12/20/05: The Impact of The NY Transit Strike On New York's Economy
SUSIE GHARIB: A transit strike in New York City today
crippled businesses in the nation`s largest city. The citywide strike, the
first in 25 years, brought bus and subway service to a halt, and could
impact the city`s economy to the tune of billions of dollars. A New York
state supreme court judge slammed the union for going on strike and
violating state law. As Scott Gurvey reports, the strike comes at a
critical time for New York, the height of the holiday season.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It hadn`t
happened in 25 years and few thought it would. Still, 34,000 New York
transit workers walked off the job at 3:00 a.m., parking busses and trains.
The strike shut down the nation`s largest mass transit system, one which
serves seven million riders each day. The city put emergency plans into
effect, restricting vehicle traffic to cars with four or more passengers
during the morning rush. For many, the strike meant a long walk in the 20
degree cold, or perhaps a ride on a bike or in a pedicab. On the street
there was little sympathy for the strikers.
VALENTIN ABREV, COMMUTER: We cannot tolerate this. I mean, the
workers have a great -- have it great, better than most workers here in New
York City. Why are they demanding more? I really think they are being
spoiled.
ROB ARNOLD, COMMUTER: The TWU makes this out to be an issue of
they`re fighting for -- they`re striking really for the common man. I say
they`re striking against the common man.
GURVEY: The city`s biggest companies, especially in the financial
sector, were prepared for the walkout. Many hired vans to shuttle
employees. But the strike is taking an economic toll which the city
estimates could run more than $400 million a day.
KATHRYN WYLDE, PRESIDENT, PARTNERSHIP OF NEW YORK CITY: There`s been
a huge cost to commission charter buses, to commission ferries, to
commission cars, obviously private car service, getting hotel rooms for
critical employees to stay in the city. So there`s a whole range of
expenses, public and private, that are being incurred every day and then
there`s lost productivity.
GURVEY: In meetings with reporters, the mayor stressed that it is the
least well-off who will suffer the most because of the strike.
MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: There are individual people
who are losing their jobs in the garment industry, in the restaurant and
hotel industry, in the travel industry. There are a lot of people who are
starting their ways up the economic ladder, who don`t get paid if they
don`t -- if they can`t get to work or if the store doesn`t open or if the
customers don`t show up.
GURVEY: One sector likely to be hard hit by the strike is New York
retail, especially so close to Christmas. But even there, sales lost at
Manhattan stores are likely to be made up elsewhere and most economists say
the nationwide impact of the strike will be minimal.
DREW MATUS, SENIOR MARKET ECONOMIST, LEHMAN BROTHERS: Nine million
people in the region roughly. It`s about 3 percent of the U.S. population.
All are going to be very unhappy about having an hour longer commute where
they have to walk in very cold weather. And so that might show up in the
confidence readings, but I don`t think it`s going to be a long lived
impact.
GURVEY: Late today, a judge held the union in contempt for violating
no strike provisions of state law and ordered it to pay fines of $1 million
a day. 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.
12/20/05: Government Regulators Issue New Guidleines To Shore Up Mortgage Loans
PAUL KANGAS: To keep the housing market from collapsing, bank regulators
are cracking down on interest-only and payment-option, adjustable-rate
mortgages. In recent years, those exotic mortgages fueled a lot of
speculative real estate buying. Today, regulators issued new guidelines so
that consumers and the banks themselves know exactly what they`re buying
into. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the red-hot
real estate market of the last few years, many people chose interest only
or payment option adjustable rate mortgages to buy homes. In that time,
regulators became increasingly concerned that many consumers and their
banks did not fully understand the terms of those loans. Fed Governor
Susan Bies says now it`s time to change that.
SUSAN BIES, FEDERAL RESERVE BOARD GOVERNOR: What we`re trying to do
is to sort of make sure that the overall way the product is structured,
underwritten and marketed to customers is done in a way that is clear to
both the banker -- what their risks are to the borrower, what their side of
the risks are because in many ways they are accepting more volatility in
their monthly payments.
DHUE: The number of interest only and option ARM loans have exploded.
