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9/07/05: Hurricane Katrina Slows Down Economic Growth
SUSIE GHARIB: It looks like hurricane Katrina will pack a
one-two punch for the economy, but it`s not going to be a
knockdown. The Congressional Budget Office said today Katrina
could reduce U.S. economic growth by up to a full percent
in the short term and cost hundreds of thousands of jobs.
Still, as Scott Gurvey reports in our ongoing series "Recovering
from Katrina," the longer term outlook is brighter.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Katrina
evacuees, survival has been the primary concerns but as they arrive at new
locations, priorities quickly turn to jobs lost along with homes and
possessions. The Congressional Budget Office today estimated that 400,000
jobs have disappeared in Katrina`s wake and the growth as measured by the
gross domestic product will be reduced by as much as 1 percent. The CBO
says most of the impact will come from the disruption of oil production.
The Gulf coast is responsible for about a quarter of the nation`s oil.
Still, the CBO says the economy will bounce back.
DOUGLAS HOLTZ-EAKIN, CBO DIRECTOR: I think this is an apocalypse for
New Orleans. It`s not an apocalypse for the U.S. economy and it`s important
to distinguish between those two. This is really about the people and the
economy broadly defined will get through this.
GURVEY: Goldman Sachs today also lowered its growth forecast for the
third and fourth quarters because of the storm, but the investment bank
raised its 2006 forecast.
JAN HATZIUS, ECONOMIST, GOLDMAN SACHS: In the course of 2006, you will
see some positives in terms of the GDP numbers, first because activity in
the effected areas in Louisiana and Mississippi will slowly get back to
normal. That adds to GDP growth which is a change measure. And secondly,
you have to rebuild some of the damaged infrastructure.
GURVEY: Because of Katrina, Wall Street is now back to debating
monetary policy. The Federal Reserve had been raising rates at what it
calls a measured pace and the consensus believed it would continue, but
Katrina has raised doubts and the consensus has disappeared.
KATHLEEN STEPHANSEN, ECONOMIST, CREDIT SUISSE FIRST BOSTON: If
gasoline prices at the retail level are essentially following the wholesale
level and we can anticipate then a decline from current levels, it`s very
likely that the Fed continues to increase interest rates 25 basis point
increase or by the same token, if gasoline prices continue to rise from
current elevated levels, that of course is very onerous for the consumer
and it might very well be then that the Fed skips this meeting.
GURVEY: Even if the Fed does skip a rate hike when it meets next on
September 20, most believe it will resume in the months that follow. 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/07/05:
The President Orders FEMA Financial Aid
PAUL KANGAS: President Bush today asked Congress for almost $52 billion to
help recover from hurricane Katrina. The bulk of that, $50 billion is for
FEMA, the Federal Emergency Management Agency. The rest would be earmarked
for the Defense Department and the Army Corps of Engineers. But as
Stephanie Dhue reports, this won`t be the last request for cash for the
relief effort.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: FEMA is
spending more than a billion dollars a day on the recovery effort. Worries
that the agency could run out of money by the end of the week prompted the
administration to request more. Congress is certain to deliver.
DENNIS HASTERT, HOUSE SPEAKER: We`re committed to the residents of the
Gulf coast and we`re doing everything we can to get them help and get them
on their feet.
DHUE: $100 billion has already been set aside to go directly to
Katrina victims. FEMA is distributing debit cards worth $2,000 to pay for
clothing, minor repairs and other needs.
MICHAEL BROWN, DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY: The
concept is to get them some cash in hand, which allows them, empowers them,
to make their own decisions about what do they need to have to start
rebuilding their lives.
DHUE: Longer term, money will be spent on reconstruction of the basic
infrastructure in the region. But it`s unclear just how much that will
cost.
DOUGLAS HOLTZ-EAKIN, DIRECTOR, CONGRESSIONAL BUDGET OFFICE: The big
unknown is the pace at which New Orleans is to some extent goes past
recovery and into reconstruction. There is a standard profile for
disasters and in that standard profile people can get back and start
rebuilding. That`s not true in New Orleans and that will dictate a lot.
