10/05/05:
Energy Prices & Interest Rates Fuel Inflation Fears & A Stock Sell-off
SUSIE GHARIB: A big sell-off on Wall Street today on
worries about inflation and higher interest rates. The Dow tumbled 123
points and the NASDAQ lost 36. Weighing on the markets, comments by
Federal Reserve officials that inflation is now the biggest threat to the
economy because of hurricanes Katrina and Rita. Also fanning the inflation
flames, a report showing a sharp slowdown in the service sector. The
Institute of Supply Management`s non-manufacturing index fell sharply in
September, 53.3 percent last month, down from August`s reading of 65
percent. The ISM`s index of prices paid in September rose to 81.4 percent,
up more than 14 points from August. Now that`s its highest level ever and
the biggest surge in the report`s eight-year history. Higher energy costs
were to blame in both cases.
Meanwhile, energy prices fell sharply in New York trading today,
despite a report showing a big drop in oil and gas inventories. November
crude futures fell $1.11 to $62.79 a barrel. And November gasoline futures
tumbled more than 5 percent. U.S. oil supplies fell by 300,000 barrels
last week and gasoline inventories shrank by more than four million
barrels. But traders were actually relieved that the declines weren`t
steeper. They say getting crippled production back online quickly will
determine where prices head from here.
EVARISTO STANZIALE, OIL & GAS TRADER, SCS COMMODITIES: If we can get
some more of these refining -- the refining capability, the capacity up to
levels where they were prior to the hurricanes, then obviously I think the
market will definitely correct itself and if we do have a mild winter,
that`s another thing, too, a look at weather heading into the winter
season. If we do have a mild winter or, you know, a non-event as far as
winter is concerned, this market could be much lower.
GHARIB: But traders are not as optimistic about natural gas prices
which remain near all-time highs. On the worry list their uncertainty
about when damaged Gulf coast pipelines will be repaired and fears that a
harsh winter could lead to shortages.
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.
10/05/05: Fulfilling Pension Promises Becomes A Capital Concern
PAUL KANGAS: The pension plan of another American company, Huffy
Corporation, was taken over today by the Federal agency that guarantees the
plans. The Pension Benefit Guarantee Corporation says Huffy can only fund
about 47 percent of its plan, which covers 3,700 employees and retirees.
So the agency will be liable for the rest, which amounts to roughly $80
million. Huffy makes bicycles, and filed for Chapter 11 last October. It
hopes to emerge from bankruptcy later this month, after getting funding
from Chinese investors.
That takeover of Huffy`s obligations comes as legislation is moving
through Congress to overhaul the rules governing private pension plans.
The Senate is set to vote on legislation this week that would clean up
pension accounting and force companies to fully fund their pension
promises. Washington bureau chief Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: There are two
basic issues to the pension debate on Capitol Hill: one, how to estimate
the financial hole in a corporate pension; and two, how fast to fill that
hole. Some analysts say valuing plans is not that hard.
DAVID JOHN, HERITAGE FOUNDATION: Pension plans should be valued on
real dollars and real asset values today. What they are doing right now is
they are taking fantasy accounting. But unfortunately, they have to pay
real dollars for the benefits.
GERSH: Since pension plans run for decades, big companies and unions
argue marking assets to current market prices makes no sense. Industry
lobbyists say the most reliable way to measure pension liabilities and
assets is to use an average of stock market returns and interest rates over
many years.
JAMES KLEIN, PRESIDENT, AMERICAN BENEFITS COUNCIL: Given what happens
with the stock market, given what happens with interest rates, to be able
to have to pick a snapshot point in time is a very volatile way of
addressing a long-term obligation.
GERSH: The Senate is considering legislation this week that would
smooth pension returns using an average return on assets over a 12-month
period. Legislation in the House of Representatives would use a weighted
average over three years. Both bills give companies seven years to bring
their plans up to full funding. The Senate bill would also raise corporate
premiums for Federal pension insurance by more than $3 billion. But the
pension problem is growing worse with each new corporate collapse. Delphi
is reported to be considering a bankruptcy filing this week. The Federal
government says the auto parts maker`s pension is short by $11 billion.
Experts say the legislation now pending on Capitol Hill will not solve the
nation`s pension under-funding.
