The Feb's Statement---Mike (fast)
NYSE---Deb (fast)
weakness was the story with the dollar, you’re buying less yen, euro and the pound. across the board declines for the greenback. federal reserve policymakers reiterated their holding or that they will be patient in holding down borrowing costs to help boost job growth, voting to leave the benchmark rate at its lowest since 1958. mike mckee has more on the fed’s statement and jointion us from washington. mike?
>> in the fed’s economic outlook, they maintain the view that the risk of slowing inflation remains almost equal to the danger of accelerating price increases and they can be patient. on january 28, the central bankers suggested they saw signs of improvement in the labor market but after the economy created just 21,000 new jobs in february, the fed today opted for a more realistic assessment saying output is continuing to expand at a solid pace, yet although job losses have slowed, new hiring has lagged. the risks of inflation or disinflation remain roughly equal, according to the fed, so with inflation quite low and resources slack, the committee believes it can be patient in removing policy accommodation or raising rates, even though the economy grew at an average 6.1% annual rate in the second half of 2003. the problem is productivity as workers are producing so much more per hour, arrangmenters are meeting demand without hiring. fed officials forecast productivity will slow and companies will have to increase payrolls but until that happens, the betting among economists and investors is the fed won’t do much more than tweak its language until november at the earliest according to fed funds futures. today’s decision was unanimous and the statement nearly unchanged from january. bond traders took the jobs phrase as a prediction, pushing prices up, the bond yield falling.
>> the marketplace is rallying because it’s rallying. no one in the rational mind sees value in this marketplace unless they’re looking for an armageddon scenario and i’m certainly not. you can’t come up with a value argument for buying the market .
>> on the shorter end of the curve, two-year and three-year notes rose on the day with the two-year note up about 1/8 and its yield all the way down to 1.47%.
>> thank you very much for your report, mike. i put together a couple of charts to illustrate the flat-line fed funds rate. if you look at the chart, this is going back to 2000 and basically can you see the fed funds rate falling from 6.25% down to this flat-line period at 1% where we’ve been unchanged since june. the orange line is the yield on the 10-year treasury. you can see anticipation starting not long after the rates fell to 1% but some sort of a giveback and now obviously the yield there and the fed funds at 1% getting closer. you need to take a look at jobs data. i put in the payroll numbers in the second chart to give you an idea of how other things are moving ahead of the fed and points to the pressure on them to finally make a decision to do something. again, your flat line here is 1% fed, and the yellow line is the rebound in the total payrolls number and the orange line is that 10-year treasury yield, up, certainly down from earlier highs in terms of yields but still is moving higher. and last but not least, this is the industrial production index that came out earlier in the week and then you can notice, again, it, too, has been rising since about march and again your fed benchmark at 1% flat and unchanged. clearly the economic data is mounting while the fed funds stays flat now at 1%. for how long is the big guess. let’s look at the fed’s benchmark rate and how to compares. i’ll move on. even though the fed did not make a move on interest rates, it sent stock markets on a ride today. deborah kostroun is at the big board with the latest.
>> that is exactly right. stocks all over the map trying to decide where they would end up and by the last hour decided to go higher. that added up to a lot of volatility, even though the fed saying they’re going to be patient with raising interest rates. everything came in as expected but many interpretations as people read into what the fed may be doing a little later down the road. so we did see volatility creeping in. and at least in today’s session, a couple of corporate earnings announcements helping the market , lehman brothers saying first-quarter profit doubling and 3m supported the dow raising their first-quarter guidance. that was the biggest gainer in the dow jones industrial average and gave investors the idea that perhaps the rally we’ve been seeing in the past year may not be over because if 3m is saying their industrial business is performing well, what could that say about other businesses, as well. strong sectors―financials and banks were very strong. the weak areas of the market , transports. by the close of trading, the transports actually ending slightly higher. they did come up with the rest of the market as the dow made that 80-point turnaround in the last hour of trading. transports that we’ll focus in on tomorrow with fedex releasing earnings before the open of trading. however, we did see many of the railroad stocks today had a good pop ahead of earnings but other transmits generally lower today. as we’re talking about tomorrow, more earnings that will be looking at before the opening trading, including bear stearns, jabil circuit and darden restaurants. after the close of trading. help hewlett-packard with their annual shareholder meeting going on in california, and the market may look for that news, as well.
