朗读练习作业

Interview: Weeden & Co---Maxwell, Charlie---Analyst

>> and welcome back to “after the bell.” crude oil rose for the seven time in nine sessions as wintry weather takes holdory the northeast. and there was a meeting in kuwait today where opec says it may cut production in 2006. to recap headlines and offer his analysis for 2006 is charlie maxwell. he’s in stamford, connecticut, today.

>> hi, lori.

>> you were able to listen to the interview with samuel bodman. bodman saying we’re doing pretty well in terms of supply. do you agree with him?

>> yes, i do. remember, rita and katrina and emily, they all came through during hurricane season and cut back our ability to produce all of the natural gas we would normally like at this time of year, and that is something we can’t stop, except in a very long term, you know, the water is becoming rather warmer in the gulf of mexico, and this is a problem about the world’s weather, and i think we’re going to be getting these hurricanes on a more frequent basis, we’ve got to hurry and begin to put some cushion between us and trouble.

>> what might you suggest for cushion?

>> well, we need to do more with cutting back the use of gasoline and diesel by big trucks and small trucks and s.u.v.’s and cars. we really need to conserve a good deal, then we need to put in more subsidies for development and research on how to build engines to use less gasoline and diesel. there is a huge amount of conversation we can can get out of our system and we need to obtain it as quickly as possible. the government is starting to do, but more could actually be done.

>> so i want to jump ahead. we were talking earlier about this conflict of interest between big oil’s public and private interest. a lot of debate about what they should do with windfall profits. should they put that money into exploration and production, or continue to pay out high dividends and do share buy backs?

>> it’s a very controversial area, and i think being in a free economy, it’s hard for us, fillo soffically to pressure people to do things with money they don’t think is economic. i do think that there is some jaw bonying that can go on, there are studies that he can made, partly by the government. government is optimistic about how we’re going to get through this difficult period of the five and 10 years before perhaps a nuclear power can come back. that’s always the great hope down the road. but, the meantime, oil is going over―over a kind of peak in the nonopec world around 2010, and we need to make up the oil divisioncy with natural gas and coal, natural gas is now getting tight, so it will have to be more coal and a big slug of conservation, and that’s where we’ll end up, a big slug of conservation.

>> talking about the opec meeting this morning, specifically oil prices, opec is leaning toward that band of $50 per barrel. does that make sense?

>> well, so far it does make sense from an economic point of view. our system is not slowing down very much, under the impact of $50 barrels, and if allows analysts like me to suggest that while in the past we’ve had big rises and then big subsequent falls, time i think things are different, we’re going to have a much lesser fall. yes, we’ll pull back from 71 to perhaps $50 to perhaps 45, but i see many people quite content with the assumption that we’ll go back to $30. i doubt in my lifetime i’ll ever see a $30 barrel again.

>> where do crude price goes from here into next year?

>> i think they come down to about $50 in spring and summer, and they may spike down to $47 or $48, they stay around the $50 mark for summer, then they go back to $55 or $60 for winter. which is quite a normal seasonal variation, i think they’ll stay that way, lori, for perhaps a year or 18 months, while we accommodate ourselves to living with this higher cost, but in the end, we’re going to be needing to use more oil, india and china are emerging as heavy powers needing a great deal more oil. there isn’t going to be more oil out there, because we peak out in 2010 and 2012 and 2015 in various countries, we are going to have to go back to either saving it or going without, and it’s just a lot easier to save it.

>> in our remaining moments, how much trouble would we be in if we had a natural disaster or terrorist attack that would get way in the production?

>> right now we’re using 98% capacity you the i hadization, so the answer is we’d be in a lot of trouble, we have to quickly get the oil companies to invest more, beginning to save more, begin to set into place government cob servation programs so we have a cushion that will save us from the next terrorist event.

>> we’ll leave it there. charlie macwell, thank you so much for joining us.
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Listen Interview: U.S. Energy Secretary--Bodman, Samuel---Other

bell.” merck suffered a set back when a judge declared a mistrial in the third case involving vioxx. the jury was deadlocked on whether the drug caused a florida man’s death. much more in stock reaction coming up. opec may consider production cuts next year, peter cook will speak with u.s. energy secretary. first, let’s get the settling numbers as the market closes. the dow loses just about nine points to close at 10,769. shares of merck fell. s&p gains one to close at 1260, and nasdaq closes at 2260 with a gain of 4 1/4 points. oil prices closed above $61 a barrel on signs cold weather will boost fuel demand. opec ministers also left the door open to production cuts. nymex crude oil futures rallied more than 3% today, settling at 61.30 a barrel. forrest of the energy complex, natural gas, a big gainer, ricing more than 3 1/2%. su keenan joins us with the latest.

