10/14/05:
Gas Prices Fuel The CPI Gain
SUSIE GHARIB: Stocks on Wall Street broke out of their slump
today, despite several weak economic reports. The Dow rose 70 points and
the NASDAQ gained 17. The rally came in the face of a higher than expected
increase in inflation. Consumer prices posted their biggest monthly jump
since 1980, but investors focused on some positive aspects of the data.
Scott Gurvey reports.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: For most
consumers, it was absolutely no surprise to learn that a 12 percent
increase in energy prices in September is the reason the consumer price
index posted its biggest one month gain in 25 years. The nation`s key
inflation indicator jumped 1.2 percent after rising 0.5 of 1 percent in
August. Some took comfort in noting that the so-called core rate of
inflation, which excludes energy and food, remained at a surprisingly low
0.1 of 1 percent.
ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS:
Everybody`s out there fighting inflation, but inflation continues to be a
no-show. Now we know we`ve got rising energy prices, but that`s an
increase in energy prices. It`s an increase in oil. It`s not an increase
in inflation. Inflation refers to the kind of price level increase that`s
ongoing and nobody thinks that energy prices are going to do this again
next year.
GURVEY: This does not mean high energy prices are not having an
effect. Retail sales were up slightly in September, but fell short of
expectations. That was a result of a big drop in auto sales for the second
month in a row. Consumers were apparently not in the mood to buy cars in
the face of ever higher gas prices. There was a big 1.3 percent drop in
industrial production in September, but that was attributed to factory
shut-downs due to the twin hurricanes and a strike at Boeing, the giant
aircraft maker. Overall economists say the health of the nation`s economy
remains good and they expect the Fed to raise interest rates again when it
meets on November 1.
DAVID GREENLAW, FIXED-INCOME ECONOMIST, MORGAN STANLEY: I think
they`ll tighten in November, tighten again in December and then probably
continue to tighten a little bit next year, but it`s going to take a few
months, I think, before we see the direct impact of higher inflation on Fed
policy making.
GURVEY: Today`s CPI report is good news for people who get Social
Security checks. Benefits are linked to the index for annual adjustment
and the report means payments will go up 4.1 percent in January. 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.
10/14/05:
The Politics Of Selecting A New Fed Head
PAUL KANGAS: In Washington, there is growing speculation about who will
succeed Alan Greenspan at the Federal Reserve. Market professionals are
eagerly dissecting the economic views of all the leading candidates. But
one thing is missing from this nomination: a sharp partisan edge. Darren
Gersh explains.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The job of
Federal Reserve chairman has been called the second most powerful office in
the land, which makes it all the more surprising that selecting a
replacement for Alan Greenspan has not become the kind of partisan battle
that accompanies an opening on the Supreme Court. One reason is that
there`s much more of a consensus about what a Fed chairman should do.
ALICE RIVLIN, FORMER FED VICE CHAIR: There isn`t really a Republican
monetary policy as distinct from a Democratic monetary policy at the
moment, at least I don`t think there is.
GERSH: For at least two decades, the Fed has mostly succeeded in
reaching its goal of keeping inflation low and economic growth on track and
both Republicans and Democrats find it hard to argue with success.
MICHAEL MUSSA, FORMER IMF CHIEF ECONOMIST: The politicians, they`re
almost all incumbents of whatever party. What they don`t want is a
monetary policy that gets them unelected.
GERSH: The first President Bush did complain that Fed tightening
helped run him out of office in 1992. But that was not seen as a partisan
decision by Alan Greenspan, who is after all, a Republican. It was 1994
when the Fed changed the political dynamics of monetary policy. Alan
Greenspan preemptively attacked inflation, raising interest rates
aggressively before price hikes could take hold. The move worked.
WILLIAM POOLE, PRESIDENT, ST. LOUIS FEDERAL RESERVE BANK: And because
it was successful without creating an unemployment problem, a lot of the
commentary about the tradeoff of inflation and employment disappeared.
GERSH: Ever since, there has been a broad political and economic
consensus that the Fed should focus on keeping inflation low and stable.
