Interview: America's Growth Capital--- Howe, Benjamin ---Managing Partner
>> welcome back. merrill will pay $164 million to settle 23 investor lawsuits. the move ends most litigation whether it issued misleading research on internet companies. merrill said two class action lawsuits remain active against the firm, one of which is before the u.s. supreme court. merrill, through its former star technology analyst, henry bloget and other researchers, urged investors to buy shares of internet companies. investors claimed the analysts did not believe the companies were good risks, and they filed lawsuits, claiming they were misled. merrill lynch is a passive minority owner of bloomberg l.p., the parent company of bloomberg news. the bulls failed to make it a four-day rally as oil concerns weighed on sentiment. joining us from boston to help put the week in perspective and what to expect from here is benjamin howe, manage partner at american growth capital.
>> good glad to be here, lori.
>> are you concerned the all about oil’s impact on stocks?
>> well, oil has been at these levels or close to these levels for the past several quarters, if not morning and the companies, the markets have gotten used to them, priced them in, worked them into their models, so if we’re staying at these levels, no, it doesn’t concern me. people have grown to understand it there. but the market , the u.s. economy, the global economy is very much hostage to held hostage to the energy, the oil markets and as those prices move up, there’s a bigger act we’ll feel across the board. i do worry about their clout about on the economy, we are surprisingly, but we’ve gotten used to it.
>> will earnings begin to benefit from the acceptance of oil price where is they are?
>> i don’t think―i think -- as i said, the analysts have the cost of energy built into whether it’s the airlines or whenever there is a huge use of oil, it’s built into the market . think with the runup we’ve had over the last six months, and it’s been significant, still can have some room, and i am not―not as worried about the current status of the energy prices, but like other major factors on the economy. as they move, debris have to worry about it.
>> stocks were stuck in a range for so long, we are solidly above 11,15000. have be broken out of the trading range?
>> we have broken out of the trading range. you saw, it was back, four months ago, blah i had the around 190,000 mark for quite a long time, we’ve run it up significantly from there. and i think, you know, iraq oil prices, a number of issues we now live with for a long time and they haven’t broken if us if are you able to endure it for a period, you get used to it and go on. people are back to betting on the market , comfortable doing it, and as i said, think we have more room to go up.
>> how far up?
>> i think earnings are strong, you’ve got some pressure on the consumer on the housing market softening a bit, and you’re seeing it across the country tharg will effect the refinancing market , will affect spending. there’s risk on the consumer. as you look across the company’s earnings reports, last quarter particularly, interest rates are moving -- are―i think are somewhat priced in. i think interest rates―the housing market will have some risk on it, but i think we can continue to see it move upward.
>> you think a march interest rate hike is already priced into the markets .
>> it’s 100% priced in. the may hike is 100% priced in. we―with the economy strong like this, the fed is going to continue to move rates up and the futures market has already priced rate hikes in.
>> you can be more specific on yourout look for interest rates. where will the fed hit neutrality at this point?
>> i don’t think you see it any time soon. you know if we see continued -- if we see the continued pressure on the labor market on pricing, i think that the fed is going to do as it went down, think it’s going to move up, i don’t see that letting up for some time.
>> back to stocks, favorite industries are right now?
>> i’m a technology guy, as you watch the tech knowing market , the corporations are buying, the consumers are buying, technology, i’m not going as far as henry bloget went, but i do think technology is strong, the results of the past several quarters have shown that to be true. it’s a big buying―a lot of buying on the corporate side. a lot of strong movement, you’re seeing it in areas such as co―equipment, has been dead for five years. technology is one area, energy, building in the south, i think infrastructure is a very good play across the board.
>> ben, got to go. thank you very much, benjamin howe, with america’s growth capital. back right after this. stay with us.
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Listen Market briefing--- Lori (slow)
NYSE --- Deb (fast)
possible buyers. shares had their biggest gain in five years. checking the stock up at the close, up over 11%, $40.41 per share. key span said there’s no assurance a deal will be done, but according to two people familiar with the discussions, consolidated edison and the u.k.’s national grid have approached key span. it could attract a bid of more than $6.5 billion. a look at today’s settling numbers. dow up five points to close at 11,115. the s&p lost two points, 1287, and the nasdaq composite fell 12 points to close at 2282. for the week, all major averages closed higher today despite today’s slight losses. a dow and the s&p did close lower, the producer price index and dell’s earnings and crude oil rebounding to nearly $60 all wayed on stocks. for more, he’s here’s a report from deborah kostroun.