In 2001, they made up less than 4 percent of purchase loans. This year,
the number is more than 40 percent. The new guidelines require banks to
document that borrowers have the money to make payments, even when they
adjust higher. Deputy Comptroller Barbara Grunkemeyer says tighter lending
standards should reduce some speculative buying.
BARBARA GRUNKEMEYER, DEPUTY COMPTROLLER: For an investor, that would
mean that when the payment resets, that they have the income to meet it.
They`re not dependent upon just selling the property into an appreciating
market, for example.
DHUE: Still, interest only and payment option ARMs are appropriate for
some buyers.
DOUGLAS DUNCAN, CHIEF ECONOMIST, MORTGAGE BANKERS ASSOCIATION: We
certainly will evaluate the rules for their appropriateness, in the sense
that we don`t want to see the baby thrown out with the bath water, but we
certainly want to see safe and sound institutions.
DHUE: Analysts say the new guidelines, along with higher interest
rates, will cool the real estate market.
ANDY LAPERRIERE, ANALYST, ISI: If you see less demand for housing
because people don`t qualify for loans and they can`t afford the houses,
then you are going to see home price appreciation slow or maybe even stop
next year in some of these hotter markets like California or even
Washington, D.C.
DHUE: But with interest rates still low and the economy still strong,
observers don`t expect home prices to collapse. 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.
12/20/05: One On One With with Fannie Mae Chief Economist David Berson
SUSIE GHARIB: As you mentioned earlier, the housing market has
logged another blowout month, with November housing starts up 5.3 percent,
far beyond what Wall Street had expected. To find out why, Washington
bureau chief Darren Gersh spoke with Fannie Mae chief economist David
Berson. He began by asking Berson why this number caught analysts by
surprise.
DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE: I think that builders are
responding to the very strong pace of home sales that we saw in October.
Single-family sales were at a record pace in October. I think that`s the
main part of the strength that we saw today with the housing starts
numbers. It`s probably not sustainable, though.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Your forecast is
that the market has peaked. What does that mean, you just put out your
forecast for 2006?
BERSON: That`s right. We think that home sales will fall in 2006.
2005 can be the fifth consecutive record year for home sales. We`ve never
seen that before. But we think in 2006 we`ll have a modest fall-off,
somewhere between five and 10 percent in home sales. That would still
leave home sales in 2006 at the third highest level ever.
GERSH: Why the fall-out, because you`ve got interest rates basically
unchanged. I mean you still see interest rates around 6 1/4. So why the
fallout?
BERSON: We think rates will move up a little bit, but that`s not the
main reason. We think that sales will fall in 2006, because one of the
components of the strength that we`ve seen -- particularly in the last two
years -- has been investors. Investors have come into the housing market
in large quantities, perhaps record quantities. Investor demand is more
volatile than other housing demand. So investors go in and out of markets
more easily than other buyers of homes. They`ve been very big into markets
and the housing markets in the last two years. We`re already starting to
see some very early signs, we think, of investors starting to pull out of
markets and that leads us to our view that housing demand will fall next
year.
GERSH: But if investors as you say jump in and out of the housing
market, why wouldn`t that seem to indicate that maybe the market will not
just sort of gradually decline but crash like some people are saying?
BERSON: The main part of housing demand is not coming from investors.
Housing demand comes fundamentally from job and income growth and
demographics and not from investors. Now the investors have been the icing
on the cake of the housing market in the last year. The icing is coming
off, but the cake remains.
GERSH: we could have a good national housing market and see individual
cities really crash.
BERSON: We will almost certainly see significant regional variation,
as we almost always do. Cities that have had a very high investor share
may be at more risk, if the investors do pull out, particularly those areas
that have not had --
GERSH: Name names.
BERSON: Particularly areas that have not had strong job growth to help
offset the investors. For example, everybody likes to look at Las Vegas,
the poster child of investor buying. And indeed, Las Vegas has seen lots
of investors but Las Vegas also has the strongest job growth in the
country, also has very strong in migration people who move there and buy
homes. So could Las Vegas see a signature slowdown? Yes, if investors pull
out, but because people continue to move there, it`s probably not going to
crash.
GERSH: What`s your outlook for prices?
BERSON: We think home price gains are going to slow meaningfully.