To be sure, there are still some Democrats and Republicans who take aim at
the Fed as it now raises interest rates.
SEN. JIM BUNNING, (R) KENTUCKY: I believe that you are fighting an
inflationary boogey man that does not exist.
GERSH: But for the most part, the political controversy stirred up by
the Fed chairman has come when Alan Greenspan wanders off the monetary
reservation. The Fed chairman`s support for the president`s tax cuts and
Social Security reforms prompted Democrat leader Harry Reid to label
Greenspan a political hack.
WILLIAM NISKANEN, CHAIRMAN, THE CATO INSTITUTE: The Fed has become,
and in particular Greenspan himself has become such a credible institution
they`re asked to comment on a wider range of issues than they should be.
GERSH: There was far more controversy about the Fed when inflation and
interest rates were high. If the economy turns south or the housing market
collapses, the next Fed chairman could find himself back in the political
cross hairs. 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.
10/14/05: "Market Monitor"-Sam Stovall, Chief Investment Strategist for Standard & Poor`s
PAUL KANGAS: My guest market monitor this week is Sam Stovall, chief
investment strategist for Standard & Poor`s. Welcome back to NIGHTLY
BUSINESS REPORT Sam.
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, STANDARD & POOR`S: Nice to
be here, Paul.
KANGAS: When you were last with us as a market monitor guest about a
year ago, you said most bull markets last three to four years and we were
just entering the third year. But you said that the fourth year which we`re
in now can get very tricky. Give us some signs investors should look for
which might signal the end of the bull market and the beginning of a
bearish trend. How about these last two weeks? Is that a signal?
STOVALL: I was going to say, certainly the ride felt like it. I would
basically say that if inflation tends to be getting out of control which
requires the Fed to become much more aggressive in slowing economic growth,
then I think that certainly could be a trigger for a potential recession.
KANGAS: Well do you see the end of the bull market in the near future?
STOVALL: Not yet. Our expectation is we probably could see about a
five percent increase over the coming 12-month period, but certainly things
could be challenging. We still expect earnings to be fairly strong, but if
the consumer does not come through because energy price remain elevated,
that could be the fly in the ointment.
KANGAS: You said on that visit I remember that the first year of a
good bull market will return about 38 percent, second year about 12
percent, third year only six percent. Is 6 percent worth waiting for with
the danger lurking?
STOVALL: Actually, six percent was what happened in this most recent
one-year period, but on average the gain is only three percent and of the
11 third-year-bull markets since 1942, investors have been disappointed six
times with a flat performance, five negative performances and of those
five, three that became bear markets.
KANGAS: So it`s maybe a time to get a little more wary than normal.
Now you spoke of inflation in recent times. Wall Street seemed to focus on
the core inflation rate rather than the overall rate which includes those
simple things like food and energy. Why is that? I mean after all, we all
need food and fuel.
STOVALL: Well, a lot of cynics like to say that if you don`t eat, if
you don`t drive, if you don`t educate your children and go to the doctor,
then inflation is under control. I think the reason that investors really
do focus on the core rate of inflation is that that`s what the Fed looks at
and what they want to do is try to get a handle on where the Fed is going
with interest rates. The Fed says that they cannot regulate energy prices
so what they try to do is control the other areas of inflation.
KANGAS: OK. That`s an interesting and very good explanation I might
add. Last October when you were with us, you recommended the purchase of
four stocks. Let`s see how they`ve done since then. Look at this one,
Aetna up 67.4 percent, a great call. You still with it?
STOVALL: We still have a favorable ranking on Aetna and still think it
could do well in the coming year.
KANGAS: Alltel was up 9.4 percent. That`s not too shabby.
STOVALL: No, that did fairly well. We right now have a hold ranking on
the shares.
KANGAS: OK, let`s have the other two that you recommended, ENSCO up 26
percent, very respectable. You still with that one?
STOVALL: Yes, we are. We still a four star or "buy" recommendation
there.
KANGAS: And then RPM International up nearly 1 percent, not a loser in
the four. I congratulate you on some great calls.
