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08/24/05:
Tropical Storm Katrina Kicks Up Oil Prices
LINDA O'BRYON: It was another record day for oil prices. In
New York trading, crude for October delivery surged $1.61 to an all-time
high of $67.32 a barrel. The price spike was fueled by several factors as
traders ignored a report showing an increase in weekly crude supplies.
Jessica Gottesman has more on today`s volatile day in the oil pits.
JESSICA GOTTESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: A heated day
of trading on the floor of the New York Mercantile Exchange as traders were
buzzing about tropical storm Katrina, supply disruptions overseas and crude
inventories here at home. That buzz pushed oil prices to another new
record, $67.32 a barrel and prices are expected to continue their climb.
BRUNO STANZIALE, OIL STRATEGIST, ABN AMRO: No one knows how high
the prices can go before demand is meaningfully choked off. I think that
we`re certainly going to see $70 and perhaps up to $72 before we trade back
down to $60.
GOTTESMAN: In fact, crude supplies were the bright spot as the
government reported that inventories were up in the past week. But traders
focused on the gasoline inventory numbers. Supplies of gasoline dropped
more than expected, with the Energy Department reporting a 3.2 million
barrel draw in the past week. Experts say that gasoline demand is now a
major mover for the crude oil market, pushing prices higher.
STANZIALE: It was the driver for the last four months certainly
behind this crude oil rally. I think that its influence is naturally going
to dissipate as we get into the fall and into the winter season. I think
that gasoline will continue to always be the driver behind the market
because I think if there`s any one product that we are more short than any
other, it`s gasoline.
GOTTESMAN: Floor traders also have their eyes on tropical storm
Katrina, although she may be less of a threat to the Gulf and refineries in
that region than first believed. Lingering worries about supply
disruptions in Iraq, Nigeria, the North Sea and Ecuador remain in the
market, and many traders say there`s a sense of urgency.
ERIC BOLLING, INDEPENDENT OIL TRADER, NYMEX: Because prices have
risen so dramatically, I think there`s kind of a panic feeling amongst
people, people who need to buy oil for whatever reason, to put it through a
refinery, to get it refined into products or into electricity. So, anytime
you have to buy and you see prices spiking like this, they rush through
that same door and that`s part of the problem, too.
GOTTESMAN: Traders here at the Merc say it`s not just Katrina,
inventories or supply disruptions overseas. It`s everything coming
together. It`s a news-driven market -- highly sensitive. Jessica
Gottesman, 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
Economic Outlook With Gary Thayer, Chief Economist, A.G. Edwards
LINDA O`BRYON: With more on today`s economic numbers and what`s in store
for the future, Gary Thayer, chief economist of AG Edwards joins us from
St. Louis. Welcome back to NIGHTLY BUSINESS REPORT, Gary.
GARY THAYER, CHIEF ECONOMIST, AG EDWARDS: Good evening, Linda.
O`BRYON: Let`s begin with today`s two reports, durable goods and
new home sales. Were you surprised by either?
THAYER: Well, we did see a little more weakness in the durable
goods numbers than I think the market was expecting. But that is a very
volatile number on a month-to-month basis. And the last couple of months
we`ve had some special factors that were boosting that, namely aircraft
orders and computer orders. And I think today we`re just sort of seeing a
return to a more normal level of activity for orders. It`s not a real
problem yet for the economy.
O`BRYON: And what about housing?
THAYER: Yeah, the new home sales numbers I think were surprisingly
strong. Yesterday we had seen existing home sales cool off a little bit
and today`s report showed there is still some life in new home sales,
although we did see some weakness in home prices.
O`BRYON: Why do you think there was that disparity between
yesterday`s report?
THAYER: Well, obviously they are measuring different things.
There is new homes. They are looking at when people are actually buying a
home and making the contract to purchase a home. I think existing homes
are something that shows up a little bit later in the data. And it is just
on a month-to-month basis you can get a difference in the two measures.
O`BRYON: Is housing affordability becoming more of a factor in your
view?
THAYER: I mean, the housing market looks strong but we do have that
one crack in the foundation, which is, the housing affordability is
starting to come down. You know, if you look at the amount of income that
it takes to qualify for a mortgage on an existing home. It is now down to
where housing affordability is at its lowest level since 1992. And that`s,
I think, a potential problem for the housing market going forward.
