Market briefing---Matt (slow)
NYSE---Deb (fast)
Investigation---Su (fast)
Currency
Interview: Sydney--- Clifford Bennett--- Chief Currency Strategist
>> welcome to “world financial report.” i’m matt nesto. let’s show you the closing numbers. the u.s. bond market was closed in observance of veterans day, so let’s check on the currency markets today. below-average volume on today’s session, but not too much of a concern according to our deborah kostroun. the queen of concerns. she’s got it all tuned in on the floor. deb, what’s the latest?
>> well, obviously, kind of a partial holiday, not a lot of traders were too concerned when they looked up at the tape to see only 1.15 billion shares being traded today because we had kind of a partial holiday. we saw kind of muted action yesterday as well, mainly because the bond market was closed and also futures on the bond contracts closed as well. so, really just very little enthusiasm in today’s session. also, the s&p 500 lower for the fifth time in six sessions, so bringing a little bit of a concern about where we’re going, at least, and of course the partial holiday having a big part of that. i was talking with peter henderson of fleet specialists and he said october, november, typically very big months to be buying in the markets, but he said we’re not seeing that. volume has been rather light. he says one of the reasons, because of that, we’ve had so much activity coming in since the low on march 11, the volume has been doing well as the market has been doing well, so this year definitely a very different environment as we’re talking about, as well, the g.d.p. growth coming in in the third quarter, the market obviously a six-month predictor of where we’re going to be. so, we did see quite a bit of that coming about six months before the third quarter and into the third quarter. at least for the next couple of days, the direction will be difficult to predict because there are no economic reports coming out until thursday. also, the market really kind of stuck in this trading range that we seem to be back in at least for now and that trading range about 9,700 to 9,800. transports still moving, and in fact they’re up 50% since the low on march 11, well outperforming the dow jones industrial average, up 29%. merrill lynch upgrading some of the transports at least some of the railroads as we’re kind of moving products with the―at least the railroads performing quite well. back to you in the studio.
>> all right. deborah, thanks very much. a volatile trading session for shares of cablevision, the cable company seeing shares rebounding from the 7% dive intraday and this as the company announced it’s going to make a more extensive restatement of earnings due to a new round of irregularities that have been discovered. cablevision already under investigation for previous accounting practices, also announcing a wider-than-expected third-quarter loss. a busy day for cablevision and su keenan has the details for it. su?
>> analysts are more puzzled by the stock ‘s recovery than its initial drop. david man tell said wherever there’s an accounting issue, however small the numbers are, it is a cloud over the stock . the analyst who has a neutral rating on the stock and doesn’t own them says the company’s lower forecast was key to the stock ‘s initial 7% drop intraday. you can see that in the start of trading, but it did recover the entire loss and just a .1% gain by the close. year to date, shares are up 22%. cablevision is the biggest cable operator in the new york area, and it reported its third quarter net loss widened. we’ll get to that in a minute, because it also noinsed additional expenses had been improperly recorded and that this could mean more extensive restatement of its earnings. the company is already under investigation for improperly recording $15 million in expenses. and it announced it will restate 2003 quarterly results by the end of the month. these developments take place as cablevision launches a satellite television service which the company plans to spin off along with a number of television networks. an analyst said the new accounting irregularities, quote, extends and complicates the s.e.c. investigation. without a green light from the s.e.c., he says it will be difficult for them to spin off the rainbow media unit, which was originally planned for early next year. he could not offer information on why shares were rebounding in the face of these concerns, both accounting and a lower subscriber forecast, but he does think investors continue to anticipate that cablevision will be able to sell off its cable assets. he says, quote, there is a general expectation that the cable assets will eventually be purchased by a media company such as time warner or comcast. a quick review of third-quarter earnings in that wider-than-expected loss, cablevision said it lost 36 cents a share on a net basis last quarter. again, you can see the ticker, recovering the entire 7% loss for the day. back to you.
>> recovering from seemingly bad news there. another new report out today shows investor confidence in germany rose to its highest level in 16 months. the euro gained ground against the dollar in new york trading on opttism that europe’s economy will continue to improve. for more on the outlook, let’s bring in clifford bennett, chief currency strategist at f.x. max joining us from sydney, australia. cliff, appreciate you coming on here. talk to me about this reversal. is this a one-day wonder, as they say, in the euro? the euro suddenly finds its legs again. is this going to last?
>> i think it hits at where the underlying flows still are and that is still u.s. dollar weakness. i think the u.s. dollar broad based will continue to decline. what we’re seeing in europe vis-a-vis the u.s., of course, is europe coming later into the recovery phase and more gradually. but―and to a lesser degree, yet still it’s a comer, whereas all the good news for the u.s. is pricy. and even in europe, you look at the trade balances, you have to offset that with capital flows and with all the good news priced into the u.s. and not the europe and particularly japan, i think really it’s still going to be a one-way street in terms of the medium turn for the dollar lower.
>> what about the pound today? because it was actually weaker while the euro was strengthening. why the discrepancy?
>> yeah. yeah. i think the story with sterling that is a little bit the same sort of concept of everyone getting excited about the interest rate hikes and now we’re absolutely certainly meaning sterling would go higher, so the whole market was already long for sterling for that and people were having to square up those positions. their economy is a little bit of a split economy. there are soft spots in the u.k., but overall, i think it’s still a strong performer, certainly spronger going forth than continental europe. so, it’s a volatile consolidation for sterling but that’s typical sterling style before it plays catch-up. but i think the euro could move ahead a little at first versus the u.s. dollar with sterling catching up later, matt.
>> the euro is up 8% against the dollar. seems we’re in a trading range here. no?
>> it does. what’s interesting, though, is the day-traders really basically no one is carrying positions overnight. people want to sell the dollar and yen to some degree, but they’re not keeping positions overnight. they’re squaring up the end of the day in each time zone as we move around the world, so there isn’t really a sustained short position in that market and i think at some point again the japanese exporters will probably have to chase this market lower. so, i think we are in for a sharp move lower to 1.05, 1.04.
>> cliff bennett from f.x. max in sydney, australia. well, the benchmark indexes, as we’ve been saying, have been falling despite positive economic news. what’s it going to take to drive the markets higher? that’s the question we’ll ask first to john wilson, director of equity strategy at morgan keegan. that’s next.