They have been rising at double digit rates in the last couple years in
part fueled by this boom in investors. So for 2004 and 2005, home price
gains on average have been anywhere from 10 to 12 percent. That`s not
sustainable. We think that a sustainable rate is somewhere around 4
percent. That`s about income growth. But we think for a year or two, we
may see home price gains somewhat below that and that`s what we normally
see. When we see a period where home price grains are well above normal,
we then see a following period where home price gains, while still positive
are less than normal. So in 2006, nationally, we`ll probably see home
prices going up at about a 3 to 3.5 percent rate.
GERSH: What about the condo market? I hear a lot of people speculating
that the condo market has turned even harder than the housing market.
BERSON: Well, the condo market we think has been the investment of
choice for the housing investors and it makes sense. It`s a much easier
investment. You don`t have to mow the lawn, for example, you simply have
the unit. If investors have been more concentrated in condominiums than in
single-family units, then we`re more likely to see a fall-off, a bigger
fall-off in condominium sales in 2006 than single-family sales, if the
investors do pull out. And that means that there`s likely to be more
weakness in condo prices than single-family home prices next year as well.
GERSH: David Berson, chief economist for Fannie Mae, thanks a lot.
BERSON: Good to be here.
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.
12/20/05: Commentary: Curing What Ails The U.S. Drug Industry
SUSIE GHARIB: Tonight`s commentator says it`s time for a new prescription for the
American drug industry. Here`s Daniel Henninger, deputy editor of the
editorial page of the "Wall Street journal."
DANIEL HENNINGER, DEPUTY EDITOR, WALL STREET JOURNAL EDITORIAL PAGE:
The U.S. drug industry is at a low point. Merck is bending beneath
thousands of anti-Vioxx lawsuits. Many people say the drug industry should
be held to account because of high prices. Well, I have a modest satirical
proposal: nationalize the drug industry. There are thousands of current
drugs listed in the "Physicians Desk Reference," a testament to the wonder
of modern drug development.
Well, let the government take over the manufacture and distribution of
all existing drugs. There`ll be good news and bad news in nationalizing
the drug industry. Without the need for any drug company to make a profit,
drug prices will fall -- as people seem to want -- and become affordable to
all cheap. But as a society we`d also pay a price. With no more profit to
support research and development, there`ll be fewer drugs for Alzheimer`s,
Parkinson`s and terrible ailments like Lou Gehrig`s or Huntington`s. No
government by itself will ever have enough money to develop new wonder
drugs.
Federalizing the industry to guarantee cheap drugs would be great for
people whose cures already exist, but it would be unbearably hard on
patients waiting for new cures in the future. Yes, the drug industry needs
to be part of any fix to high health care costs, but our politicians and
lawyers ought to be careful how hard they kick this industry because if it
breaks, there`s no easy replacement. I`m Dan Henninger.
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.
12/20/05: "Last Word"-Brown's Busy Day
SUSIE GHARIB: And finally tonight, if there are five more shopping days
until Christmas, there are fewer shipping days. That`s why today is the
busiest shipping day of the year for UPS. The company estimates it will
deliver more than 20 million packages today. That`s 230 packages per
second. It`s also a 43 percent increase over UPS` daily deliveries. UPS
has the world`s largest package distribution facility in Louisville,
Kentucky and, Paul, amazingly, those packages zip through more than 120
miles of conveyor belts on their way to their final destination.
KANGAS: Looks like brown is making a lot of green.
GHARIB: They sure are.
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.
12/20/05: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Well, no big up tick on Wall Street this morning. Stocks were
narrowly mixed despite that good news on inflation, a 5.3 percent rise in
November housing starts and solid earnings from Morgan Stanley. At noon,
the Dow was down three points. NASDAQ lost a fraction. A break below $20
in General Motors stock, a rise in oil prices and year end selling kept
stocks on the defensive this afternoon. So the Dow came in with a loss of
nearly 31 points at 10,805.55. The NASDAQ Composite down 1/3 of a point at
2222.42 and the Standard & Poor`s 500 lost .30 ending at 1259.62. In the
bond market, the 10-year note fell 6/32 to par and 9/32, putting the yield
at 4.47 percent.