>> let’s focus on opec, agreed to keep output quotas unchanged and withdraw a previous offer to use two million barrels of capacity. no one has taken up on opec on the aspare capacity offer it was, quote, no big deal. the big focus analysts say is on opec’s january meeting. oppenheimer says opec is continuing to pump at the highest levels in 25 years because, his words it doesn’t want to look like the grinch that stole christmas.

>> the question is will demand u.s. is taken current level of oil prices? that’s the $64 question. and opec is looking very carefully at that, because if there is an economic slowdown, and the market goes down without an immediate response, we could see oil prices going down.

>> many analysts say that opec is sending a bullish natural and hinting it may cut production next month.

>> they are taking the extra barrels, the extra capacity, taking that offer―that’s coming to a close at the end of this month there was language that said as an organization we have to pay attention to the ceiling in place, this free-for-all mentalties has to come toy aclose. and the meeting at the end of january says they are watching the market and they will be ready, willing, and able to act

>> meanwhile, cold weather continues to drive prices higher, one analyst says mother nature is a bull right now. lori.

>> thank you very much, su. continuing with the oil story. today, opec supplies 40% of the world’s oil, they announced once again they will keep output close to a 25-year high, but members hinted they may consider cutting production next year. we have more on this in a special money and politics discussion. peter.

>> i’m joined by u.s. energy secretary samuel bobman. first of all, thank you for the time today.

>> peter, i’m happy to be here.

>> i would like to get your reaction to the meeting today. the cartel will continue producing 28 million barrels a day, but members may also consider cutting production next year. are you disappointed with that?

>> no. i’m in frequent touch, peter, with both the ministers who represent opec countries and nonopec countries who are producers and suppliers of the market . and in each case i try to make the case to them that it’s very important for them and for us as well as the other buyers that the market be well supplied with product. and as far as i can tell, that’s what they decided to do today to supply product and to continue to do that. obviously, it’s in their interests to examine that and look at it from time to time, so i’m not disappointed are

>> what about the specific decision to withdraw this offer the 2 million barrels of spare capacity, to that i that off the market , because there were no market participant that requested any of that supply. i concerns about that decision?

>> no, i don’t really there either. the―that product was described to me as being heavy oil, heavy material that the refining capacity of the world would have difficulty handling, and one of the big issues that is causing the kind of price situation that we have in heating oil, as well as in other refined products, an absence of refining capacity. we’ve been working hard, encouraging, also encouraged the producing companies to hopefully get busy and get the new alaska natural gas pipeline up and going, to get that committed to. as well as anwar, it’s right before congress as we speak, i’m eager to see that hopefully congress will act favorablely on that and give the president a bill to pass, to sign.

>> before we move on to anwr, i wanted to ask you specifically about opec, the notion that we’re at $61 a barrel oil, the possibility of a production cut doesn’t trouble you at all heading into next year?

>> of course we want to make sure―i will continue to advocate to the ministers involved, both opec and nonopec nations that it’s important for them to keep markets well supplied. i think it’s in their interests as well as in ours. that’s what i discussed with the various opec countries during a recent trip to the region there is a―a situation where in the past we have seen a decline in the usage of oil this is something that they are used to, they want to monitor. i don’t think that’s unreasonable.

>> so nothing you would like to see opec doing at this point to try and ease prices right now? no additional steps would you like to see them make? any specific requests you made before this meeting that perhaps did not transpire?

>> no. we have only―i have encouraged them to continue the supply, keep these markets well supplied, and as best i can tell, have done that that’s what decision today was. they are already pumping at the max mum supply possible to serve the markets of the world, and i can’t ask for more than that.

>> let me ask you about some numbers coming from the department of energy today. their energy outlook, the updated energyout look, coming from the energy administration information, the forecast looking out to 2025. anything that cause you concern? there is an expectation that the price of oil will increase more so than the department forecast a short time ago. your sense of the market going forward and the outlook from the government?

>> well, the outlook that was published today has go bothersome in it. it increased the 20-year out figure for the barrel of oil. that’s an indication that in their judgment, that demand is going to continue increasing, and that we’re going to have -- we’ll have challenges from that. it’s one of the reasons i’m very happy we passed the energy bill that the president signed into law. we’re getting all sorts of things that are getting started. if you look at the forecast, you’ll see increases in nuclear energy, increases in clean coal, increases―the effects of some of the tax impact on new hybrid vehicles, you’ll see a number of different things, also on on renewables and renewable forms of energy. that’s all starting to grow as a direct result of the energy law that was passed into law last august.