O`BRYON: If housing is indeed falling down and we continue to see
increasing oil prices, could the combination result in a recession,
especially since housing has been such an economic driver in recent years?
THAYER: Well, I think we`re probably going to see a slowdown. But
I`m not sure that we will see a recession yet. We`ll have to watch and see
how high oil prices go and how much home prices retreat. If we see a
cooling off in housing. But the slowdown or the moderation in housing
affordability is not a big drop. It doesn`t suggest that we`re going to
see a collapse in housing, just a cooling off. So I think we may be able
to avoid a recession at this point, just probably see a slowdown.
O`BRYON: And cooling off, do you see that being more regionally
driven as well?
THAYER: Sure. I mean obviously we have some local markets where
home prices are more extended than in other markets. And we could see more
of a cooling off there and maybe more of a price retreat in the hot
markets, namely on the coasts and maybe in the west. But I don`t think
it`s going to be a general decline in housing.
O`BRYON: And so given all of this, what do you see the Federal
Reserve doing in the next six month on short-term rates?
THAYER: Well, we think we are getting close to the point where the
Fed may be finished raising rates. They haven`t signaled that they are
finished yet, but we are up in the three to five percent range that some
policymakers a year ago said would be a neutral policy. Plus we do have
the signs that the housing market could cool off. And of course high
energy prices are likely to cool the economy. So maybe the Fed`s closer to
being finished than a lot of people anticipate.
O`BRYON: All right, we`ll have to keep watching.
THAYER: All right.
O`BRYON: Gary, thanks for joining us. We`ve been speaking
with Gary Thayer, chief economist of AG Edwards.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
Defense Spending Undergoes A Shift In Strategy
LINDA O`BRYON: The military has been buying weapons at a record pace,
with defense procurement spending increasing every year for the last
eight. But the increasing cost of war may force the Pentagon and the defense
companies that supply it to make tough choices on future projects.
Stephanie Dhue reports.
STEPHANIE DUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The global
war on terror has increased military contracts for companies like Lockheed
Martin, General Dynamics and Northrop Grumman. But many observers say that
even as overall defense spending increases, money for major new weapons
systems is being squeezed.
BRETT LAMBERT, ANALYST, DFI INTERNATIONAL: It`s the shift below the
top line that`s important to companies and important to investors. It`s
not necessarily the top line. And that shift is occurring and it`s being
taken from procurement and research and development and it`s going into the
operations, the day-to-day operations of our military.
DHUE: Large weapons projects are the likely targets for cuts as
spending slows. Air force orders for Lockheed Martin`s F-22 program could
be further scaled back. The navy may buy fewer multi-billion dollar
destroyers from General Dynamics and Northrop Grumman. But analysts say
the firms should be able to weather any slowdown in procurement spending.
LAMBERT: All of the primes currently have so many things in their
portfolios, both research and development, operation and maintenance and
procurement, that they`re not really going to be hurt by changes in the
mix. The overall top lines, as it declines, will affect the primes, but
that likely will not be felt for the next three to five years.
DHUE: Defense firms will look to Federal IT spending, homeland
security and civil space projects to make up for any slowdown in military
spending. Northrop Grumman`s strategy is to expand the products and
services it offers the government.
ROBERT HAFFA, DIRECTOR, ANALYSIS CENTER, NORTHROP GRUMMAN: We have
a very diversified portfolio of capabilities that our customer needs, so we
can look at a variety of ways in which not only are we providing platforms,
but we are providing services, and we`re providing -- we think of ourselves
as a system integrator. We can integrate those kinds of capabilities.
DHUE: Defense firms will soon have a better handle on the
military`s expectations for the future. The Pentagon is in the midst of
what`s called the quadrennial defense review, a top to bottom study of the
military`s needs, capabilities and budget. The results are due to Congress
in February and will lay out the military`s plans for the next 20 years.
Stephanie Dhue, 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
The Airline Industry Hits Turbulence But The Stocks Aren't All Grounded
LINDA O`BRYON: The nation`s airlines are clearly in a rough patch.