STOVALL: Well, thanks a lot Paul. I have to say though that it`s a
team effort here so analysts Phil Seligman, Stewart Glickman and Todd
Rosenbluth also get some of the credit.
KANGAS: Credit where credit is due of course. How about some new
recommendations that will match the old ones, any chance?
STOVALL: Well, I`ll do my best. But basically there`s a theme here. Go
for large cap stocks, focus on high quality. Those companies that over the
past 10 years have increased their earnings and dividends consistently and
have a high S&P quality ranking and also focus on those that are likely to
do well in this fourth year of this bull market.
KANGAS: All right, let`s see number one, I can hardly wait.
STOVALL: OK, well, number one is ADP, if you -- Automatic Data
Processing. If you want to go to the tech side, I would say go ahead, but
be a little bit defensive, focus on a company that has good earnings growth
prospects, a high dividend yield and will benefit from the employment
trend.
KANGAS: We have less than a minute. Number two?
STOVALL: Number two would be UnitedHealth Care. Here`s a company that
also should benefit from a defensive move to health care stocks and so with
the acquisition of Pacific Care that would become accretive in 2007, that`s
a plus.
KANGAS: We`ve got time for a number three.
STOVALL: OK, number three, Wal-Mart. Our feeling is that this stock
will rebound from the negative performance received recently and then
finally also ExxonMobil, hedge your bets by staying with oil.
KANGAS: There`s Exxon. Boy that Wal-Mart chart doesn`t look too good
right now, but that`s why you like the purchase of it here, obviously. And
incidentally Same, do you personally own any of these stocks?
STOVALL: No I do not, nor does S&P, but our other affiliates might
provide services to them.
KANGAS: Why don`t you own them?
STOVALL: Well S&P has a long history of objectivity and basically we
don`t want to compromise that objectivity by potentially having a conflict
of interest.
KANGAS: I understand. Sam, thanks very much for being with us again.
STOVALL: You`re welcome Paul.
KANGAS: My guest, Sam Stovall of Standard & Poor`s.
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.
10/14/05: "Last Word"-Halloween Goes To The Dogs
SUSIE GHARIB: And finally tonight, when choosing a Halloween costume for that
special little one in your life, be sure that he or she can see well, hear
well, and of course wag their tail. Yes, we`re talking about Halloween
costumes for your dog, which are big business. This year the American
Kennel Club says nearly half of the dog owners it surveyed think turning
Fido into Frankenstein is an idea that they like. The poll also found that
women are more likely than men to dress up their pets for the holidays.
The American Kennel Club also reminds dog owners, Paul, that a happy
Halloween is a safe Halloween so be sure to supervise your pet.
KANGAS: You`re dog gone right I will.
GHARIB: Those are cute pictures aren`t they?
KANGAS: Yes they were.
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.
10/14/05: "The Week Ahead"
SUSIE GHARIB: Here`s a look at what`s happening next week. Our Friday
market monitor guest is James Dines, editor of the "Dines Letter." On the
economic calendar: Monday, Federal Reserve Chairman Alan Greenspan heads to
Tokyo for a speech on energy; Tuesday, we`ll see September producer prices;
Wednesday, September housing starts and weekly energy inventories; and
Thursday, weekly jobless claims. And also next week, lots of earnings from
Dow components including Caterpillar, Citigroup, General Motors, Intel,
Johnson & Johnson, JPMorgan Chase, 3M, and SBC Communications.
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.
10/13/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened modestly higher as investors focused on the
small rise in the core consumer price index along with lower oil prices.
The Dow rose 16 points at the outset of trading and the NASDAQ gained two.
Stocks turned flat after that drop in consumer sentiment came out, but
General Electric`s solid earnings kept optimism alive. That, along with
continuing weakness in oil and a good rally in the downtrodden tech sector,
helped the market close higher. Dow industrial average gained 70 3/4
points to 10,287.34. It rose twice and fell three times this week, still
had a net loss of 4.97 points. The NASDAQ Composite rose 17.61 to 2064.83
today. It also rose twice and fell three times this week, had an overall
loss of 25.52. The Standard & Poor`s 500 today advanced 9 3/4 points to
1186.57. In the bond market, the 10-year note down 4/32 to 98 5/32,
lifting the yield at 4.49 percent.