For the eighth consecutive trading session, Pfizer (PFE) topped the
active list today on 30.4 million shares. Stock down $0.32, little profit
taking.
Then came Sprint Nextel (S) with a $0.17 loss. This company plans to
buy the 68 percent of its biggest affiliate Nextel Partners that it doesn`t
already own. Of course, $6.5 billion. That works out to $28.50 a share.
Nextel Partners stock on NASDAQ did well. We`ll see it in a moment.
General Motors (GM) down $1.20. In addition to the news that Toyota`s
trying to dethrone it as the world`s number one car maker, GM is recalling
425,000 vans from model years 2003 through 2006 because of faulty seat
belts. And incidentally, after the market closed, Kirk Kerkorian`s Tracinda
Corporation announced that it sold five million GM shares last Thursday and
another seven million yesterday for tax loss purposes. Those losses will
offset unrelated capital gains that Tracinda made.
Time Warner (TWX) was down $0.21. We`ll have some big news there in
just a moment.
Lucent Technology (LU) down $0.14. That was fifth in big board
volume.
General Electric (GE) $0.28 drop.
Motorola (MOT) moved up $0.16.
ConocoPhillips (COP) $0.42 gain.
Hewlett-Packard (HPQ) eased $0.02.
And then Merck & Co (MRK) a little profit taking there, down $0.26 a
share.
Morgan Stanley (MWD) up $1.04. Fourth quarter earnings up 49 percent
over last year to $1.68 and that $0.60 better than the Street expected, way
up from $1.09 a year ago.
Amerada Hess (AHC) was up $4.54 today. Citigroup rates it a "buy"
because of its relatively low valuation in its peer group.
Nike Inc (NKE) up $1.22. Just after the close, company in with second
quarter earnings, $1.14, up from $0.97 a year ago. That was $0.10 above the
Street estimate. Sales rose 10 percent. However, after hours Nike stock
plunged $3 from this level after the company`s forecast of future orders
which disappointed a number of analysts apparently.
Electronic Data Systems (EDS) up $0.61. Lehman Brothers upgraded it
from "equal weight" to an "over weight."
And then Black & Decker Corp (BDK) up $2.12. JPMorgan upgraded it from
"neutral" to "over weight."
Big gain in Town & Country Trust (TCT), rising nearly $4 a share. A
joint venture between Morgan Stanley real estate and Onex real estate will
acquire this company for $33.90 a share in cash.
Park Electrochemical (PKE) rose nearly $2 a share. Third quarter
earnings almost double last year, $0.41 versus $0.21 then and sales were up
a respectable 13 1/2 percent.
Station Casinos (STN) up $3.15. The company will develop a hotel and
casino in booming North Las Vegas, Nevada. CIBC World markets brokerage
rates Station Casinos an "out performer."
Assurant (AIZ) up $1.27. Merrill Lynch upgraded it from "hold" to
"buy" in the belief the company`s underlying earnings power is well ahead
of expectations.
Google (GOOG) topped the active list on NASDAQ, up $5.14. After the
close, Time Warner confirmed that it has sold a 5 percent stake in its AOL
unit to Google for $1 billion. There was a lot of speculation. Now it`s
been confirmed. There was little change in either stock after hours.
Microsoft (MSFT) $0.03 gain.
$1.52 rise in Nextel Partners (NXTP). Remember, that`s the one I said
that Nextel, Sprint Nextel will buy for $28.50 a share.
Apple Computer (AAPL) up $0.73.
Intel (INTC) $0.03 gain there, fifth in volume.
Oracle (ORCL) a $0.04 loss.
$1.13 drop in Sandisk (SNDK).
Cisco Systems (CSCO) up or down $0.16.
Qualcomm (QCOM) was up $0.40.
And then Yahoo! (YHOO), tenth in volume, down $0.37.
Seracare Life Sciences (SRLS) tumbling $9.26. The company said it will
miss its 10K filing deadline due to a number of accounting issues raised by
its auditors.
On the upside we see Neon Systems (NEON) rising $1.69. Progress
Software will acquire this company for $6.20 a share in cash.