>> the market heading into a three-day weekend. markets closed on monday, traders i talked to say they are very positive on the market . steven parpora of william o’neil says we have great economic reports and really set up for this market maybe to do go higher. late on friday, the dow turning around the last hour on news about general motors. bloomberg news first reported that wachovia dropping out of bidding for g.m.’s finance unit. g.m. ended up being the second biggest drag after the story came out taking really a turn for the worst near the close of trading this is a set back to general motors for gaining an investment grade rating for g.m.a.c. the assessment of gmac may hinge on the participation of a bank in the group that acquires and runs that company. wachovia is the only bank bidding for gmac and separately, wachovia hitting a record high in today’s session. the big news was the p.p.i. report. a chief economist at comerica’s bank says that margins will go up higher in march. when have you a rise in interest rates, it’s usually not good for. it close at another record. a lot of the broker dealers and some of the investment banks, e trade hit a 52 week high as well. that pp i. report led us to retail names as well. a little concern that inflation concerns may keep the consumer held become a little bit. retail, however, really being impacted by the fact that crude oil was closing higher for the past couple of days, around 60 per barrel. radio shack a story in and of itself. fourth-quarter profit plunging 62%, they may be closing 62 stores. i’m deborah kostroun at the new york stock exchange.
>> a three-day rally. sheer robert gray with more details on today’s nasdaq trading. the nasdaq falling half of 1% on friday’s session it finished higher, the first week of gains for the composite in the past three. clearly the big story was dell. dell’s forecast disappointing investors, changing set meantime around computer-related shares. the biggest drag on the nasdaq and the broader market as well. and of the industry groups, the only that fell for the week. this comes a day after hewlett-packard and network appliance lifted the nasdaq higher and the broader market as well with its forecast, but sentiment turning negative after dell’s forecast. we saw disappointment in the computer chip area, with intel shares falling. intel the supplier for dell providing chips to them, r.b.c. capital markets saying they cannot see the bottom in sight for intel shares. market share loss to rival advanced microdevices. a.m.d. shares fell as well. some investors were expected dell to say they would buy a.m.d. chips. there was some criticism that they may be better suited for dell. we heard from intuit, largest manufacturer of tax preparation software. the worst percentage performer on the s&p 500. weak innocence the satellite radio group. sirius loss wider than the average analyst estimate. x.m. had a similar report. some stocks moved higher, including brokay communications, the world’s largest maker of switches for network storage and nvidia which makes chips. crude oil surged close to 60 per barrel. gasoline futures saw the biggest gain in five months after a reported threat to nigerian oil that sills. nymex closed at $59.88, a gain of nearly 2.5%. yet, on a weekly basis, crude prices fell more than $2. it is the fourth straight week of lower prices. the biggest futures was in the move of gasoline market . gas futures rose more than 6 pest after a steep two-week decline due to an abundance of supply. nigerian militants were reported to declare total war added new anxiety to the market . nigeria is the fifth biggest source for u.s. imports and pumps the light, sweet crude variety that is most easily refined. this is not the first time nigeria’s outputs that been threatened.
>> nigeria has persistent unrest for years, and, you know, lately it’s picked up, and it is―you know, we have seen outages develop from it. but as the i.e.a. reported from the last month’s report. the actual outages last month that really mattered were caused by weather, not caused by nigh year gentleman.
>> mann’s financial bill wallace says he sees several factors for the turn around in the market . including early comments that opec might cut production at its march meeting.
>> the government saying maybe there’s a millian barrel a day oversupply. that’s tightening things up. nigeria is getting cold here, it’s a cold shock we haven’t seen in a while. that gives it―could tighten thing up. altogether tightening things up. we’re off from our highs, probably off, you know, $14 per so top to bottom where there where we were a month ago.
>> the nymex will be closed monday for the holiday hot ever than expected reading on wholesale price inflation, followed by a positive response in the bond market . after two straight gaze of hearing the fed chief ben bernanke, reminded the global markets that it’s a potential risk. a producer price would unsettle inflation fearing bond investors. not today. the producer price index jumped.3% in january, a bit more than the.2% increase forecast. the corps p.p.i. was up.4%, an increase of.1% was expected. one reason the markets not getting too excited is that this is the junior inflation report, because it is a wholesale manager, the consumer price is the broader measure. and that report is due next week. in addition, traders and economists quickly figured one price category as the main culprit.
>> it looks to me the problem is that principaly in passenger cars, had a large increase of over 1% of the demand for automobiles is soft. there is going to be price cutting, not representative of the trend and moreover, is not an inflationary environment.
>> another reason why long-term bonds rallied, pushing the price higher, yield lower than the university of michigan’s sentiment survey came in weaker than expected it fell to 87. in february on preliminary reading of the monthly survey, down from 91.2 in january. some economists say this is an important number, as it shows the economy still has some soft spots.
>> exebs is once of those things that is glg to be―i think much better related to the fundamental underlying economic pressures in the month, and not necessarily the temperature on the thermometer, and the fact that it is down and down two months in a row tells that you people are still worried about high energy prices, about the level of political discourse in washington, where it’s―it’s harder and harder to get anything done.
>> and as promised, here is a look at the 10-year. up 12/32, with yield at 4.56%. the two-year up slightly with a yield to 4.66%. our stocks taking a pause from a breakout, or worries over oil and innation putting a dahmer on the rally for good? we’ll ask benjamin howe of american growth capital, what he thinks, next.