MARK IWRY, PENSION ANALYST, BROOKINGS INSTITUTION: It really does
require a delicate balancing. On the one hand, we need to make sure that a
promise made is a promise kept and therefore, the plans are funded
responsibly and promptly. On the other hand, we need to make sure that
employers still want to maintain these plans.
GERSH: While Congress is expected to force companies to bring their
pension plans up to full funding more quickly, there is one large
exception. The Senate is considering giving the troubled airline industry
up to 21 years to fully fund its pension promises. 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/05/05: The Outlook For The Online Brokerage Business With Joe Moglia, CEO of Ameritrade
SUSIE GHARIB: There has been a flurry of mega deals in the online
brokerage business. E-trade agreed last week to buy Brown-co and
Ameritrade recently closed on a deal with TD Waterhouse. Joining us now to
talk about the changing dynamics of the industry, Joe Moglia, CEO of
Ameritrade. Nice to see you again, Mr. Moglia.
JOE MOGLIA, CEO, AMERITRADE: Hi Susie, nice to see you.
GHARIB: What was your reaction to the E-trade purchase of Brown Co?
What impact will that have on Ameritrade?
MOGLIA: I think you should expect continued consolidation in the
industry. There is excess capacity so as long as that exists, mergers and
acquisitions wind up making a lot of sense. In terms of the actual impact
that it`s going to have on Ameritrade, it`s really not going to impact us.
Our strategy is intact. We know what we want to do and we`ll pursue that.
So the Brown/E-trade acquisition or deal really doesn`t affect us at all.
GHARIB: Were you interested in Brown Co yourself for Ameritrade?
MOGLIA: Susie, that`s a very fair question but for legal reasons,
I`m not allowed to comment on that, but I think it`s fair to assume that
any time we see a property that winds up making sense to us from a
strategic perspective with regards to our clients or our shareholders, it
would be something that we would be looking at but I can`t specifically
comment on the Brown acquisition.
GHARIB: One of the big questions in the investment community is, is
it just a matter of time where E-trade and Ameritrade will merge together
and I know that E-trade made a pass at Ameritrade this past summer and it
didn`t work out, but do you see that in your future?
MOGLIA: Right now you have about 80 firms or so that have online
brokerage presences in the United States and about five or six fairly major
names. As long as there`s excess capacity, I do believe that consolidation
will continue. I don`t think you`re going to see five major names three to
five years from now. Now, whether or not we wind up doing something with
E-trade or we wind up doing something someplace else, we don`t know that.
But at the end of the day, we`re going to do everything we can to make
decisions that are going to be in our shareholders` best long-term
interest.
GHARIB: Mr. Moglia, as you position Ameritrade to compete with a
bigger E-trade and also with Fidelity and Schwab because these are the
really big players, what is your strategy?
MOGLIA: Well, first of all, part of what we were able to
accomplish, Susie, by doing the TD Waterhouse transaction expanded our
client segmentation strategy and got us involved with a long-term investor
space as well as the advisory space. We were already pretty significant in
the active trader space and it just enhanced our position there. It gives
us in effect diversification of our revenues. We have a full scale of
branches, a branch network now across the entire country and we`re the
number three player in the advisory business in the United States. Above
and beyond that, we`ve also created a strategic relationship with TD Bank
that allows us the vast majority of the benefits from being associated with
a bank without the majority of the costs or the risk associated with that.
So that has been our strategy and we`ll continue to pursue that.
GHARIB: And what about the -- the competitive marketplace,
especially in terms of pricing? We`ve seen Schwab drastically reduce its
prices and be very aggressive on that. Do you expect more price
competition between the online brokers?
MOGLIA: Well, Susie, there`s always going to be price competition on
Wall Street in general. Now, when Schwab came down with a lot of their
pricing, if you notice they were taking a lot of the prices that were
frankly above the market and basically bringing them more in line with what
the market`s going to be, with where the market is. I think for us it`s a
value of -- it`s a question of value proposition. It`s a matter of having
a specific price for different types and for different products and
services that you, indeed, offer your client base. And you can have
different levels of prices for different types of clients depending on what
you offer them. So that`s going to continue to be part of I think the
normal course of business.
GHARIB: All right. Well thank you very much for coming on our
program again. We appreciate it.