DHUE: The final price tag will also depend on how broadly Congress
addresses the problem. Lawmakers are already considering a whole host of
new measures, including rebuilding roads and sewer systems, extending
unemployment benefits, and even changing tax policy to help businesses
recover. Also under consideration is a special agency to oversee relief.
SEN. PETE DOMENICI, CHAIRMAN, SENATE ENERGY AND NATURAL RESOURCE
COMMITTEE: I strongly recommend that we suggest to the administration that
they quickly decide on some kind of an executive headquarters and chief
recovery person so that all of this effort can be coordinated.
DHUE: Congressional leaders are also forming a joint bi-partisan
committee to study what went wrong with the early response to the disaster.
The committee`s findings are due no later than February 15. 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.
09/07/05:
The Outlook for Oil & Recovery Efforts With A.G. Edwards' Bill O'Grady
SUSIE GHARIB: Oil prices dropped again today. In New
York trading, they closed off $1.59 to $64.37. In Washington, the Federal
Energy Information Administration slashed its forecast for growth in U.S.
oil demand this year and next saying it`s due to a huge jump in energy
prices. A short while ago I talked with AG Edwards` futures analyst Bill
O`Grady and began by asking him what was behind today`s oil price drop.
BILL O`GRADY, FUTURES ANALYST, A.G. EDWARDS: There are a couple of
factors that are very important to keep in mind about the aftermath of that
spike. The first is that the month of September tends to be a weak demand
month. Seasonably gasoline consumption falls anywhere from 300,000 to a
half million barrels a day just naturally. Once we get passed the last
summer holiday and the children back at school, vacations tend to slow down
and you see a drop in consumption. So that was going to have a dampening
effect on gasoline consumption regardless of whether or not we had a
hurricane. For that reason we were looking for a pull back in prices in
the month of September. In addition, the International Energy Agency in a
very unusual move because of Katrina authorized a global release of
strategic reserves of crude oil, gasoline and distillate fuels to the tune
of two million barrels a day for 30 days, a total of 60 million barrels. So
we have the combination of falling consumption due to seasonal factors
coupled with secure supply from the strategic petroleum reserves of the
United States, Europe and Japan.
GHARIB: And also the government today reduced its forecast on oil
demand, so between the factors you were mentioning a long term demand,
where do you see oil prices going. Are they going to get down to $50, $60 a
barrel?
O`GRADY: We`re looking for a $50 handle, somewhere between $59-$50
over the next four to six weeks. Again, this weaker demand will play an
important role in doing that. The problem that you have once you get past
that middle of October issue is that you start heading into winter. And we
move into heating oil season and a lot of significant part of the price of
crude oil is going to be determined by weather. Since predicting long term
weather -- predicting what the winter`s going to be like in September is a
difficult affair. We tend to pass on that.
GHARIB: What about prices at the pump? You know everybody is
grumbling about these $5, $4 a barrel a gallon gasoline. Will we see a drop
at the pump?
O`GRADY: Yeah, we should start to see that I would expect in the
coming five to 10 days. Again, it takes a little while for it to work
itself through the system. But you`ll start to see wholesale prices fall.
We have already seen a pretty significant drop in gasoline prices both at
the futures level and the wholesale level and you`ll start to see that
showing up at the pump, my suspicion is by the weekend.
GHARIB: Can you say the same thing will be true of jet fuel prices
because late today, Northwest Airlines said that it`s going to be canceling
its nonstop flights between New York and Tokyo because of high jet fuel
prices?
O`GRADY: Those jet fuel prices will also come off to some extent
maybe not as much as the gasoline does, because it didn`t have quite the
same run up and we aren`t seeing a strategic release of jet fuel. But as
crude oil prices fall, we should see those jet fuel prices ease as well.
GHARIB: Bill, we`re expecting the Energy Department to do its
weekly oil inventory report. What are you expecting them to say?
O`GRADY: Well this coming week is - we`re going to see some
significant withdrawals from storage. I`m looking for somewhere between
6.5 to 7.5 million barrels of crude oil withdrawn from storage this week.
It`s really a function of the drop in production due to hurricane Katrina,
also the loss of imports. Keep in mind that when Katrina went through, it
shut off the Louisiana offshore oil port. And so that will curtail imports
and production. Offsetting that, of course, is that we also lost some
refining capacity so that oil won`t be consumed. So my guess comes out to
about 6.5 to 7 million barrels a day, which is fairly consistent with what
we saw with Ivan last year.