Many have watched their shares plunge as jet fuel prices has soared. But
as Erika Miller reports, industry analysts say certain airline stocks are
clear for takeoff.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: The nation`s
airlines are facing a perfect storm and investors are asking which carriers
will survive. Many airlines are in financial distress thanks to record jet
fuel prices, intense pricing pressures and, in some cases, under funded
pension plans. And that`s only the beginning.
RAY NEIDL, AIRLINE ANALYST, CALYON SECURITIES: The airlines still
have to make many more reforms in reducing costs and redoing their
systems. They have to continue to bring down labor costs, have to continue to look
at their systems to see where they can fly economically.
MILLER: The pain is particularly acute at Delta and at Northwest,
which is in the midst of a mechanics strike. Industry analysts predict
both carriers could file for bankruptcy protection next month. That helps
explain why shares of both companies have plunged over the past year.
United and U.S. Airways are already in bankruptcy, although U.S. Airways
has agreed to merge with America West. Still, experts say all of those
carriers are likely to survive.
JAMES CORRIDORE, AIRLINE ANALYST, STANDARD & POOR`S: It`s very hard
for an airline to go out of business because they continue to attract new
venture capital financing in bankruptcy. And so, we`re not really
predicting anyone`s going to go anywhere. I think the status quo is going
to persist.
MILLER: Most analysts agree American and Continental are in the
best financial shape of the major carriers thanks to lower labor costs.
Shares of both those companies have soared over the past year. Analyst Jim
Corridore has Continental as his top pick.
CORRIDORE: The airline has already got its labor cost cuts in
place. They have a higher percentage of business travelers than other
airlines, so their revenue stream is more profitable. And they are
expanding internationally primarily, which is still a profitable revenue
stream for them.
MILLER: Other analysts are recommending low-cost carriers like
Southwest. They say the Internet has given an edge to the discounters by
making it easier for passengers to compare ticket prices. Southwest also
happens to be the biggest fuel cost hedger in the industry.
NEIDL: Southwest is the only major U.S. carrier with an investment
grade rating. So, they had the balance sheet to do the hedges. Most of
the other U.S. carriers did not have, if not the foresight, the balance
sheet to do big hedges.
MILLER: Analysts say the airline industry is on track to lose $5.5
billion this year and they warn fuel prices would have to drop 20 percent
for the industry to be profitable next year. Erika Miller, 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
"Money File"-The Next Sure Thing
LINDA O'BRYON: In the "money file" tonight, why a sure thing isn`t always a sure
thing. Here`s Eric Schurenberg, managing editor of "Money Magazine."
ERIC SCHURENBERG, MANAGING EDITOR, MONEY MAGAZINE: I know you`re a
wise and sober investor too smart to buy into a mania like Google or Miami
condos. But it would be nice to get in early on the next mania, wouldn`t
it? My advice: don`t swim for the fences (ph). The next big thing is
inherently unknowable. Instead, look at the strategies that are supposed
to be the next moon shot and if you`re persuaded, find a prudent way to
play.
Two examples, the dollar. Betting on a falling dollar seems like a
sure thing. Even Warren Buffett says he`s bearish on the buck. Online ads
are full of invitations to trade currencies and get rich. The only problem
is, had you bet against the dollar over the past 12 months, you`d be broke
now. Trading currencies is a game for pros. Instead, if you are concerned
about the dollar, protect yourself by buying international mutual funds.
It`s a sensible way to put your money into assets priced in other
currencies. And this way, you leave the currency trading to the pros at
the fund. Another alleged next big thing is hedge fund investing. The
thesis is, in a flat market, you need to put your money with the smartest
investors around and hedge fund managers are it.
The problem is, hedge funds haven`t done any better than mutual
funds on average, and the fees are ridiculous -- 1 percent of assets per
year and 20 percent of profits. If you want your money run by an adviser
who can beat the market, choose a mutual fund run by a proven manager who
concentrates on just a few stocks. The idea that hedge fund managers are
all geniuses is myth. Their real genius seems to lie in getting investors
to pay those fees. I`m Eric Schurenberg.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Stocks started the day on the downside as traders reacted to that
drop in durable goods orders and a further rise in oil prices. But the
release of July`s stronger than expected new home sales numbers helped the
Dow turn an early single digit loss into a 30-point noontime gain. The
NASDAQ was up 17 points at midday. The promising rally turned into a steep
sell-off this afternoon when oil surged to that fresh record high. So, the
Dow industrial average closed off 84.71 points at 10,434.87. NASDAQ
Composite lost 8 1/3 points to 2,128.91. Standard & Poor`s 500 down about
eight points at 1,209.59. Over in the bond market, the 10-year note rose
4/32 to 100 21/32, putting the yield at 4.17 percent.