MOGLIA: Thanks, Susie.
GHARIB: We`ve been speaking with Joe Moglia, CEO of Ameritrade.
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.
10/05/05: Going Global In Search of Investment Opportunities
PAUL KANGAS:Investors looking for big stock market returns may want to
send their money packing. Many emerging markets are outshining the United
States so far this year. So where are the best opportunities? Erika Miller
got some answers from the pros.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Many investors
are fed up with the performance of U.S. stocks. The Standard & Poor`s 500,
a proxy for the U.S. market, has eked out only a fractional gain so far
this year. By contrast, some emerging markets have scored spectacular
returns. The Egyptian stock market is up 126 percent. Argentina, Jordan,
Sri Lanka and Russia are each up at least 68 percent. In fact, of the 27
emerging markets tracked by Morgan Stanley Capital International, only two
have done worse than the U.S. this year: Venezuela and Taiwan. So why has
the U.S. market been such a laggard?
ARNIM HOLZER, CHIEF INVESTMENT STRATEGIST, DEUTSCHE ASSET
MANAGEMENT: I think we are little bit later in the economic recovery cycle.
Interest rates have been moving up. The Fed has been raising rates to try
and take away some of the stimulus out of the system, and that`s
historically been a sign that equities aren`t going to do quite as well.
MILLER: Another reason investors are sending their money to
emerging markets is strong global demand for commodities like oil. Plus,
many developing nations have radically transformed their economies over the
past few years.
JOYCE CHANG, GLOBAL HEAD OF EMERGING MARKETS RESEARCH, JP MORGAN:
They`re paying down debt. They`re pre-financing. They are embarking on
liability management. They are improving the fiscal surpluses and also
building up foreign exchange reserves.
MILLER: So can the strong performance of emerging markets continue?
Some strategists say yes and see good opportunities in places like Thailand
and South Korea.
HOLZER: Asia has fundamental growth. We see industrialization. We
see some of the manufacturing jobs obviously moving from the developed
markets into those markets because of cheap labor, but we also see rising
productivity. The restructuring and reform in the financial area, in
particular, is very good for capital and for equity markets.
MILLER Others prefer Latin American countries, including Argentina,
Brazil and Mexico.
CHANG: Returns are still very high. The structural improvements
are in place. And in Latin America, the commodities boom really is helping
as well.
MILLER: One word of warning: emerging markets are almost always more
volatile than the U.S. market. But advocates say along with the greater
risk can be greater reward. 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.
10/05/05: "Money File"-Credit Cards Are About To Get The Maximum Out Of Minimums
PAUL KANGAS: In the money file tonight, beware: the minimum payment on your
credit card may be going up. Here`s Chuck Jaffe, senior columnist at
Marketwatch.
CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: The number of Americans
who are delinquent on their credit card bills now stands at an all-time
high, with nearly 5 percent of all credit accounts past due. That
statistic from the American Bankers Association is frightening, but it`s
about to get much worse. You can blame the sluggish economy and the
shocking increases in gas prices for the increase in delinquencies, which
are defined as accounts more than 30 days past due. But delinquency
numbers will rise because new Federal rules are forcing many card issuers
to hike the minimum payment due on credit cards. In some cases, minimum
payments will double. The rule goes into effect in January, although some
credit issuers have already made the change. With minimums rising,
delinquencies will too.
Studies indicate that as many as 10 percent of consumers pay only
the current monthly minimum due. If you`re one of those people, the key is
to be ready for the rule change, to understand that minimums are rising and
that it is crucial not only to meet them, but to do it on time.
Lenders increasingly are feeling the pinch of the economy, too.
They`ll use late payments as an excuse to raise your rates. Heck, if you
are late on a payment to one issuer, the others may use that as a reason to
bump your rates on their cards. Time will tell if the rule achieves its
goal, which is helping Americans as a whole, make progress towards debt
reduction. But the key for consumers is to remember that no matter how bad
the delinquency numbers are today, you don`t want to become a statistic
tomorrow. 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.
10/05/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS:Stocks headed broadly lower this morning, amid growing
concerns about inflation and higher energy prices. That steep decline we
told you about in the service sector index worsened the sell-off. At noon
the Dow was off 70 points; NASDAQ down 26. The market`s bearish behavior
convinced a lot of investors to take profits in favorites like housing,
biotech and energy stocks and that spurred a major afternoon sell-off. The
Dow industrial average came in with a loss of 123 3/4 points at 10,317.36.
