10/26/05:
The Bouncing Bond Market Impact
SUSIE GHARIB: Declines in the bond market pulled down stocks
on Wall Street today. The Dow lost 32 points and the NASDAQ
fell nine as investors focused on rising interest rates in
the treasury market. The yield on the bench mark ten year
note approached 4.6%, it’s highest level in seven months.
Erika Miller Reports.
ERIKA MILLER: The bond market fell again today, continuing
a grend that started two months ago. The yield on the ten-year
note, which moves in the opposite direction to price, is now
at the highest level since march. Strategists say the root
cause of the really in yields is the expectation that the
Federal Reseserve will keep raising interest rates into next
year. With virtual certainty of the fed raising interest rates
in November and December, the bond market is already looking
ahead to January. It is now pricing in almost 80% odds that
the fed funds rate will be raised to 4.5% at that Janaury
31 policy meeting. Those odds were closer to 50-50 a week
ago.
JACK MALVEY, CHIEF FIXED INCOME STRATEGIST, LEHMAN BROS.:
There seems to be capitualtion across the bond market in acknowledgement
that the final resting place for the Federal Reserve is probably
around 4.75%, Plus or minus 25 basis points. And that is higher
than what the market had envisioned going back a month ago.
MILLER: Yields have also been rising since Monday, when Ben
Bernanke was named to replace Alan Greenspan as Fed chairman.
Experts say investors are concerned Bernanke may want to establish
his inflation-fighting credentials early on.
MALVEY: The expectation is this new chief central banker
will be expected to demonstrate his inflation-fighting bona
fides by being aggressive in 2006 and keeping the tightening
continuing.
MILLER: Also helping to put pressure on U.S. bond prices
is a decline in European bonds. The region`s economy has been
improving and that has many investors betting the European
central bank will soon boost interest rates, the first rate
hike since 2000.
ANTHONY CRESCENZI, CHIEF BOND MARKET STRATEGIST, MILLER TABAK:
Foreign
bond markets right now are performing very poorly and that
performance is affecting treasuries, too. Historically, there`s
very strong correlation between U.S. Treasures and foreign
bonds.
MILLER: Experts say another reason for the sell-off in Treasuries
is growing concern about criminal indictments in the Bush
administration for leaking the identity of a CIA agent.
CRESCENZI: Foreign investors own about half of the U.S. Treasury
market. If they are fearing possible problems within the White
House -- let`s say because of possible indictments of key
people within the
administration -- foreign investors might be less willing
to put their money in the United States.
MILLER: Many bond market strategists expect the sell-off
in Treasuries to continue, but they say that could change
if a rate hike in January appears less likely. 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.
10/26/05:
The Budget Battle Becomes A Capitol Concern
SUSIE GHARIB: The president stepped into the budget fight
today, urging Congress to push harder to cut spending. But
that won`t be easy. A full-blown battle is developing between
Republicans and Democrats and senators and congressmen as
to just what programs will get trimmed down. There are
also charges flying that one budget plan deliberately targets
the poor.
Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The
president says he is willing to consider across the board
spending cuts as one way to reduce the deficit and help pay
for the costs of hurricanes Katrina and Rita.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We can help
the people
of the Gulf coast region recover and rebuild and we can be
good stewards of the taxpayers` dollars at the same time.
I encourage Congress to push the envelope when it comes to
cutting spending.
GERSH: But how hard Congress pushes is another matter. The
Senate Budget Committee today approved a package of $39 billion
in cuts over five years, $26 billion in Medicare and Medicaid
payments to drug makers, pharmacies and managed care companies.
Other cuts include reductions in
fees to banks that issue student loans. But even Republicans
acknowledge these cuts may not make it into law.
SEN. JOHN ENSIGN, (R) NEVADA: We`ll be lucky to get this
small amount of deficit reduction.
GERSH: Democrats remain united in their opposition to a Republican
budget that cuts taxes by $71 billion while cutting services
for the poor.
SEN. PATTY MURRAY (D) WASHINGTON: I really believe that we
should be focusing on how we protect the most vulnerable,
not handing them further burdens.
GERSH: Republicans in the House of Representatives are pushing
for even deeper cuts. House conservatives would like to see
across the board spending cuts with a total savings of $50
billion, including $11 billion in Medicaid, $5 billion from
Federal child support enforcement and $6 billion in increased
corporate premiums for the Federal Pension Benefit Guaranty
Corporation. But so far conservatives have been unable to
muster the votes for deeper cuts.
