Market briefing---Matt (slow)
Martha Stewart---Allan (slow)
NYSE---Deb (fast)
Currency markets---Clifford (slow)
Welcome to world financial report.” i’m matt nesto. a judge today refused to slow out charges of securities fraud against martha stewart, the founder and former chief executive of martha stewart% -living omnimedia was on hand in the manhattan courtroom for the ruling as was bloomberg’s allan dodds frank, outside of the federal courthouse right now in lower manhattan with the latest. allan?
>> martha stewart will be standing trial in january on all five criminal charges against her. judge mirian cedarbaum wasted no time in dismissing her lawyer’s efforts to have two of the counts dropped, one about securities fraud and the other about obstructing an agency proceeding. the judge complimented the lawyers for their extensive and well-researched briefs and said they were so good, she didn’t need to hear arguments on either side. and she took less than 20 minutes to dismiss miss stewart’s efforts to have charged dropped and to dismiss the efforts from the co-defendant to have his trial separated from martha stewart. his attorney said it was impossible for martha stewart to get a fair trial as a result of the publicity and therefore he couldn’t. and the judge said in the interest of judicial economy, we prefer to have a joint trial and the publicity is inescapable, whether or not it’s a separate trial. so the judge decided that the lawyers would have almost two weeks to select a jury in mid january before they get to opening arguments.
>> all right, allan dodds frank, thank you very much. that’s live from lower manhattan at the federal courthouse. g.e. was a big mover in today’s session. and the company also released news after the close of trading. deb kostroun with the before and after and in between and all the details from the nyse.
>> in fact, matt, we did see g.e., the biggest gainer in the dow jones industrial average. that after an upgrade in today’s session. and in fact, actually, the analyst at merrill lynch saying they will likely increase -- assets will increase by 15% or more and earnings per share growth in excess of 15% in 2005, that as they focus on faster growing business. in the after-hours session, g.e. stock is higher an they said they will sell shares of their mortgage insurance and most of their life insurance companies in an i.p.o. next year and that as they shed some of those slower growing units. this news coming out on g.e. after the close of trading. in today’s session, the market really giving us many signals about where the market has been headed and obviously, for a fourth day in a row, the market was lower. but once again on below-average volume. looking at what traders are talking about, in particular, peter henderson with fleet specialists saing that the -- saying that the dow closing below the 50-day moving average very significant because that’s a technically weak place for the market to close. that gives us an indication we may be headed lower. and the dollar-gold relationship, very important right now. in fact, he says that the market could be heading significantly lower mainly because people see gold as a safe haven. gold closing today at $398 per ounce. he says that could open many eyes especially as we have less foreign money coming into the market because we depend on that for our trade deficit and our budget deficit. so with the dollar at critical levels, that could mean more weakness for equities as we move ahead. in today’s session, industrials on the rise. we have g.e., but also financials struggling again in today’s session and the big concern coming out of citigroup and morgan stanle morgan stanley as federal regulators investigating those firm for trades that allowed freddie mac to break accounting rules.
>> we’ll check with you in a little bit. let’s talk about the benchmark indexes here, worth noting today. the dow, s&p and nasdaq all lower, .9% for the dow and s&p is the percentage decline there today, seven of eight trading days down. the nasdaq down about 1.5% here today. inflation expectations increasing affecting the five-year, three-year and two-year notes today. currencies, a huge story with the euro hitting an all-time high against the dollar or the dollar at an all-time low. the yen little changed here today and the pound also little changed with president bush in town in europe. speaking of currencies, the u.s. dollar fell to a record low against the euro in new york trading today. traders sent the currency down more than two cents to an intraday low of $1.1960 against the european common currency. the trigger for the selloff, the u.s. treasury issued a report saying net foreign purchases of u.s. stocks and bonds in september fell to the lowest level in five years. a drop in overseas ownership of those securities mak makes it harder for the u.s. to finance its $138 billion current account deficit. joining me to discuss the implications of today’s events for the financial markets, particularly the currency markets, clifford bennett. all-time high for the euro?
>> i think it’s just―we’ve come a long way in the euro. this rally is all the way from 1.08 euro but the target is still 1.265.
>> when?
>> fourth quarter of next year but i wouldn’t be surprised if it comes early part of january.
>> what about the year end of next year, beyond 1.26?
>> if we get towards 1.34, the political forces muster against it and you could see quite key g-7 meetings taking place to reverse that flow. so i think 1.265 minimum for next year and 1.34 potential.
>> would the european central bank ever do anything?
>> i think you could have coordinated intervention to support the u.s. dollar because it could well need it in six- to nine-months’ time. the data we’ve seen today is old data. the process has been going on for quil quite some time. with september data, we’re towards the end of november. the data will be volatile but we’re not going to get what we had in the late 1990’s which gave us the strong dollar, around 1999, 2000, the u.s. was sucking in 70% of the world’s fresh available capital. that’s not going to happen this decade and we’ll have a dollar downtrend still.
>> what’s to stop the white house or treasury secretary from saying tomorrow that we still have a firm strong dollar policy and the market will trade up and down. would you not expect that tomorrow?
>> yeah, absolutely. they’ll be saying it. but they won’t be able to stop the market. it’s a little bit like the bank of japan trying to hold 108 but that market can collapse in the next few days as low as 105. we’re in a scenario where the fundamental forces are greater than the wishes of political leadership and until the imbalance swings the other way where the market is massively short of the u.s. dollar and vulnerable to that rhetoric, it’s not going to impact. the market is not short u.s. dollars, only just starting to get short of u.s. dollars and has a long way to go.
>> given the reaction to that, the declines and the superlatives, cliff, it seemed the focus on foreign investment number, was the market looking for something or was this really truly a surprise?
>> it was both. i think the market was a little surprised but the market wasn’t positioned in short u.s. dollars because everyone’s been looking to buy the u.s. dollar the last few days. they’ve had to capitulate so a lot of stops, as well, matt.
>> so a lot of people got burned badly?
>> yeah, absolutely. and we’ve only just seen that and people have yet to go for new positions to make money going short the dollar.
>> hell hath no furry like a currency trader spurned. thank you very much. executives from the steel industry say this isn’t the time for the u.s. to abandon tariffs that have helped them compete globally. we’ll get the latest on that. and head of pacific and emerging equities at gartmore comes in with picks and prognosis.