>> let me ask you about a more immediate situation that has to do with natural gas. we saw today the price is up more than 3 1/2% today. you talked after the gulf coast hurricanes about your concern about natural gas supplies heading into the winter heating season is your worst-case scenario playing out here, or is this go the country and consumers can handle?

>> we hope it will be able to handle it. the president is very concerned about the high prices, and the damage it’s doing to the budgets of american families. it’s one of the reasons he’s come out for a billion-dollar increase in the low-income heating assistance program that’s managing in the health and human services department, a billion dollars will go a long way to helping keep our citizens warm and sthafe winter some of beer very sensitive to it, the president is working very hard on it.

>> is the supply situation satisfactory to you right now?

>> we continue to have supply issues with respect to natural gas. the―we have about a third of the natural gas that is produced normaly on the gulf coast continues to be shut in and that is causing a shorter supply than we would like to have. the problem with natural gas, it’s a highly localized market , and it’s something that we’re  material that something not movies i will, especially since we have not accommodated the use of l.n.g. in this country, and that’s part of the energy bill, i think we’ll see a change there.

>> thank you, samuel bodman.

>> thank you, peter. we’ll continue our focus on the energy markets today. we’ll be joined by our next guest, says oil prices could reach $75 a barrel.

Goldman Sachs & Morgan Stanley
Interview: Sanford Bernstein---Hintz, Brad---Analyst
>> looking at going going -- goldman sachs and morgan stanley stanley. talk to me here. we’ve had surprises from bear stearns. we’ve had positive surprises and numbers and results from lehman brothers. would we not expect the same for goldman sachs and morgan stanley tomorrow?

>> my guess is that morgan stanley and goldman sachs will beat the consensus estimates. and the reason is because they’re going to have good fixed income. but one of the things they have that both lehman and bear don’t have is the strong commodities trading. if you think of commodities,% commodities tends to do well during periods of war, famine, pestilence and disease and we certainly have had enough geopolitical moves that oil trading will have done very well.

>> in the big scheme of things, can oil trading carry a quarterly result like bond trading or stock trading or equity underwriting?

>> what it will do is add to it. because likely―like lehman and bear, you’ll have fixed income trading. fixed income began slowly in the last four to six weeks of the quarter. what we’ll see in terms of the numbers is excellent commodity trading, excellent equity underwriting, very good fixed income. unfortunately, i think the problem we have is the market is focused on rising interest rates and although they think they’ll post very good earnings, the market will look forward to what’s the next part of the cycle for them to outperform.

>> it’s got―this is the broker/dealer index data. you see the percentage, three months, 26%, 18%. morgan stanley up 14% versus the s&p 500, the percentage underperformance during that period of time. but the reality is, these stocks have been killed for three months.

>> they certainly have. i feel my research has been sent to the electronic trash bin. the market certainly is focusing on the decline of fixed income. but i think one of the problems that the market may have in terms of its analysis is it’s ignoring the fact that european fixed income should continue to perform at least into 2005. it’s unlikely that the european% central bank will raise rates and the european fixed income market is roughly a half the side of the u.s. so in terms of what will happen in the brokerage firms is the decline of u.s. fixed income in the next two quarters and the european fixed income side continues buoyant with rates finally beginning to rise in 2005 so the decline in european fixed income is delayed. what that means is we have time for m&a and i.p.o.’s and the investment banking, the capital market cycle to pick up again. the area where we’ll see softness in brokerage firms is retail. retail brokerage is going through an early summer decline and we probably can’t expect the retail investor to come back until september. i think one of the more interesting things that we have is that we’re seeing the hedge funds pull back. hedge funds, if we look at the amount of equity --

>> what would bring the retail investor back in september. just going to take the summer off?

>> fundamentally, yes. the history of retail brokerage is that when the summer comes, the retail investor tends to go away.

>> as well as the institutional.

>> exactly.

>> let’s talk about the multiples that are at stake here here. is there a price level? you rank these stocks a buy and i assume that the more they fall, the more they become attractive to you.

>> that’s right. goldman sachs has a price point at 1.97. that puts them in its eighth decile. 80% of the time it trades at a higher price to book.

>> why price to book? of all the different fundamental ways to look at a company, why price to book in goldman?