REP. MARK KIRK (R) ILLINOIS: This is, I believe, a moderate
proposal coming forward because we are reducing the rate of
growth of Federal spending from 5.7 percent growth to 5.6
percent.
GERSH: And there is more spending to come. The Bush administration
is expected to ask for $20 billion for hurricane Katrina and
lawmakers from Louisiana want Federal help worth $250 billion
and no one knows how much hurricane Wilma will cost. 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.
10/26/05: One On One With James
McNerney, President & CEO, Boeing
PAUL KANGAS: It was a mixed bag of earnings news today from
Boeing. The nation`s largest aircraft maker reported third
quarter earnings of $1.26 a share, including a large tax benefit
and other one-time items. That`s more than double its earnings
in the same period a year ago. But revenues fell
4 percent to just over $12.5 billion, reflecting the effect
of slowing growth in some product sales and a strike by the
company`s machinists union. Diane Eastabrook talked with Boeing`s
new CEO Jim McNerney in Chicago today and began by asking
him about the longer term impact of that
strike.
JAMES MCNERNEY, PRESIDENT & CEO, BOEING: The $1.5 billion
is revenue we lost and with that revenue, which we had orders
for, obviously we would have been in sort of a high single
digit kind of growth as a company, which is pretty good performance.
But the 21 planes in the third quarter will
have an additional nine in the fourth quarter that will be
the result of the strike and it`s -- we`re not exactly sure
when we`re going to be able to make those up. Our customers
are -- have not canceled any orders.
They`re going to be with us.
But next year we had a big plan to ramp up production that`s
been in place for a couple of years. This kind of business,
that is a major event, ramping up production significantly.
Because we have this $100
billion backlog we`re trying to satisfy. And it`s tough to
add on to that, these 30 airplanes that you`re asking about.
And we`re a little uncertain when we can catch those up.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT:
You mentioned that you have $100 billion back order of jets.
What companies are ordering those jets?
MCNERNEY: Mostly airlines outside of the United States. A
number of the discount airlines around the world, including
the United States -- Southwest and others. So it`s mostly
an internationally driven backlog
right now.
EASTABROOK: The U.S. legacy carriers are still having difficulties.
We`ve seen two more companies file for bankruptcy in the last
couple of months. When do you think that sector is going to
turn around?
MCNERNEY: We are constantly in discussion with our customers.
And I would say that discussions are in more advanced stages
with our U.S. airline customers than they`ve been in a while.
But they still have major challenges with fuel prices and
with -- and with some of their other costs, which is one of
the reasons we`re trying to produce planes that are dramatically
more fuel efficient than the ones that came before them. But
it`s -- I still -- it`s hard to call. All I know is that we
have a $100
billion backlog now and when the U.S. carriers start ordering,
which they will, it will add to that.
EASTABROOK: You did mention that your 787 Dreamliner is a
more fuel efficient jet and that is attractive during these
times when fuel prices are high. But if we do see prices spike
dramatically, will that have an impact on your orders going
forward?
MCNERNEY: Well, there`s the tension between being able to
afford the airplane you need and that`s the question you`re
asking. And I think -- I think sweet spot is -- not a matter
of a sweet spot, but I think the
current thinking is that fuel prices will remain higher than
they`ve been on a trend line basis, hopefully not as high
as they`ve been most recently, which should enable the airlines
to get their house in order and order
these planes.
EASTABROOK: Let`s switch gears now and talk about defense.
The defense budget is beginning to moderate in growth a little
bit. How are you going to deal with that going forward in
your defense unit?
MCNERNEY: We do foresee some pressure, as you pointed out.
And I think within the business driving performance, execution
on programs is the key to holding on to the industry`s largest
backlog. We do have the industry`s largest backlog on the
defense side. So the opportunity is there. There will be pressure
on new orders, but executing on what we`ve got, we still think
we`ll be in the mid to low single digit rangewhich is down,
but that down will be offset by a far bigger up on the commercial
business. So the portfolio affect is good and execution will
be key in IDS.
EASTABROOK: Your stock price is basically where it was five
years ago. Where do you see it going in the near future? Do
you see that improving?
