Market briefing---Matt (slow)
Numbers---Su (fast)
NYSE ---Deb (fast)
Currency market:
Interview: F.X. Max---Clifford Ben---Senior Currency Strategist
>> welcome to “world financial report . i’m matt nesto. we take a look at the latest round of economic data today, in fact, half a dozen data points that show the pickup in the amount of money americans earned and spent last month. bloomberg’s su keenan to sort it out.
>> a lot of numbers coming out, matt, giving us a better picture of the strength in the economy. and economists say personal income showed the biggest month to month increase since june of last year. this, combined with the rise in consumer spending, suggest shopper wills continue to support growth in the final three months of the year. you are looking at the personal spending number, which rose in november, although the increase was less than analysts expecteded. consumer spending rose by 0.4% since october. consumers spent more than originally thought in october. as for the pace of personal spending? well, it’s slowed from earlier in the year when consumers had extra cash from tax cuts and mortgage refinancing. now to personal income. as you can see, it rose by 0.5% in november, more than economists surveyed by bloomberg expected. it rose by 0.2% in october. and new numbers confirm that the u.s. economy’s third quarter growth was the fastest in two decades. check it out. the final reading of third quarter g.d.p. shows an 8.2% growth in the third quarter. you can see how big that box is to the far right. it is the same, by the way, as the preliminary reading that confirms fastest growth since third quarter of 1983. a chief economist for m.k.m. partners says this growth is sustainable. even so, he predicts growth for 2004 will be more likely at a 5% rate rather than 8%.
>> we have seen really large pro growth tax cuts on capital. that is the investment and industrial production inventory side of the economy which is coming together really well right now. on the demand side w the value of the dollar dropping so much, that means nominal spending will be very strong in 2004. i really think we have both supply and demand functioning in a complementary fashion, and it ought to really produce surprisingly strong growth moving into 2004.
>> michael dorda with m.k.m. partners. lastly, another important gauge of economic strength, consumer confidence that fell last month. the drop, however, was less than economists forecast. final figure was 92.6 for december. the adjustment shows stronger confidence than the preliminary reading of 89.6. even so, the higher number still shows consumers lost confidence from november, which matt, you recall had the highest reading in more than a year and a half.
>> all right, su. thanks very much. doing a little homework because micron technology t world’s second largest memory chip maker, has done something it habit done in three years. it made a profit. it made $1.1 million. on a per share basis, that goes in the history books as a break even, but it is $1.1 million on $1.1 in sales. the sales were up 62%, so micron ending a three-yearlong profit losing streak. a losing streak for three years. the thomson estimate was for a loss of six cents. clearly far better than expected. well, let’s get to the numbers now in this day of, well, kind of light trading. if you look at it, a mixed session really. it was an up and down day with the markets finishing little changed on the day. three points for the dow. three points for the s&p. 18, almost 19 points for the nasdaq here today. as we look at the new york stock exchange volume, little less than the 1.3 billion that we have become accustomed to over the past six months. the nasdaq volume also on the light side. there’s 1.3 million. that also less than the 1.2 billion we’re used to. wilshire 5000, 3/10 higher. bonds an interesting story with a two-year auction today, so the yields were up, and the prices, as you would expect, accordingly, down. 10, five, three, and two all lower today. a quick check on the current sis, look at that before you ice, yen unchanged. dollar mixed in trade as we speak. stocks hit some turbulence about midday, but saw, as i was saying, that recovery as we came towards the closing bell. deborah kostroun was light to for the closing bell. and here now with this report. deb?
>> well, matt t holiday spirit kind of setting in down here, especially at the new york stock exchange. volume today, we only saw about 1.1 billion shares. we expect tomorrow’s trading to be even lighter because the market here closes at 1:00 new york time. also, trading volume on christmas eve last year was 70% below the three-month daily average. a drop would mean about 406 million shares. we’ll have to wait and see how it all comes out, but victor puglasi, a trader at first albany, says people are ready to go home for the holidays and doesn’t know of any reason to push stocks down and saw the recovery, other than traders are closing out the trades before the christmas break. one of the things we did see is the dow and the s&p closing at the new 19-month highs. what is bullish and initially sent stocks higher and all the economic news c.o.d. consumer spending better than expected t university of michigan’s consumer confidence index revidse up, and it really shows us that consumers are driving the economy. this comes amid evidence that businesses are beginning to spend again. just take a look at the 45% rally we saw in research and motion today. businesses and consumers both spending should lead to higher profits. also, the takeover of duane reed certainly a big story today. the deal having an impact on j.c. penney. based on the terms of the takeover, j.p. morgan says that j.c. penney may be able to sell the eckerd drug chain for $4.5 to $4.7 billion, at least a billion more than the $3.5 billion they were expecting. j.c. penney up 5.9%. it shot up this morning and really continues that way throughout the rest of the session. and then, of course, we saw many of the other drugstore chains higher as well, except wall greens. it was a little bit lower. back to you in the studio, matt.
>> all right, deb. thanks very much. moving on, folks t dollar traded within a record half a percent. the smaller than forecast jump in u.s. consumer spending gave traders little reason to push the u.s. currency higher. the dollar dropped 15% against the euro this year. joining me now with a look at the currency markets is clifford ben fete, senior currency strategist with f.x. max down in sydney, australia. cliff t euro has done well after reaching a record low in 2001. is the euro credibility or has it gained credibility, i guess i should phrase it that way.
>> certainly it has a lack of credibility for the u.s. dollar. people had to look elsewhere for somewhere to place the funds in a global portfolio sense where you had a large market and a liquid currency. of course, the euro benefited from that. but really the story is more about u.s. dollar weakness. going into the holiday season, everyone squared up, but the u.s. dollar is sitting on the lows. so i don’t think it’s looking very good for the start of next year either for the dollar. i think euro high still.
>> how much higher?
>> well, we have been looking for 1.26 year end. we almost got there. although the risk is to 1.34. 1.34 is easily achievable as i see it in the first or second quarter next year for the euro. the u.s. dollar really has nothing going for it. part of the reason you’re going to see firm equities in a firm domestic economy is because the dollar is weakening. i think this is the huge background fundamental forces that even though people think, oh, it’s quiet going into the holidays, i think the risk is the dollar just keeps slipping away.
>> how would you rate the performance of the e.c.b. throughout the whole period of euro strength strength?
>> i think they regained some ground, matt. really they are a little bit of a cliche, but a bit of a basket case a year or two ago, and now they seem to have come back on line in a more steadfast and responsible manner. i think they have held the line quite well. people understand where they’re at at the moment, so i think that’s certainly helped the euro a lot because that was one of the big euro selling pressure points two years back. certainly the e.c.b. is back online. bank of england, a central central bank, so really the european currency is supported all around on that front, i would think.
>> all right, cliff bennett, thank you very much. it’s not a weekend, but it sure feels like one. wish you all the best and see you again soon. that’s clifford bennett, the senior strategist with f.x. max in sidney. the next guest runs the transamerica prix mere equity fund that’s up 28% this year. jeff van harte going to tell us what stocks he is buying next and why.