And Outlook Group (OUTL) plunging $3.39. Plunging second quarter
earnings the reason, $0.18 versus $0.37 last year.
And finally, FX Energy (FXEN) down $2.34, a negative reaction to news
the company hit a dry well in western Poland.
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.
12/20/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10805.55 -30.98 - .3
HIGH 10860.14
LOW 10789.62
NASDAQ COMP. 2222.42 -.32 -.0
HIGH 2231.02
LOW 2213.52
VOLUME 1,469.4
PREVIOUS 1,663.1
UP VOLUME 665.3
DOWN VOLUME 768.7
DOW TRANSPORTS 4103.12 -5.03 - .1
DOW UTILITIES 413.22 +1.08 + .3
CLOSING TICK +454
S&P 500 1259.62 -.30 - .0
S&P 100 576.19 -.95 - .2
MIDCAP 400 736.14 +2.23 + .3
REUTERS/CRB 325.81 -.28 - .1
NYSE COMPOSITE 7777.27 -1.32 - .0
VALUE LINE 412.03 +.05 + .0
RUSSELL 2000 672.78 +.53 + .1
DJW 5000 12598.37 +2.88 + .0
U.S. TREASURIES
5-YEAR NOTE 4.375%
Dec. 15,2010 99 29/32 -5/32 4.40
10-YEAR NOTE 4.50%
Nov. 15,2015 100 9/32 -6/32 4.47
30-YEAR NOTE 5.375%
Feb. 15, 2031 110 20/32 -6/32 4.65
LEHMAN BROS.
LONG BOND INDEX 1755.16 -4.14
DOW CLOSE 10805.55 -30.98 - .3
ADVANCES 1661
DECLINES 1669
NEW HIGHS 57
NEW LOWS 147
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 24.00 -.32 -1.3
S Sprint Nextel 24.47 -.17 -.7
GM General Motors 19.85 -1.20 -5.7
TWX Time Warner 17.74 -.21 -1.2
LU Lucent Tech 2.76 -.14 -4.8
GE General Electric 35.54 -.28 -.8
MOT Motorola 22.49 +.16 +.7
COP ConocoPhillips 59.02 +.42 +.7
HPQ Hewlett-Packard 28.85 -.02 -.1
MRK Merck & Co 31.99 -.26 -.8
NASDAQ CLOSE 2222.42 - 0.32 - .0
VOLUME 1,761.8
PREVIOUS 1,765.9
ADVANCES 1377
DECLINES 1660
NASDAQ ACTIVES
GOOG Google 429.74 +5.14 +1.2
MSFT Microsoft 26.86 +.03 +.1
NXTP Nextel Partners 27.84 +1.52 +5.8
AAPL Apple Computer 72.11 +.73 +1.0
INTC Intel 25.81 +.03 +.1
ORCL Oracle 12.28 -.04 -.3
SNDK SanDisk 58.59 -1.13 -1.9
CSCO Cisco Systems 17.31 -.16 -.9
QCOM Qualcomm 44.09 +.40 +.9
YHOO Yahoo! 40.68 -.37 -.9
AMEX CLOSE 1751.08 - 2.97 - .2
INDEX SHARES
DIA DIAMONDS TRUST 107.88 -.33 -.3
QQQ NASDAQ 100 40.95 +.03 +.1
SPY S&P DEP.RECEIPTS 125.83 +.12 +.1
STOCKS IN THE NEWS
MWD Morgan Stanley 57.71 +1.04 +1.8
AHC Amerada Hess 130.07 +4.54 +3.6
NKE Nike Inc 88.48 +1.22 +1.4
EDS Electronic Data 24.01 +.61 +2.6
BDK Black & Decker 87.18 +2.12 +2.5
TCT Town & Country 33.75 +3.96 +13.3
PKE Park Electrochem 24.91 +1.96 +8.5
STN Station Casinos 66.14 +3.15 +5.0
AIZ Assurant 42.65 +1.27 +3.1
SRLS Seracare Life Sci 10.04 -9.26 -48.0
NEON Neon Systems 6.13 +1.78 +40.8
OUTL Outlook Group 10.98 -3.39 -23.6
FXEN FX Energy 8.55 -2.34 -21.5
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