MCNERNEY: We`re going to do the things that tend to lead
to appreciation in stock price. The stock price will be what
it will be. But I think the -- I think as the market understands
and as we communicate the
growth opportunity on the commercial airline business as perhaps
the defense business isn`t as bad as some people fear -- and
I don`t mean our business, I mean the overall pressure on
the defense side. Plus we`re
driving a lot of things that add up to productivity as well
as things that add up to growth. And I think that will enable
us to keep expanding our margins as well as grow. And I think
that`s the key. And if we can
demonstrate both growth and margin expansion, I think our
stock price is going to grow significantly.
EASTABROOK: Mr. McNerney, thanks very much for joining us.
MCNERNEY: You`re very 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.
10/26/05: Money File: The Plastic
Premium
In the "money file" tonight, a pop in the price
of paying with plastic. Here`s Harriet Brackey, personal finance
reporter for the "South Florida Sun Sentinel".
HARRIET BRACKEY, PERSONAL FINANCE REPORTER, SO. FLORIDA SUN
SENTINEL:
A lot of things are lining up to make debt far more difficult
to handle.
Interest rates are rising, making it more expensive. The bankruptcy
law
has gotten tougher, making debt harder to escape. And now
this: credit
card companies are doubling the minimum amount you have to
pay each month.
On certain cards, that will be 4 percent, up from 2 percent
of your
balance. Others are going up to 1 percent plus a finance charge.
You see, a group of Federal regulators told credit card issuers
to
stop setting itty-bitty minimums by the end of this year.
Regulators don`t
want consumers to have some false sense that they can handle
a mountain of
debt because they can afford the monthly payment. You may
think that
everyone understands this, that when you pay as little as
possible,
interest grows and grows on your credit card balance, but
that doesn`t mean
people can live by that fact.
There`s an $800 billion mountain in credit card debt out
there,
more than three times what there was in the 1990s. I think
what`s driving
debt up is that people aren`t saving money. Then, when something
like a
medical crisis comes up, they pull out the plastic. The American
Bankers
Association says the higher minimums shouldn`t be a problem
because most
people handle their debt well. And that`s true. But last summer,
credit
card delinquencies reached the highest rate ever. When the
new super-sized
bills arrive, I`m worry about that number heading up even
more. I`m
Harriet Brackey.
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.
10/26/05: "Last Word"-- The
Great Cheapskate Search
SUSIE GHARIB: And finally tonight, are you looking for some
creative ways to
save money? Well, how about showering with your dog or living
in a tent?
Now, while those ideas may not appeal to you, they apparently
appeal to
someone in New Zealand, who entered them into a contest to
find the
nation`s thriftiest shopper. Also recommended, confiscating
your spouse`s
credit cards, keeping your hands in your pockets while you`re
in a store
and cutting your own hair. And Paul, that last suggestion
could also have
another money saving benefit. The New Zealander who suggested
it says it
would cut down on social obligations and hence save you even
more money,
because of the damage to your appearance.
KANGAS: I guess you could call that cutting expenses with
a fine-
toothed comb.
GHARIB: You hit it on the head. That`s a good one.
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.
10/26/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Those continuing problems with idled refineries
led Wall
Street`s blue chips to a lower opening as the Dow fell 30
points at the
outset. But it rebounded quickly as crude futures fell while
the tech
sector firmed up. Just before noontime, the Dow was up 55
points. NASDAQ
had gained 12. Persistent weakness in Boeing stock, which
we`ll detail a
bit later in the program, began to weigh on the blue chips
this afternoon
as Amazon did on the tech sector. So the markets ended lower.
Dow Jones
industrial average closed off 32.89 points at 10,344.98. NASDAQ
Composite
was off 9.40 points at 2100.05. Standard & Poor`s 500
lost 5.16 ending at
1191.38. And as Erika Miller reported, another down day in
the bond
market; the 10-year note fell 11/32 to 97 11/32, putting the
yield at 4.59
percent, a seven month high.
New York exchange volume leader on nearly 67 million shares,
Lucent
Technology (LU) down $0.18. Fourth quarter earnings fell to
$0.08, from
$0.23 last year, but last year`s included a big tax benefit,
excluding
items like that - actually the earnings came in at $0.06 versus
$0.04 last
year, a penny above the Street estimate.