The most active New York exchange issue on 19.8 million shares,
Motorola (MOT) moving up $0.25.
Then General Electric (GE) with a $0.32 gain as you heard. Third
quarter earnings up 15 percent to $0.44 versus $0.38 a year ago. Revenues
up 9 percent.
Ford Motor Co (F) down $0.38. Citigroup downgraded Ford from "hold" to
a "sell."
Time Warner (TWX) $0.41 gain.
ExxonMobil (XOM) up $0.48, fifth in big board volume.
Then Pfizer (PFE) down $0.19.
Lucent Technology (LU) edged a penny higher.
Big gainer of the day, Vintage Petroleum (VPI) jumping $10.35.
Occidental Petroleum will acquire the firm for $20 a share cash plus 0.4 of
a share of Occidental. Today that deal is worth almost $50 a share for
Vintage shareholders. Occidental today closed at $72.73.
Texas Instruments (TXN) down $0.96. Bear Stearns downgraded it from
"out perform" to "peer perform."
Bank of America (BAC), tenth in volume was up a nickel a share.
Waters Corp (WAT) tumbling $4.80. The company cut its third quarter
earnings guidance of $0.47 down to $0.43. The Street estimate is up there
at $0.48. The company blames lower than expected sales growth of just 3
percent. The Baird brokerage cut its price target from $45 down to $38 a
share. It`s already there.
Regions Financial (RF), the big banking company, up $2.10. Third
quarter earnings nicely higher, $0.61 versus $0.57 a year ago and there was
a 7 percent increase in net interest income in that period.
Cleveland Cliffs (CLF), the iron ore producer, up $4.16. Morgan
Stanley repeated an "over weight" rating and it boosted its price target
from $81 to $106 a share for Cleveland Cliffs.
UnitedHealth Group (UNH) a $2.26 rise there. No particular news that
we saw, but this nice gain in the stock.
Then we see Black & Decker (BDK) up $2.60. The company is boosting its
stock buyback plan by five million shares.
Stanley Works (SWK) up $3.45. The company said third quarter sales
from operations were up 12 percent and it sees third quarter earnings
around $0.88 to $0.90 a share. That`s well above the $0.83 Wall Street
estimate.
A.O. Smith (AOS), which makes water heaters among other things, up
$2.64. Third quarter earnings more than tripled to $0.32 versus $0.10 a
year ago. Standard & Poor`s upgraded the stock from "sell" to "hold." Nice
move on the day.
Navteq Corp (NVT), this is a digital map maker, up $4.30. UBS
Financial upgraded it from "neutral" to a "buy" rating.
And International House of Pancakes (IHP) up $3.79. Third quarter same
store sales up a respectable 4 1/2 percent.
Continental Airlines (CAL) edged up $0.61. Lehman Brothers upgraded it
from "under weight" to "equal weight."
And then we see Encore Acquisition Co (EAC) rising $3.39. This is an
oil and gas field developer. Stanford Research upgraded it from "hold" to
"buy" and boosted its price target from $28 to $36 a share.
NASDAQ`s most active, Google (GOOG) down $1.30.
And then Apple Computer (AAPL) $0.26 gain.
Microsoft (MSFT) an $0.08 rise.
Intel (INTC) $0.03 gain there.
Sandisk (SNDK) up $2.60, fifth in dollar volume.
Qualcomm (QCOM) gained $0.23.
Cisco Systems (CSCO) down $0.03.
Yahoo! (YHOO) was up $0.15. The company had no comment on speculation
that it like Google and Comcast is considering a stake in AOL.
Amgen (AMGN) a $0.07 loss.
And Ebay (EBAY), tenth in volume, up $0.06.
Research in Motion (RIMM) fell $1.42. Bear Stearns downgraded it from
"peer perform" to "under perform."
And finally Charlotte Russe (CHIC) holding, this is the women`s
apparel retailer, is boosting its fourth quarter earnings guidance from the
$0.16 to $0.20 range all the way up to $0.25 to $0.27 a share.