GHARIB: OK, we`re going to have to leave it there, Bill, thank you
so much as always, a pleasure talking to you.
O`GRADY: You`re welcome.
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.
09/07/05
Voters In Japan Try To Make Yen Sense Out Of The Economy
SUSIE GHARIB: Voters in Japan go to the polls on Sunday for
national parliamentary elections. While there probably will not be any
realignment of political power, there could be a change that paves the way
for removal of a longstanding drag on Japan`s economic growth. From Tokyo,
Lucy Craft explains.
LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Japanese
elections are usually yawners. This time both the ruling party and its main
opponents are not just pressing the flesh and spouting slogans but talking
yen and sense. The election is actually a referendum on modernizing the
Japanese economy starting with Japan`s monstrous postal system. Despite its
name, Japan Post doesn`t just deliver the mail. Through its sprawling
network of post offices, Japan Post handles a whopping $3 trillion worth of
savings accounts and life insurance policies. That`s almost triple the
holdings of Citigroup, America`s number one bank.
MARTIN SCHULZ, SENIOR ECONOMIST, FUJITSU RESEARCH INSTITUTE: So
this is really financial volume we`re talking here about and enormous for
us in terms of intermediation and financial resources.
CRAFT: Postal funds have been a favorite trough for political pork.
ROBERT FELDMAN, SENIOR ECONOMIST, MORGAN STANLEY JAPAN: Heretofore,
much of that money has been invested on bureaucratic principals, whose
road, whose bridge do you build, no economic or no serious economic control
over how the money is used and so of course, there has been a lot of waste,
fraud, corruption involved with those monies.
CRAFT: Japan Post would be broken into several parts and privatized
under the (INAUDIBLE) plan, much need medicine say experts for the overall
financial system.
SCHULZ: Their major competition for example in real estate loans
for the private banks, so the reform and privatization here would help the
entire financial system and allocation of resources in Japan.
CRAFT: With its nearly half million employees, Japan Post say its
critics is ripe for downsizing.
FELDMAN: Particularly as the population ages, we can`t afford to
have that much people in post offices, selling stamps, taking packages only
and not doing other jobs that they could be doing.
CRAFT: Japan`s democrats would slash the size of the postal savings
system by half, while the ruling party would invite private companies to
manage the funds. Analysts do not expect a rush of postal savings to Wall
Street.
FELDMAN: At least under the LDP`s (ph) proposal, the money that`s
in the postal system right now will continue to be subject to guarantees
and will have to be invested on a, call it widows and orphans basis, that
is with safety as the primary factor. As new money comes in, it will be
more allocated to more profit making entities and profit making ventures.
CRAFT: Poll show Prime Minister Kozumi (ph) and his ruling
conservative party are in line to stay in power after this election, but
even if the conservatives lose, analysts say the momentum for postal reform
is overwhelming. They say the question isn`t if Japan Post will be
radically overhauled, only when and how. 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/07/05:
"Money File"-Swinging From Paycheck To Paycheck
SUSIE GHARIB: In the "money file" tonight, a true test of your ability to handle
your personal economy. Here`s Chuck Jaffe, senior columnist for
Marketwatch.
CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: Most of us celebrated
Labor Day this week by not working. But with the holiday over, it`s a good
time to consider what would happen if, indeed, we were not working on a
more-permanent basis. So here`s a drill that`s easy to try, hard to
achieve, and well worth the effort. Skip your next paycheck. Just don`t
cash it or put the money to a holding account until you see that you can go
a full pay period without it. Missing a payday lets you see if you are
living paycheck-to-paycheck, and tests out the comfort in any financial
cushion you have made for yourself.
Someone is living the frightening statistics and the Commerce
Department now says that the nation`s savings rate is zero. The Employee
Benefits Research Institute notes that nearly 40 percent of all workers
have saved nothing at all towards retirement. And statistics show that a
growing number of people are tapping their home equity just to get by.
While the hourly wages of blue- collar workers rose this summer, all of
that gain and then some was swallowed by inflation, and that was before
hurricane Katrina virtually guaranteed big hikes in the consumer price
index for at least the rest of the year.
