Market briefing---Matt (slow)
NYSE---Deb (fast)
Currency report:
Interview: Wachovia Corporation---Bryson, Jay---Economist
welcome to “world financial report.” i’m matt nesto. we’ll look at the mundane members, first, the dow little changed on the day, down 1 .wors. .1%. the star of the day, nasdaq, led higher almost 1% by technology shares. in the currency markets, the euro, at the latest check, 1.2633, inching higher again and the pound inches higher again, while the dollar is unchanged against the yen at this hour. let’s talk about the stocks . the dow was down not quite 10 points here today. deb kostroun is at the big board for what was exciting other than the biological weapon index.
>> at one point we saw the market rebound, looking like we might go higher but in the last hour gave it a good push. the nasdaq held on to its gains, hitting a two-year high. the s&p, best gain for a new 20-month high, as well. so the drop that we did see in the dow jones industrial average really not all that bad. however, there are some concerns about valuations and there are plenty of investors who say stocks are not pricing in all of the good news we being get on the technology and earnings. technology the rising stars today. a lot of broad themes and big individual movers especially in the s&p 500, even in utilities. duke energy rose 1.8%. they left their quarterly dividend unchanged at 27.5 cents a share. investors and analysts expected the company to cut their dividend by as much as in half. darden restaurants dropped after their president and chief operating officer quit. we did see that stock lower and circuit city plunged today after they said sales last month fell 2% citing sluggish demand. investors saying best buy’s competition was the problem there and best buy saying that sales for the fourth quarter up 8%. back to you.
>> thanks. we’ll check with you a little later. in other news today, procter & gamble says that second-quarter profit will probably top analysts’ forecasts and that caused shares to rise as much as $2.30 in extended trading after the close of regular trade on wall street and may have pulled back a bit. p&g said they earned as much as $1.30 a share, four cents better than the average estimate by analysts polled by thomson financial. the federal judge rejected the plea agreement for lea fastow, a former enron assistant treasurer and wife of former enron c.f.o., andrew fastow, according to a “houston chronicle” report. lea fastow was charged with conspiracy to commit wire fraud, money laundering and filing false tax returns. a u.s. district judge rejected the agreement between her lawyers and prosecutors because ited have given them no leeway to increase her sentence. the chronicle reported citing unidentified people close to the case. people familiar with andrew fastow’s case told bloomberg news that the two might agree to plead guilt theweek. fastow was charged with hiding billions of dollars in company debt in off-the-book partners. in a related development, former executive vice president and chief accounting officer at enron is expected to turn himself into the f.b.i. in houston tomorrow morning in response to a criminal complaint which has been filed or will soon be filed against him. that also is according to the “houston chronicle.” the pair of u.s. senators may have reached a solution to break the impasse over fannie mae and freddie mac should be regulated in the future. the senate banking committees republican chairman and senior-ranking democrat favor legislation that would set up a non-government entity to regulate both companies according to senator chuck hagel, a nebraska republican who sits on that committee. fannie mae and freddie mac are the largest buyers of u.s. home mortgages and both companies -- both government-chartered companies came under scrutiny after freddie mac last year said it understated earnings by $5 billion. in new york, the euro fell against the dollar for the first day in four. investors speculate that the european central bank will signal its currency’s 22% surge in the past year threatens the region’s economic recovery. e.c.b. president jean claude treshaw will―trichet will speak with the press tomorrow. economists expect trichet to express concern about the euro’s strength and joining us to discuss the global currency markets is jay bryson with wachovia in charlotte. treshahas a―trichet has avoided commenting on the euro. what’s the likelihood of his altering his stance tomorrow at the press conference?
>> he may talk about what needs to happen is for asian currencies to appreciate. the yen has been relatively weak because of the bank of japan. the chinesera mim bee hasn’t -- ramim bee hasn’t moved because of the fixed peg there and he may hammer in on the asian currency and say that’s the problem more than a weak dollar, per se.
>> what is the magic level or range for the euro when the pain gets enough to elicit action from the u.s. and europe?
>> from the european side, it’s maybe in the 1.30 to 1.35 level. we’ve seen corporates out of germany saying that would be a painful level for them. on our side, it’s not very painful but would we go along at that point and intervene if the europeans were crying for help in my guess is later on in the year, maybe if mr. bush seems like he has the election sewn up, we may step in and intervene but you have to wait a while for us to get into the 1.30 sort of range and the e.c.b. start to cry for help at that point.
>> jay, we had a report out of europe today showing business confidence fell for the first time in five months so maybe it is dampening sentiment there.
>> it could be. it is one month, only one month. it has been on a steady rise over the summer and throughout the fall. and so if it’s just a one-month sort of reversal, i don’t know if they would necessarily respond to the one month. if you get two or three months of falling business sentiment compounded with hard data showing that orders are starting to slow, retail sales, at that point they may take more action.
>> what do you think about treasury secretary snow’s comments today, continued support for the strong dollar policy, as well as the strength in the economy as a whole?
>> mr. snow continues to talk out of both sides of his mouth. on one hand he says the strong dollar is in the u.s. national interest but on the other hand he says we want flexible exchange rates and i think that’s code saying that we don’t mind the dollar’s weakness as long as it’s not out of hand, and that’s where the strong dollar policy comes in. he won’t say that a weak dollar is in the u.s. national interest so he keeps the “strong dollar” part there to keep the dollar from going into freefall.
>> jay bryson, we’re out of time. thank you very much and we appreciate your straight answers. he’s a global economist with wachovia securities. up next, how about this one? spitzer v. grasso? should eliot spitzer sue richard grasso? harvard business professor brian hall will join us to discuss the implication of this issue.
