Market briefing---Matt (slowt)
NYSE chairman---Greg (slow)
Godman Sachs---Su (fast)
Currency market
Royal Bank of Canada---Greg Gibbs---Currency Strategist
welcome to “world financial report.” i’m matt nesto. our top story tonight, the appointment of john thain to the new york stock exchange comes three months and one day after former chairman richard grasso was ousted because of that controversial $140 million pay package. greg miles talked to thain after this morning’s announcement. greg, tell me, where does this leave us now? where does the new chief begin?
>> it adds up to a new era for the nyse. john thain told me his main challenge is to restore credibility with investors. he says he’ll talk to staff, nyse members and investors across the nation to rebuild confidence in an exchange divided by controversy over excessive pay and conflicts of interest.
>> any time you lose credibility, it takes time to restore. i think time and improving the operations and focusing on really having the highest degree of integrity and most efficient and liquid markets, i think investor confidence will return quickly as we really start to get the exchange up and running in a very high quality way.
>> thain will be paid $4 million a year for the job. the biggest area where thain may have an impact is electronic trading. he says he may expand electronic trading at the exchange.
>> goldman sachs has an operation both on the electronic trading side and on the floor of the exchange, as you know. so i think that both worlds can exist and probably the right answer is that we have some form of electronic trading in a very efficient way but still i think specialists are important.
>> s.e.c. chairman william donaldson said he was happy with the appointment. paul hotio hogsdon, a corporate executive expert, said thain may be too closely linked to the industry. for example, the chief executive at goldman, paulson, is on the board at the nyse.john reed made it clear that today’s appointment was only one step in reforming the new york stock exchange. by january, a chairman will be hired to split the responsibilities with thain, meaning mr. thain will not have the power that dick grasso had during his tenure at the nyse.
>> moving along here today, just who exactly is mr. thain? we put that task to su keenan to find out. a closer look at the man who will take the hem.
>> john thain, the 48-year-old executive of the goldman sachs, about to lead the new york stock exchange in a new direction. bob hom homan describes him as a man who is low key, analytical and can solve problems. colleagues say he brings a history of financial management to the position.
>> i am deeply honored to accept this call to service and i’m humbled by the prospect of leading an institution that traces its origins to the first days of our nation and it has grown to symbolize the heart of american capitalism.
>> the interim new york stock exchange chairman john reed approached thain several weeks ago about the job and said, “the thing gelled in the last 2 1/2 weeks and mr. paulson was not in any way involved.” goldman’s chairman and c.e.o., henry paulson, released a statement today saying while we were sorry to see him leave goldman sachs, the nyse is fortunate to gain such an able and effective leader” regarding thain. it could be said that paulson, as a board member of the nyse, played a crucial role in the departure of former chairman richard grasso. in september, paulson joined merrill lynch’s stanley o’neal in withdrawing the support that led to grasso’s ouster. analysts say john thain, the man now taking the c.e.o. role, had emerged as a possible successor to paulson and was one of two employees to sit alongside the chairman on goldman’s board of directors. from goldman, the loss of thain marks the second departure of a top executive in the year. analysts say this clears a path for blankfein to succeed paulson in the top job.
>> the management bench at goldman sachs is very broad, indeed. i don’t make much of this from the perspective of a negative to goldman sachs. john thain will be replaced by lloyd blankfein who has been at the firm a very long time and has had major leadership positions across many business units so i think he’s a great choice and a natural progression into john thain’s role.
>> and goldman sachs not making an influential comment on the succession issue at this time.
>> thank you very much. moving on, representative richard baker welcomed the appointment of john thain to the head of the nyse. but the chairman of the house subcommittee capital markets said he had reservations about the depth of reform being pursued at the world’s largest stock exchange.
>> at least the division between the chairman and c.e.o. has finally occurred. i must say i’m disappointed that the reforms that have been discussed to date at least have not been more significant. many of us hoped circumstances surrounding mr. grasso’s departure would lead us to an opportunity for meaningful reform.
>> baker wouldn’t say if he and his colleagues in congress were considering legislation that would push reform at the big board beyond what interim chairman john reed has already laid out. baker is pushing to lower fees investors pay to mutual fund companies. let’s get to the closing numbers on wall street. the dow and s&p for a third day today, 10,250, right within sight there for the dow. the s&p 500 also up over 1% today. the nasdaq, the best performer, 1.8% higher, almost 35 points. new york stock exchange volume on the day, above average, 1.5 billion. the six-month average is 1.4 billion shares. nasdaq volume is light, interestingly, 1.7 billion, less than the two billion we’ve been seeing for the past six months. wilshire 5000 also up and if we look at the bond market today, the 10-year yield approaching a one-month low, at 4.12. at one point during the day. the five-year also lower and little changed at the shorter end of the curve. inflation―low inflation exciting bond investors. currency markets also interesting because your dollar buys less yen, euro and pound both lower. intraday, the euro hit a new high with comments coming from the new e.c.b. chairman, european central bank chairman, jean-claude trichet, no concern over the recent rise of the euro. the euro rose to that record high against the dollar for a fourth straight day in new york trading. european central bank president jean-claude trichet, sounds familiar, doesn’t it? says he favors a strong and stable currency. he’s the second e.c.b. official to suggest the 18% rise in the euro this year won’t hurt the e.u. economy. joining me now for an update on on the currency markets is greg gibbs, royal bank of canada, in sydney, australia. what do you make of the comments coming from brussels?
>> not a lot of concern amongst european officials over the strength in the euro to date. very modest comments suggesting if it was to overshoot, it could hurt the economy, but no one’s suggesting we’re in overshoot territory yet for the euro.
>> so, i mean, should there be―would it make sense for the e.c.b. to take action, it would be unprecedented?
>> they have taken action in the past. but it does occur at extremes. certainly the case that the urine officials are suggesting, we’re just back to average levels on a long-term historical comparison and until we get to 1.30, 1.35 levels, only up to there would i believe the e.c.b. would act strongly. that said, the pace of the move is concerning some officials. there were comments in the “financial times,” the london newspaper, from a lesser-known e.c.b. official, suggesting that the pace of the move in the euro is something there is concern over.
>> we’re tight on time and thank you, greg gibbs, currency strategist, royal bank of canada. positive economic data pushed the s&p to a 19-month high. closer look up next.
