Market briefing---Matt (slow)
NYSE---Deb (fast)
Currency report:
Interview: Greg Gribbs
we just received the alcoa news from bob and the earnings season is honest and earnest and expectations are high leading market higher.
>> it’s funny how economy and earnings can help out the market. but it’s something we’ve been seeing since that march low of last year and now we have expectations for this quarter, especially with all the companies coming out today increasing forecasts, really gives us positive sentiment going forward. and today what we did see, new highs across the board, not only for our major averages but also as matt was mentioning, small caps and midcaps coming in at records. also that cyclical index hitting another record high, as well. other things that we saw in today’s session, the better than average volume with tech and industrials leading. retail, energy and drug stocks were dropping today. retail, a lot of news coming out on the retail sector, a little mixed with some. up and some down. but the heavier-than-average volume we did see, something we’ve been seeing all this past week, helping out. nokia was the stock that sent technology stocks higher. they raised their forecast, leading other chip and telecom stocks higher. nortel lifted after verizon saying yesterday they’re going to add $3 billion to their network. we saw increased trading volume in that stock in the past couple of days. other things we did see, honeywell upgraded today, merrill lynch saying it’s a buy because it sees a recovery developing not only for airplane parts but also cockpit controls and office building also rebounding. that could boost sales of otis elevators and air conditioners. we did see honeywell at its highest level since september of 2002. back to you in the studio.
>> thanks very much. one we are watching right now, of course, actually two stocks . i.b.m. came out with a press statement saying it has receive a so-called wills notice―well,s notice from the staff of the securities and exchange commission in connection with the s.e.c.’s investigation of i.b.m. customer dollar general. this is one of its retail point-of-sale product customers. i.b.m. said it disclosed the existence of the investigation about six months ago, june of 2003. the i.b.m. customer, as i said, is dollar general. and it’s i.b.m.’s understanding that an i.b.m. employee or employees in its sales and distribution unit may also receive these notices from the s.e.c. it’s interesting, i was reading in the press release, it says that the s.e.c. notice, it says that i.b.m. may have aided and abetted dollar general in its misstatement of 2000 earnings so clearly i.b.m. coming out, no word yet from dollar general on this but they are a focus. of that probe. moving on to the currency markets. the euro surged more than 1% against the dollar and yen today in new york. this after european central bank president jean-claude trichet said the euro’s 22% gain in the past year won’t prevent the region’s exports from increasing. for a closer look at the day’s action in the currency markets, i’m joined by greg gibbs. talk to me about the trichet comments. your thoughts on them?
>> markets are trying to speculate at what time european officials will show concern over the strength in the euro. very focused on what trichet had to say as governor of the e.c.b. and as you mentioned, he didn’t show real concern yet that it’s hurting their economy and as such, the market wants to take euro high still.
>> how much higher?
>> that’s the thing. the focus is not really on how high should the euro go, it’s how high can it go without hurt hurting the economy. we’re really in a situation here where the u.s. is struggling to find the capital it needs too fund its current account and as a result it’s difficult to pick a level. we’re probably heading into overshoot territory but we could go higher for the euro.
>> what is substantial? substantially higher?
>> psychological levels will be 1.30 and 1.35 and some forecasters anticipate levels towards 1.40 over the next year or two years.
>> what―do you think that mr. trichet is wrong in his assessment that the strong euro isn’t going to hurt exports?
>> he’s not wrong. he’s basically saying, yes, exports will be damped but because of strong global growth they still expect their exports to perform well so it is true that the european economy in the current environment can stand a relatively strong euro. it certainly could afford stronger growth in europe and you are seeing strong growth in the u.s. so fundamentally you could argue u.s. dollars should be doing better. asas i said, we’re talking about a large funding problem for the u.s. and once currency markets get a head of steam and trends are involved, it’s hard to turn them around.
>> greg gibbs, thank you very much. he’s a senior strategist with the royal bank of canada based in sydney, australia. coming up next, alcoa’s results just out in the fourth quarter. we’ll joined by a money manager and shareholder long about 142,000 shares and he still is adding to his position or at least he was an hour ago. stick around for those comments.