And those are the stocks in the news.
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.
10/14/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10287.34 +70.75 + .7
HIGH 10291.91
LOW 10200.10
NASDAQ COMP. 2064.83 +17.61 +.9
HIGH 2064.95
LOW 2042.54
VOLUME 1,703.9
PREVIOUS 1,830.0
UP VOLUME 1,286.1
DOWN VOLUME 401.4
DOW TRANSPORTS 3638.61 +49.11 + 1.4
DOW UTILITIES 394.06 +4.95 + 1.3
CLOSING TICK +615
S&P 500 1186.57 +9.73 + .8
S&P 100 550.49 +3.07 + .6
MIDCAP 400 681.12 +9.00 + 1.3
REUTERS/CRB 327.64 -1.28 - .4
NYSE COMPOSITE 7362.59 +69.47 + 1.0
VALUE LINE 390.32 +4.16 + 1.1
RUSSELL 2000 633.15 +9.87 + 1.6
DJW 5000 11835.61 +112.80 + 1.0
U.S. TREASURIES
5-YEAR NOTE 4.25%
Oct. 15,2010 99 19/32 -3/32 4.34
10-YEAR NOTE 4.25%
Aug. 15,2015 98 5/32 -4/32 4.49
30-YEAR NOTE 5.375%
Feb. 15, 2031 109 27/32 -4/32 4.71
LEHMAN BROS.
LONG BOND INDEX 1752.08 -3.10
DOW CLOSE 10287.34 +70.75 + .7
ADVANCES 2277
DECLINES 1044
NEW HIGHS 14
NEW LOWS 172
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MOT Motorola 20.16 +.25 +1.3
GE GE 34.34 +.32 +.9
F Ford Motor Co 8.61 -.38 -4.2
TWX Time Warner 18.00 +.41 +2.3
XOM Exxon Mobil 58.64 +.48 +.8
PFE Pfizer 24.32 -.19 -.8
LU Lucent Tech 3.06 +.01 +.3
VPI Vintage Petro 48.94 +10.35 +26.8
TXN Texas Instrument 29.93 -.96 -3.1
BAC Bank Of America 42.05 +.05 +.1
NASDAQ CLOSE 2064.83 + 17.61 + .9
VOLUME 1,570.4
PREVIOUS 1,823.4
ADVANCES 2072
DECLINES 924
NASDAQ ACTIVES
GOOG Google 296.14 -1.30 -.4
AAPL Apple Computer 54.00 +.26 +.5
MSFT Microsoft 24.67 +.08 +.3
INTC Intel 23.23 +.03 +.1
SNDK Sandisk 50.44 +2.60 +5.4
QCOM Qualcomm 41.93 +.23 +.6
CSCO Cisco Systems 17.27 -.03 -.2
YHOO Yahoo! 33.52 +.15 +.5
AMGN Amgen 75.75 -.07 -.1
EBAY eBay 39.70 +.06 +.2
AMEX CLOSE 1619.79 + 25.00 + 1.6
INDEX SHARES
DIA DIAMONDS TRUST 102.83 +.88 +.9
QQQ NASDAQ 100 38.06 +.28 +.7
SPY S&P DEP.RECEIPTS 118.67 +1.24 +1.1
STOCKS IN THE NEWS
WAT Waters Corp 36.58 -4.80 -11.6
RF Regions Financial 31.93 +2.10 +7.0
CLF Cleveland Cliffs 77.31 +4.16 +5.7
UNH UnitedHealth Group 56.43 +2.23 +4.1
BDK Black & Decker 79.68 +2.60 +3.4
SWK Stanley Works 47.76 +3.45 +7.8
AOS A.O.Smith 30.80 +2.64 +9.4
NVT Navteq Corp 51.20 +4.30 +9.2
IHP IHOP Corp 44.10 +3.79 +9.4
CAL Continental Air 11.78 +.61 +5.5
EAC Encore Acquistion 34.30 +3.39 +11.0
RIMM Rsch In Motion 64.01 -1.42 -2.2
CHIC Charlotte Russe 17.26 +2.67 +18.3
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