>> we’ve found that major brokerage firms tend to have -- it’s relatively volatile earnings. price to book tends to be a cleaner number. historically the book value tends to be a very good number and brokerage firms don’t trade below bang book. if we look at morgan stanley, it’s trading at its seventh decile, at 2.19 times book. 70% of the time this company will trade above there.

>> good odds for a bet.

>> and what we have is we know that brokerage firms are always always―do not peak in fixed income cycles, but during investment banking and retail and asset management, much later.

>> the advice is to hang in there.

>> absolutely.

>> u.s. securities analyst at sanford bernstien. as commodities prices soar, energy companies are reaping benefits. we’ll hear from the chief executive of quiksilver coming up. quiksilver shares hit an all-time high today.

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Listen Market briefing --- Matt (slow)
NYSE--- Julie (slow)
Morgan Stanley --- Su (fast)
>> welcome back to “world financial report.”% matt nesto reporting here. and recapping the day that was on wall street. a day that saw the benchmark indexes give it all back. the final 90 minutes of trade on lower-than-average volume. it’s almost a cliche. a couple of acquisitions topping business headlines today. first and foremost, shares of% chelsea property group surged on news that it’s being caught. simon property acquiring the factory outlet owner for about $3.5 billion in cash and stock. simon is the world’s biggest manager of shopping malls and the deal adds factory outlet centers in major cities like new york, boston and l.a. the other big major story today in the m&a world, a group of buyout firms acquiring loews cineplex entertainment. bane capital of boston along with carlyle group and spectrum equity investors are buying the theater chain for $1.5 billion. sellers are oak tree capital management and canadian buyout firm, onyx. the sale is expected to close in the third quarter. the nasdaq fell about 12 points today as 1.36 billion shares changed hands. that’s the slowest trading day of the year. i believe it’s the fourth slowest. julie hyman will know in the wrap-up report from times square.

>> this turned out to be the fourth slowest trading day of the year on the nasdaq. we’ve been below average volume for the year for many days now, almost two months’ time and today was the fourth slowest trading day. to give you an idea of how slow it has been this month in terms of volume and price action, the nasdaq hasn’t moved more than 3.2% so far in the month of june, 64 points. when you hear traders talk about stuck in a trading range, this is what they’re talking about. the nasdaq has been bouncing between 1960 and 2024 but has not broken out of that range so far this month. people waiting for the upcoming fed meeting and the next earnings season to roll around. we saw the nasdaq, as well as the other indexes, break down late in the trading day on the very low volume. telecommunication stocks a drag% throughout the session, continuing to be so heading into the end of the session. we had a story in “barron’s” over the weekend saying that phone, cable and satellite prices will vine as companies that provide them competing more with each other and failing to meet growth quotas. because of that, we saw telecom% stocks decline today. notably we saw stocks such as% comcast, a cable provider, and echostar, a satellite president tv provider, both declining ph.d. the source of strength today were banks, especially regional% -banks.% on speculation that after a couple of the bank deals we saw today, other smaller banks might be takeover targets. the nasdaq banking index rising throughout the session despite the overall decline in the market . stocks like huntington bank share, capital federal financial and first merit all gains today on related speculation. back to you.

>> as we said, fourth slowest day. merrill lynch, no longer listed as an underwriter for google’s% -i.p.o.% merrill lynch wasn’t included in the list of 30 underwriters in a recent filing google made with the s.e.c., although merrill had been on the list last month, merrill’s exclusion from the i.p.o. comes after the company has already lost market share in the u.s. for new stock offerings. a merrill spokesman declined to comment. two of the biggest financial companies on wall street report earnings this wek. in fact, tomorrow. goldman sachs and morgan stanley. su keenan joins us with what i have a feeling will be an insightful report.

>> could be a highlight of the week when they report, early tomorrow morning. morgan stanley and goldman sachs will likely say second-quarter profits nearly doubled when they report their results before the opening bell tomorrow. morgan stanley c.e.o. phil purcell increased investment banking business at the nation’s second largest securities firm. more demand for merger advice and equity sales likely increased profits to $1.2 billion or $1.08 per share according to a thomson financial survey of analysts.

>> right now there’s a back log of some $56 billion of deals expected to come to market . that represents $275 offerings.% that has constantly increased from six months ago when it was $33 billion and two years ago when it was under $5 billion.