Pfizer (PFE) was down $0.14.
ExxonMobil (XOM) lost $1.
Sprint Nextel (S) $0.65 loss. Third quarter earnings $0.41,
$0.02
above the Street consensus and that did include the acquisition
of Nextel
incidentally.
General Electric (GE) $0.21 loss, fifth in big board volume.
Texas Instruments (TXN) fell $0.32.
Micron Technology (MU) gained a dime.
Citigroup (C) $0.48 rise.
Doral Financial (DRL) down $2.25. The Puerto Rican mortgage
bank`s
accounting is under investigation by the SEC. Meanwhile, the
company is
cutting its quarterly dividend by 56 percent down to $0.08
a share, way
down from the previous quarter.
JPMorgan Chase (JPM) $0.38 gain, tenth in volume.
Chubb Corp (CB), the big insurance company, up $5.59. Third
quarter
earnings fell to $0.89 versus $1.72 last year, but the Street
consensus was
for only $0.23 in earnings. Katrina did cost the company $511
million in
insurance losses.
Another insurance company XL Capital Ltd (XL) down $5.51.
The
company sees its third quarter insurance losses from hurricanes
around $1.4
billion, says it will have a 2005 operating loss.
Then the big oil companies, Conocophilips (COP) up $0.36.
Third
quarter earnings $2.68, up from $1.43, $0.22 above the Street
estimate. Of
course, the stock`s already had a run.
Anheuser-Busch (BUD) down $0.95. Third quarter earnings lower,
$0.66, versus $0.88 last year and lower than the Street estimate.
The
company cited price cuts in the beer industry hurting earnings.
Agere Systems (AGR) up $1.03. This chart is of the reclassified
stock incidentally. Agere had a fourth quarter earnings of
$0.04, versus a
big loss last year and the company plans to buy back up to
$200 million of
its own stock.
Automatic Data Process (ADP) up $2.44. Third quarter, first
quarter
earnings $0.38, up from $0.35 last year. Revenues up 10 percent.
Company
boosted the outlook for 2006, sees earnings growth of 22 to
25 percent.
Standard & Poor`s repeated a "strong buy" recommendation
today.
The big rail Norfolk Southern (NSC) down $1.82. Third quarter
earnings $0.73, up from $0.72 a year ago and a penny below
the Street
estimate.
The bit logistics trucking company Ryder (R) up $3.11. Third
quarter earnings jumped $0.98 versus $0.83 last year, revenues
up 14
percent. The company boosted 2005 guidance.
Google (GOOG) topped the NASDAQ active list with a gain of
$8.53.
Followed by Microsoft (MSFT) $0.08 rise there.
Apple Computer (AAPL) up $0.93.
Then Amazon.com (AMZN) plunging $6.42. Third quarter earnings
$0.12
down from $0.13 last year, but $0.02 above the Street estimate,
but the
fourth quarter outlook given by the company was rather guarded
(INAUDIBLE)
didn`t like it.
Intel (INTC) was a $0.04 loser and that was fifth in volume.
Research in Motion (RIMM) ended with a gain of $0.92 after
trading
as low as $51 a share this morning. That was after the Supreme
Court
declined to suspend a patent infringement ruling against the
company while
the court considered whether to hear an appeal.
Flextronics (FLEX) down $2.90. After the close yesterday,
second
quarter earnings $0.17, $0.02 below the Street consensus.
Company sees
third quarter earnings at $0.18 to $0.20. That`s well below
the $0.25 Wall
Street estimate.
Qualcomm (QCOM) $0.31 loss there.
Cisco Systems (CSCO) dropped $0.02.
Tenth in volume was Yahoo! (YHOO) with a gain of $0.34.
Intuitive Surgical (ISRG), this is a company that makes robotic
surgical products and boy did they have earnings, third quarter
$0.55, up
from $0.17 last year. The Street estimate was only for $0.29
a share.
And then Baidu.com (BIDU) closed up $1.24, but after the
close, the
company reported third quarter earnings of $0.03, a penny
below the Street
estimates and down from second quarter levels. In after hours
trading, the
stock plunged about $12 a share, down to the $69 a share level.
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.
10/26/05:
Market Stats
Due to Hurricane Wilma and the aftermath
of technical and logistical issues NBR faced on 10/26/05, we do not have market stats for this date. |