In today`s economy, everyone lives frighteningly close to losing
their paycheck. If you can`t miss a pay period without feeling pinched or
racking up new debt, you need to get a handle on your spending habits and
start saving, so that you`ll have a cushion in case there is no job to
celebrate with a day off come next Labor Day. I`m Chuck Jaffe.
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.
09/07/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Stocks began the day modestly lower on profit taking from
yesterday`s sharp rally. Investors were concerned about a 2.5 percent rise
in second quarter labor costs too, but the Dow fell only 10 points at the
outset and the NASDAQ lost seven. Cushioning the downturn were analyst
upgrades on Hewlett-Packard, JPMorgan and McDonalds whose strength helped
lift the Dow to a 12 point gain by noontime. Falling oil prices kept the
rally alive this afternoon. So the Dow industrial average closed up 44 1/4
points at 10,633.50. The NASDAQ Composite rose 5.17 ending at 2172.03.
Standard & Poor`s 500 gained 2.97 to 1236.36. In the bond market, the 10-
year note fell 11/32 to par and 28/32 lifting the yield to 4.14 percent.
The New York`s most active big board issue, 24.1 million shares
traded, Lucent Technology (LU) moving up $0.12.
Pfizer (PFE) a $0.43 gain. Bear Stearns reinstated coverage of Pfizer
with an "out perform" rating.
Then General Electric (GE) with a $0.07 gain.
ExxonMobil (XOM) up $0.40, despite the further drop in oil prices.
Time Warner (TWX), fifth in volume was up $0.23 a share.
Motorola (MOT) down $0.05. The company is going to begin making for
Apple Computer an iTunes cell phone.
Then Boston Scientific (BSX) down $1.95. The company sees third
quarter earnings on the soft side compared to Street expectations of $0.46
share in earnings.
Ford Motor Co (F) up $0.17, even though the company is recalling 3.8
million vehicles from the yields `94 through 2002 and they include the
popular Ford F-150 pick up and three of its SUV models and the problem is
the cruise controls, which can cause fires under the hood. This is the
fourth largest recall in Ford history.
Nortel Networks (NT) up $0.16.
And McDonald`s (MCD) up $1.04. Bear Stearns upgraded McDonald`s from
"peer perform" to "out perform," did the same thing to two other restaurant
stocks. Let`s have a look at how they fared.
We see Brinker International (EAT) up $1.40.
And Yum! Brands (YUM) getting an upgrade also and the stock up $2.91.
Hewlett-Packard (HPQ), another Dow stock rising $0.21 gain. UBS
financial upgraded it from "neutral" to "buy."
And the third Dow stock to get an upgrade, this time from Piper
Jaffray was JPMorgan Chase (JPM). Piper upgraded it from "market perform"
to "out perform."
Hibernia (HIB) the Louisiana-based bank, down $1.54. Capital One cut
its acquisition price by about 7 percent from $33 down to $30.49 a share
due to damage to Hibernia assets caused by hurricane Katrina.
Symbol Technologies (SBL) up $1.15, good percentage move. The company
has settled a dispute over radio frequency identification issues with a
unit of Unova. Unova stock was up $3 a share at $34 even.
McCormick & Co (MKC) peppered by sellers today, down $3.93. The
company sees 2005 earnings lower than expected because of profit shortfalls
in its industrials businesses for spices and sauces.
On the upside we see Medco Health Solutions (MHS) rising $2.89.
Merrill Lynch upgraded it from "neutral" to "buy" with a $60 a share target
price.
And Navistar International (NAV) up $2.36. Third quarter earnings up
28 percent to $0.83 versus $0.66 last year, a penny above the Street
estimate.
Google (GOOG) topped the active list on NASDAQ with a nice gain of
$7.76.
Followed by Apple Computer (AAPL) which was down $0.12. It unveiled an
iTune-enabled cell phone and a smaller iPod today.
Microsoft (MSFT) $0.15 loss.
$0.20 gain in Cisco Systems (CSCO).
Intel (INTC) a $0.04 loss. That was fifth in dollar volume.
Dell (DELL) down $0.41.