Most active big board issue on 50.6 million shares was Lucent
Technology (LU) edging up $0.17. Yesterday, Prudential upgraded it from
"neutral" to "over weight" and set a price target of $4 a share.
Pfizer (PFE) down $0.04.
Time Warner (TWX), there you see it, down $0.26.
Citigroup (C) fell $0.51.
Ford Motor Co (F), fifth in volume was up $0.12. It`s part of its big
restructuring. The company`s going to plan, is going to cut 1,000 to 1,500
jobs at its Volvo subsidiary. After the close incidentally, Moody`s cut
Ford`s debt rating to just junk status.
Hewlett-Packard (HPQ) gained a penny.
And then General Electric (GE) a $0.43.
ExxonMobil (XOM) was down $0.12, although Morgan Stanley boosted its
earnings estimate and its price target up to $72 a share and also Morgan
Stanley did the same for a number of major oil companies, including Amerada
Hess (AHC), Conocophillips (COP), Marathon Oil (MRO) and Sunoco (SUN),
which all ended in plus territory on the day.
Then Nortel Networks (NT) a $0.07 loss.
Tenth in volume was Wal-Mart Stores (WMT) losing $0.79.
Baker Hughes (BHI), Diamond Offshore Drilling (DO), Schlumberger Ltd
(SLB) and Smith Intl (SII), Transocean (RIG), all reacting positively to
Goldman Sachs, which backed its positive view of the oil service stocks, so
a very strong group today.
General Motors (GM) moved up $0.75. The Wall Street Journal" reported
that the top United Auto Workers officials said the union is now
considering helping the company cut costs. Incidentally, after the close,
Moody also cut GM`s debt rating to junk status.
Then we see Frontline Ltd (FRO), this is a company that operates a
fleet of oil tankers. Second quarter earnings dropped to a $1.70 from $2.29
last year, but that was above the $1.21 Wall Street expectation and the
company also says it sees its rates rebounding in the second half, so it`s
going to maintain its dividend. General Maritime, another fleet operator
moved up $2.13 on that news.
Genesco (GCO), $2.69 gain. The footwear retailer had higher second
quarter earnings, $0.27 versus last year`s $0.20 and revenues up 12
percent. The company boosted 2006 sales guidance.
Then we see Coach Incorporated (COH) up $1.35. The company said its
first quarter sales and earnings are running ahead of the company`s plan.
Officemax (OMX) was down, up $1.63. CS First Boston upgraded it from
"neutral" to an "out perform" rating.
Then a new issue, Enterprise GP Holdings (EPE), this is an energy
holding company. It offered 12.6 million units to the public priced at $28
each. The high, $33.20 on the day, had a pretty good debut, I`d say.
Google (GOOG) topped the active list on NASDAQ up nearly $3.
Followed by Microsoft (MSFT) with a $0.06 loss.
Intel (INTC) dropped $0.19.
Cisco Systems (CSCO) a $0.24 drop.
And then Apple Computer (AAPL) edged $0.03 higher, fifth in dollar
volume.
Dell (DELL) $0.35 loss.
Yahoo! (YHOO) edged up $0.36.
Baidu.com (BIDU) down $4.20. Yesterday after the close, the company
repeated a strong or I should say reported strong second quarter results,
but it also forecast third quarter will slow down.
Ebay (EBAY) a $0.02 loss.
And then tenth in volume was Research in Motion (RIMM), $0.81 drop.
Union Community Bancorp (UCBC), look at that gain, up over 48 percent
with a rise of $8.48 or $0.46. Mainsource Financial Group is going to
acquire this company for cash of $27.33 a share or 1 1/2 shares of
Mainsource Financial stock.
