on additional taxes claimed by Russia. Today ING financial markets
brokerage upgraded it from "hold" to "buy."
And then we see Cascade Corporation (CAE) which makes forklifts and things
like that, up $5.51. The company in with third quarter earnings $0.68, well
above the $0.41 last year and sales jumped 27 percent.
Esterline Technologies (ESL) which is in the avionics business up or down
$1.36. Fourth quarter earnings were up though, $1.07 versus last year`s
$0.44. However the company sees 2005 earnings around $1.70 to $1.80 and the
Street estimate is just over $2 a share, so a disappointment there.
New offering today, Bill Barrett Corporation (BBG) which is in gas
exploration, 13 million shares offered to the public at 25, opened at 27
1/2, the high of the day $30.09, back down a little bit from there.
The NASDAQ 100 (QQQQ) down $0.12 today, volume leader.
Microsoft (MSFT) off $0.15.
Nextel Communications (NXTL) was a $0.05 loser as I mentioned earlier.
Intel (INTC) losing $0.20.
Apple Computer (AAPL) up $1.16, fifth in dollar volume on NASDAQ.
Cisco System (CSCO) a $0.02 gain.
eBay (EBAY) down $1.81.
Sirius Satellite Radio (SIRI) moved up $0.42. CIBC World Markets upgraded
its price target for Sirius from $6 1/2 to $9 a share.
Google (GOOG) down $1.78.
And then tenth in dollar volume, Research In Motion (RIMM) losing $1.17.
A few more new issues today, Community Bancorp of Nevada (CBON), 2.3
million shares offered at 23, opened at 28 1/2, the high of the day $29.79,
backed off but still a good day.
And then Adeza Biomedical Corporation (ADZA), this is a new issue, 3 3/4
million shares at 16, opened at 17, the high of the day 20 1/4 backed of a
bit, but still a nice debut on the day.
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) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/10/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10543.22 -9.60 - .1
HIGH 10575.58
LOW 10522.68
NASDAQ COMP. 2128.07 -.94 -.0
HIGH 2134.60
LOW 2120.33
VOLUME 1,443.5
PREVIOUS 1,624.1
UP VOLUME 666.3
DOWN VOLUME 745.2
DOW TRANSPORTS 3686.03 -23.18 - .6
DOW UTILITIES 319.69 +.92 + .3
CLOSING TICK +589
S&P 500 1188.00 -1.24 - .1
S&P 100 565.50 -.87 - .2
MIDCAP 400 641.30 +.80 + .1
REUTERS/CRB 276.62 -1.61 - .6
NYSE COMPOSITE 7028.51 -19.59 - .3
VALUE LINE 391.05 +.72 + .2
RUSSELL 2000 632.24 +3.05 + .5
DJW 5000 11691.98 +.59 + .0
U.S. TREASURIES
5-YEAR NOTE 3.50%
Dec. 15,2009 99 27/32 +3/32 + 3.53
10-YEAR NOTE 4.25%
Nov. 15,2014 100 24/32 +5/32 + 4.16
30-YEAR NOTE 5.375%
Feb. 15, 2031 108 5/32 +8/32 + 4.82
LEHMAN BROS.
LONG BOND INDEX 1767.93 +1.45
DOW CLOSE 10543.22 -9.60 - .1
ADVANCES 1818
DECLINES 1452
NEW HIGHS 196
NEW LOWS 13
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
FON Sprint Fon Group 24.14 -.14 -.6
MOT Motorola 16.33 -1.39 -7.8
GE GE 36.69 +.67 +1.9
PFE Pfizer 27.09 -.28 -1.0
LU Lucent Tech 3.80 -.04 -1.0
TWX Time Warner 18.48 +.10 +.5
C Citigroup 45.91 -.53 -1.1
STX Seagate Tech 16.70 -.24 -1.4
NOK Nokia 15.50 -.42 -2.6
GDT Guidant 71.55 -2.20 -3.0
NASDAQ CLOSE 2128.07 - 0.94 - .0
VOLUME 1,817.4
PREVIOUS 2,301.7
ADVANCES 1675
DECLINES 1435
NASDAQ ACTIVES
QQQQ Nasdaq 100 39.93 -.12 -.3
MSFT Microsoft 27.08 -.15 -.6
NXTL Nextel Comm 29.76 -.05 -.2
INTC Intel 22.56 -.20 -.9
AAPL Apple Computer 65.15 +1.16 +1.8
CSCO Cisco Systems 19.42 +.02 +.1
EBAY eBay 114.41 -1.81 -1.6
SIRI Sirius Satellite 7.59 +.42 +5.9
GOOG Google 171.65 -1.78 -1.0
RIMM Rsch In Motion 88.37 -1.17 -1.3
AMEX CLOSE 1392.08 + 5.51 + .4
INDEX SHARES
DIA DIAMONDS TRUST 105.48 +.10 +.1
QQQ NASDAQ 100 39.93 -.12 -.3
SPY S&P DEP.RECEIPTS 119.35 +.13 +.1
STOCKS IN THE NEWS
UTX United Tech 101.03 +1.58 +1.6
BZH Beazer Homes 140.70 +8.19 +6.2
DHI D.R. Horton 39.29 +1.48 +3.9
HOV Hovnanian Enterp 46.35 +4.25 +10.1
VIP Vimpelcom 30.41 +3.28 +12.1
CAE Cascade 39.05 +5.51 +16.4
ESL Esterline Tech 32.94 -1.36 -4.0
BBG Bill Barrett 29.05 +4.05 +16.2
CBON Community Bncp 29.35 +6.35 +27.6
ADZA Adeza Biomedical 19.70 +3.70 +23.1
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