Altera (ALTR) fell $1.69. Company said its profit margins will narrow
from as high as 69 percent to as low as 66 percent.
Ebay (EBAY) up $0.29.
Amgen (AMGN) $0.72 loss.
And Yahoo! (YHOO) was up $0.38 a share.
ID Biomedical (IDBE) up $3.46. Glaxosmithkline is offering to acquire
the Canadian firm for about $29.46 in U.S. funds. That`s just where it
closed, $35 Canadian.
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.
09/07/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10633.50 +44.26 + .4
HIGH 10640.43
LOW 10573.95
NASDAQ COMP. 2172.03 +5.17 +.2
HIGH 2172.39
LOW 2158.61
VOLUME 1,499.9
PREVIOUS 1,421.5
UP VOLUME 908.1
DOWN VOLUME 570.5
DOW TRANSPORTS 3687.30 -1.71 - .1
DOW UTILITIES 419.98 +.23 + .1
CLOSING TICK +613
S&P 500 1236.36 +2.97 + .2
S&P 100 572.15 +1.52 + .3
MIDCAP 400 718.35 +3.14 + .4
REUTERS/CRB 324.19 -5.17 - 1.6
NYSE COMPOSITE 7625.24 +6.28 + .1
VALUE LINE 415.81 +1.52 + .4
RUSSELL 2000 677.32 +2.84 + .4
DJW 5000 12375.01 +34.56 + .3
U.S. TREASURIES
5-YEAR NOTE 4.125%
Aug. 15,2010 100 26/32 -5/32 + 3.94
10-YEAR NOTE 4.25%
Aug. 15,2015 100 28/32 -11/32 + 4.14
30-YEAR NOTE 5.375%
Feb. 15, 2031 114 15/32 -31/32 + 4.43
LEHMAN BROS.
LONG BOND INDEX 1814.21 -16.60
DOW CLOSE 10633.50 +44.26 + .4
ADVANCES 1751
DECLINES 1539
NEW HIGHS 228
NEW LOWS 19
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.18 +.12 +3.9
PFE Pfizer 26.30 +.43 +1.7
GE GE 34.01 +.07 +.2
XOM Exxon Mobil 61.46 +.40 +.7
TWX Time Warner 18.22 +.23 +1.3
MOT Motorola 22.36 -.05 -.2
BSX Boston Scientific 24.26 -1.95 -7.4
F Ford Motor Co 10.13 +.17 +1.7
NT Nortel Networks 3.22 +.16 +5.2
MCD McDonald's 33.70 +1.04 +3.2
NASDAQ CLOSE 2172.03 + 5.17 + .2
VOLUME 1,538.6
PREVIOUS 1,457.1
ADVANCES 1639
DECLINES 1369
NASDAQ ACTIVES
GOOG Google 294.87 +7.76 +2.7
AAPL Apple Computer 48.68 -.12 -.3
MSFT Microsoft 26.85 -.15 -.6
CSCO Cisco Systems 18.40 +.20 +1.1
INTC Intel 25.66 -.04 -.2
DELL Dell 35.12 -.41 -1.2
ALTR Altera 20.11 -1.69 -7.8
EBAY eBay 40.46 +.29 +.7
AMGN Amgen 81.66 -.72 -.9
YHOO Yahoo! 34.06 +.38 +1.1
AMEX CLOSE 1690.80 + 4.59 + .3
INDEX SHARES
DIA DIAMONDS TRUST 106.20 +.37 +.4
QQQ NASDAQ 100 39.41 +.07 +.2
SPY S&P DEP.RECEIPTS 123.91 +.21 +.2
STOCKS IN THE NEWS
EAT Brinker Intl 38.40 +1.40 +3.8
YUM Yum! Brands 50.66 +2.91 +6.1
HPQ Hewlett-Packard 27.46 +.21 +.8
JPM JPMorgan Chase 34.89 +.32 +.9
HIB Hibernia 29.86 -1.54 -4.9
SBL Symbol Tech 10.18 +1.15 +12.7
MKC McCormick & Co 29.28 -3.93 -11.8
MHS Medco Health Solu 53.07 +2.89 +5.8
NAV Navistar Intl 34.97 +2.36 +7.2
IDBE ID Biomedical 29.46 +3.46 +13.3
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