Then over on the American exchange, we had another new offering today,
Readymix Inc (RMX), the concrete company, 1.55 million shares offered at a
price of 11, had a high of 13, closed nicely higher on the day.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/24/05:
Market Stats
Market Stats
DOW CLOSE 10434.87 -84.71 - .8
HIGH 10559.00
LOW 10432.08
NASDAQ COMP. 2128.91 -8.34 -.4
HIGH 2156.13
LOW 2127.30
VOLUME 1,454.3
PREVIOUS 1,276.7
UP VOLUME 534.5
DOWN VOLUME 904.0
DOW TRANSPORTS 3665.97 +4.63 + .1
DOW UTILITIES 397.44 -1.50 - .4
CLOSING TICK +10
S&P 500 1209.59 -7.98 - .7
S&P 100 560.96 -4.45 - .8
MIDCAP 400 702.36 -.80 - .1
REUTERS/CRB 320.02 +2.46 + .8
NYSE COMPOSITE 7417.42 -36.36 - .5
VALUE LINE 405.38 -1.27 - .3
RUSSELL 2000 655.01 -.46 - .1
DJW 5000 12096.37 -62.94 - .5
U.S. TREASURIES
5-YEAR NOTE 4.125%
Aug. 15,2010 100 13/32 +2/32 + 4.04
10-YEAR NOTE 4.25%
Aug. 15,2015 100 21/32 +4/32 + 4.17
30-YEAR NOTE 5.375%
Feb. 15, 2031 115 1/32 +5/32 + 4.39
LEHMAN BROS.
LONG BOND INDEX 1814.67 +1.45
DOW CLOSE 10434.87 -84.71 - .8
ADVANCES 1494
DECLINES 1860
NEW HIGHS 88
NEW LOWS 28
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.15 +.17 +5.7
PFE Pfizer Inc 25.06 -.04 -.2
TWX Time Warner 17.55 -.26 -1.5
C Citigroup 43.05 -.51 -1.2
F Ford Motor Co 9.92 +.12 +1.2
HPQ Hewlett-Packard 26.72 +.01 +.0
GE GE 33.54 -.43 -1.3
XOM Exxon Mobil 58.88 -.12 -.2
NT Nortel Networks 3.10 -.07 -2.2
WMT Wal-Mart Stores 45.55 -.79 -1.7
NASDAQ CLOSE 2128.91 - 8.34 - .4
VOLUME 1,767.3
PREVIOUS 1,382.9
ADVANCES 1370
DECLINES 1647
NASDAQ ACTIVES
GOOG Google 282.57 +2.99 +1.1
MSFT Microsoft 26.81 -.06 -.2
INTC Intel 25.53 -.19 -.7
CSCO Cisco Systems 17.52 -.24 -1.4
AAPL Apple Computer 45.77 +.03 +.1
DELL Dell 35.38 -.35 -1.0
YHOO Yahoo! 33.47 +.36 +1.1
BIDU Baidu.com 77.80 -4.20 -5.1
EBAY eBay 38.96 -.02 -.1
RIMM Rsch In Motion 75.95 -.81 -1.1
AMEX CLOSE 1618.68 + 7.61 + .5
INDEX SHARES
DIA DIAMONDS TRUST 104.18 -1.10 -1.0
QQQ NASDAQ 100 38.50 -.23 -.6
SPY S&P DEP.RECEIPTS 121.15 -1.08 -.9
STOCKS IN THE NEWS
AHC Amerada Hess 123.63 +.28 +.2
COP ConocoPhillips 63.22 +.54 +.9
MRO Marathon Oil 60.14 +.52 +.9
SUN Sunoco 63.85 +1.47 +2.4
BHI Baker Hughes 56.70 +.54 +1.0
DO Diamond Offshore 56.58 +1.08 +2.0
SLB Schlumberger Ltd 82.68 +.53 +.7
SII Smith Intl 67.24 +1.05 +1.6
RIG Transocean 57.64 +.91 +1.6
GM GM 34.27 +.75 +2.2
FRO Frontline Ltd 44.26 +3.59 +8.8
GCO Genesco 39.25 +2.69 +7.4
COH Coach 33.99 +1.35 +4.1
OMX OfficeMax 29.11 +1.63 +5.9
EPE Enterprise GP 32.55 +4.55 +16.3
UCBC Union Community 25.86 +8.46 +48.6
RMX Ready Mix Inc 12.10 +1.10 +10.0
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