> also today, lehman brothers shares were up after they posted a record quarterly profit, .5% higher on the day. the securities firm says more earnings more than doubled to $670 million with higher revenue from stock underwriting and bond trading helping lehman to deliver its sixth straight quarter of improving profits. the chief executive has branched out from bond trading, hired investment bankers and bought money management firm newburgher berman. we’ll look more closely at lehman brothers later in the program and preview earnings due out from beer stearns tomorrow morning―bear stearns tomorrow morning. and k.b. homes reporting its first-quarter 2004 revenue 1.35 billion dollars and earnings per share at $1.75 per share. adjusted earnings were expected to be $1.59 and we haven’t had the adjusted number in there. actually, that does beat the estimate of $1.59 so better-than-expected earnings from k.b. homes and k.b.h. is the ticker there. the stock was up in extended hour by 50 cents closing at $79.25 in regular trade. k.b. homes out with better-than-expected earnings. we’ll check back on the sales numbers. the university of michigan said that school officials and the f.b.i. are investigating unauthorized access and public release of its february consumer sentiment report. the index was published by the market news international news service before released to subscribers on february 13. the university sponsorship of the index, which can move stock and bond markets , has drawn criticism because it’s the only u.s. economic indicator sold to customers before the public sees it. the university says new security measures are in place. fedex shares surge. the company reports earnings wednesday morning and our next guest is bullish on fedex. arthur hatfield will tell us why.
>> we’re back. two top tobacco executives may testify in the government’s racketeering lawsuit against the industry.
the justice department says it may question r.j. reynolds c.e.o. andrew schindler and former altria c.e.o., geoffrey bible.
they’ll be questioned about their company’s public statements.
the government claims big tobacco misled the public and congress about the dangers of smoking for more than 30 years and are asking for more than $200 billion in damages. m.f.s. investment management plans to stop paying extra brokerage commissions for outside research approximately the cost of soft dollar transactions had been covered by fund investors.
consultants say abolishing the practice will likely hurt earnings at money management companies.
ficialt―fidelity estimates the industry spends $2 billion a year on soft dollar research. united technologies says some empies at its―employees at its elevator unit may have violated competition laws in europe.
otis elevators and three european rivals control 60% of the elevator market there. turning now to world and national news, french officials are investigating threats issued by a radical islamic group against france and its overseas interests.
mark crumpton has details. >> justice officials didn’t disclose the nature of the threats but french media say it has to do with france’s plan to ban islamic head scarves and other religious apparel in schools.
president bush says terrorists will “never shake the will of the united states.”
and he says the u.s. and its allies must remain “strong and resolute and determined in battling terrorism.”
mr. bush’s remarks during a white house meeting with the prime minister of the neth netherlands come after the electoral defeat of the spain’s prime minister, one of mr. bush’s closest allies in the war on terror.
hours after israel’s security cabinet approved a stepped of help you offensive against gaza militants, a missile strike killed two palestinians. it also wounded a dozen people. the israeli action follows a suicide bombing at at an israeli sea port.
president bush and john kerry continued verbal sparring. in remarks to veterans in west virginia, senator kerry said the president has consistently misled the nation on economic and healthcare issues as well as on the war in iraq.
for his part, president bush called on senator kerry to identify which foreign leaders he claims hope he’ll win in november.
mr. bush told reporters at the white house that senator kerry ought to back up the claims with facts.
that’s the latest world and national news.
back to you.
>> thank you very much. we also had some economic data that came out ahead of the fed meeting today.
the commerce department reported that housing starts fell 4% in february, the second consecutive drop, as you can see there.
still, the annual pace of
construction last month would
produce more homes this year
than last year which was the
highest in 25 years, or as many
homes as we built