NASDAQ tumbled 36 1/3 points ending at 2103.02. Standard & Poor`s 500 lost
18 points closing at 1196.39. Over in the bond market, the 10-year note
rose 7/32 to 99 7/32, lowering the yield to 4.35 percent.
For the third straight session, Lucent Technology (LU) topped the
active list today on 29 million shares, the stock losing $0.16.
ExxonMobil (XOM) down $1.60 in a weak energy group as oil prices faded
a bit.
Delphi Corp (DPH) was down $0.28. Analysts say the company`s close to
filing Chapter 11 bankruptcy unless General Motors bails them out.
Texas Instruments (TXN) down another $0.62 after losing $1.87
yesterday when Goldman Sachs downgraded it from "in line" to "under
perform."
Pfizer (PFE) in there with a $0.44 loss, fifth in big board volume.
General Electric (GE) fell $0.17.
Motorola (MOT) a $0.32 drop.
Procter & Gamble (PG) fell $0.97.
Hewlett-Packard (HPQ) lost $1.08.
And Chesapeake Energy (CHK) in that weak energy group, down $2.12.
General Motors (GM) itself off $1.44. The company is selling its
entire 20 percent stake in Fuji heavy industries. That`s the maker of
Subaru cars. Toyota is going to buy 9 percent of Fuji for about $310
million.
Harley-Davidson (HDI) losing $2.92. Bank America downgraded it from
"neutral" to "sell" and cut its price target down to $36 a share on
concerns about rising retail inventory for Harley and slowing demand for
its products.
British Airways (BAB) up $1.22. The company`s September traffic was up
a respectable 7.8 percent over last year.
Valero Energy (VLO) down $6.79. Declining demand for gasoline because
of the high prices had a lot of the major refiner stocks under selling
pressure, Valero one of them. Let`s have a look at some others.
Tesoro (TSO) off over $5.
Sunoco (SUN) fell $3.83.
And Marathon Oil (MRO) losing $3.79.
OM Group (OMG), this is a specialty chemicals firm, down $3.60 a
share. The company cut its 2005 earnings forecast from the $2 to $2.40 a
share range, all the way down to $1.40 to $1.60 a share.
Wolverine Worldwide (WWW), maker of Hush Puppy shoes among other
things, third quarter earnings higher, $0.42, up from last year`s $0.37.
Revenues were up 7 percent and the company boosted its 2005 estimate, up to
$1.26 to $1.28.
Freddie Mac (FRE) gained $1.46. The company`s board of directors
approved a $2 billion common stock buyback, also a $2 billion preferred
stock buy back.
Yum! Brands (YUM) edging up $0.56. Third quarter earnings comfortably
higher, $0.72, up from $0.61 last year. Revenues rose 3 percent.
And then Wendy`s Intl (WEN) gaining $0.61, although the company said
the two hurricanes will cut its third quarter earnings by $0.02 a share and
sales will be down 5 percent over last year.
Google (GOOG) topped the NASDAQ`s most active list down $0.29.
Followed by Microsoft (MSFT), $0.31 drop there.
Apple Computer (AAPL) off $0.97.
Intel (INTC) fell $0.43.
And Dell (DELL) you heard the story there, down $0.80. That was fifth
in dollar volume.
And no green at all on the active 10 in NASDAQ. Cisco Systems (CSCO)
down $0.17.
Sandisk (SNDK) fell $0.34.
Qualcomm (QCOM) $0.46 drop.
Ebay (EBAY) lost a penny.
And tenth in NASDAQ volume was Amgen (AMGN) off $2.09 a share.
Human Genome (HGSI) losing $4.10 or about 30 percent of its value.
Mid stage trials of the company`s lupus treatment proved to be
disappointing.
And ADC Telecom (ADCT) down $3.06. The company cut its fourth
quarter guidance from $0.28, that`s the Street estimate, down to $0.15 to
$0.19 a share.
And Mercury Interactive (MERQE) losing $5.29. The company says it
won`t meet its third quarter earnings targets. It`s also of course under an
SEC investigation regarding its accounting practices.
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.
10/05/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10317.36 -123.75 - 1.2
HIGH 10438.47
LOW 10316.16
NASDAQ COMP. 2103.02 -36.34 -1.7
HIGH 2139.60
LOW 2103.02
VOLUME 1,914.9
PREVIOUS 1,544.7
UP VOLUME 175.7
DOWN VOLUME 1,730.2
DOW TRANSPORTS 3623.52 -72.26 - 2.0
DOW UTILITIES 415.17 -14.18 - 3.3
CLOSING TICK -255
S&P 500 1196.39 -18.08 - 1.5
S&P 100 552.55 -7.26 - 1.3
MIDCAP 400 696.18 -16.70 - 2.3
REUTERS/CRB 328.20 -1.52 - .5
NYSE COMPOSITE 7436.36 -121.74 - 1.6
VALUE LINE 398.60 -9.05 - 2.2
RUSSELL 2000 644.98 -18.86 - 2.8
DJW 5000 11968.15 -199.95 - 1.6
U.S. TREASURIES
5-YEAR NOTE 3.875%
Sept. 15,2010 98 16/32 +3/32 + 4.21
10-YEAR NOTE 4.25%
Aug. 15,2015 99 7/32 +7/32 + 4.35
30-YEAR NOTE 5.375%
Feb. 15, 2031 112 1/32 +17/32 + 4.57
LEHMAN BROS.
LONG BOND INDEX 1778.18 +5.29
DOW CLOSE 10317.36 -123.75 - 1.2
ADVANCES 604
DECLINES 2713
NEW HIGHS 31
NEW LOWS 144
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.27 -.16 -4.7
XOM Exxon Mobil 58.95 -1.60 -2.6
DPH Delphi 2.50 -.28 -10.1
TXN Texas Instrument 31.39 -.62 -1.9
PFE Pfizer 24.80 -.44 -1.7
GE GE 32.68 -.17 -.5
MOT Motorola 22.00 -.32 -1.4
PG Procter & Gamble 57.11 -.97 -1.7
HPQ Hewlett-Packard 27.47 -1.08 -3.8
CHK Chesapeake Energy 35.50 -2.12 -5.6
NASDAQ CLOSE 2103.02 - 36.34 - 1.7
VOLUME 1,994.5
PREVIOUS 1,703.6
ADVANCES 599
DECLINES 2414
NASDAQ ACTIVES
GOOG Google 310.71 -.29 -.1
MSFT Microsoft 24.67 -.31 -1.2
AAPL Apple Computer 52.78 -.97 -1.8
INTC Intel 24.07 -.43 -1.8
DELL Dell 32.59 -.80 -2.4
CSCO Cisco Systems 17.50 -.17 -1.0
SNDK Sandisk 52.00 -.34 -.7
QCOM Qualcomm 45.15 -.46 -1.0
EBAY eBay 40.19 -.01 -.0
AMGN Amgen 78.01 -2.09 -2.6
AMEX CLOSE 1684.05 - 37.60 - 2.2
INDEX SHARES
DIA DIAMONDS TRUST 103.17 -1.00 -1.0
QQQ NASDAQ 100 38.76 -.54 -1.4
SPY S&P DEP.RECEIPTS 119.63 -1.59 -1.3
STOCKS IN THE NEWS
GM GM 28.64 -1.44 -4.8
HDI Harley-Davidson 44.81 -2.92 -6.1
BAB British Airways 53.07 +1.22 +2.4
VLO Valero Energy 105.77 -6.75 -6.0
TSO Tesoro 61.23 -5.02 -7.6
SUN Sunoco 72.95 -3.84 -5.0
MRO Marathon Oil 61.07 -3.79 -5.8
OMG OM Group 15.52 -3.60 -18.8
WWW Wolverine World 22.00 +1.35 +6.5
FRE Freddie Mac 57.02 +1.46 +2.6
YUM Yum! Brands 48.83 +.56 +1.2
WEN Wendy's Intl 47.33 +.61 +1.3
HGSI Human Genome 9.87 -4.10 -29.4
ADCT ADC Telecomm 19.61 -3.06 -13.5
MERQE Mercury Interact 31.61 -5.29 -14.3
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