>> meantime, goldman sachs c.e.o. henry paulson took more risks this quarter using the firm’s own money to make bets on currencies and commodities. the nation’s third biggest securities firm probably boosted profits to $1 billion or $1.95 per share according to analysts surveyed by thomson financial. prudential analyst david trone says both companies may benefit from near record levels of debt trading from march to may and raised profit estimates for both companies last week after lehman brothers and bear stearns reported better-than-expected second-quarter results. bond trading may slow as interest rates rise. there’s been much talk about this. yet investors say the strong economy will fuel gains in other parts of their business.

>> it’s my feeling that we’ll see a pickup in equity issuance and importantly we’ll have to see more i.p.o.’s because that’s very profitable and i think we’ll see m&a advisory, that should take up the slack from the bond business.

>> they’ll look at the stocks. financials have lagged the market this year. shares of morgan stanley down nearly 11%. shares of goldman sachs down more than 9% compared to the s&p 500’s gain of 2%. shares of both companies closed lower ahead of their reports, about .5% and .75% respectively.

>> and worse than the 7% decline of the amex broker/dealer index. legg mason up 14% year to date. thank you, su. we’ll have more on those goldman and morgan numbers coming up. u.s. securities analyst with sanford bernstien will tell us why he’s bullish on both when we return.

Energy stocks
Interview: Brummer & Partners---Doug Cliggott---Chief executive and strategist
>> continuing our special series, markets at midyear. earlier, brian sullivan spoke with doug cliggott, chief executive and strategist with brummer & partners, and he began by asking about energy stocks.

>> i guess i would humbly disagree. it really depends on where you expect oil prices and energy prices in general to be not so much six months from now but maybe 18 months or 24 months from now. the way we look at the energy complex, it’s priced in a meaningful decline in the% commodity price one to two years from now. if the think the commodity price will be sticky and have a hard time going below $30 a barrel, we think energy still attractive.

>> you like the utility group?

>> yes, for a different reason. in a rising interest rate environment i think part of your portfolio you want in low duration assets and in some sense utilities are to the equity market like the money markets are to the fixed income market .

>> yield?

>> high yield but low duration. you’re not betting on what earnings will look like three years or five years from now.% -you wanted regulated utilities% -so you know what you’re going to get.

>> in the tease going into it, into the commercial, we said that a short-term strategy may be the better term strategy. we don’t usually hear you say things like that. what do you mean by and how short term should investors be thinking right now?

>> what i meant by that was i think you can’t have a buy-and-hold strategy, i don’t think, in this environment. look at what happened in the second quarter, the quarter we just lived through. earnings estimates came up five percentage points from 15% expected growth to 20% expected growth. the s&p 500’s been up four index points. nothing.

>> nowhere.

>> nowhere. so it seems to me you can think long term but you have to think long term sector by sector. don’t just put your money an index fund and think it will grow for you.

>> but you have to draw the conclusion, then, if you suggest that, you’re not that optimistic about the overall markets for the next few years.

>> not at all. i think if we couldn’t get anywhere with earnings expectations rising significantly, when we look out% -the next 12 to 18 months, we’ll have slower, not faster earnings growth. and our guess is interest rates will just continue to grind higher and higher.

>> secular bear market right now?

>> i don’t know that i’d call it a bear market . a market that it will be tough to make money in. you have to pick your spots in the market . the market , on its whole, is not going to give exciting returns.

>> one of the groups you do like we showed on a graphic recently was the pharmaceutical group. this is a group that has just disappointed so many people for so long and every time they seem to be out of the woods, some other regulatory or headline crosses. are we out of the woods here on pharmaceuticals?

>> no. i think the short answer is no. i think there are very significant long-term issues. but what we like about pharmaceuticals right now is on a relative valuation standpoint, they’re a lot lower than they were 12, 18, 24 months ago so they’re cheaper. the other real attraction and consumer staples have the same thing, they have non-cyclical earnings. our concern is when we look out to 2005, earnings expectations are too high. consensus is for 11% earnings growth. consensus thinks financials will grow earnings 10% to 11% next year. those numbers to us look very silly. you want areas where you don’t need accelerating economic growth to give you earnings. that’s pharmaceuticals and again

>> it’s more of a story of, hey, pharmaceuticals, at least you know what you’ll get and not be shocked on the upside or downside for earnings.

>> and again, at least some of the names have a lot better valuation profiles than they did a couple of years ago.

>> why do you think that earnings estimates for the financials are overheating?

>> i think we’ve been spoiled. lacking back the last three, five, seven years, financial profitability just improved and improved and improved. but i think a big part of that is the short-term interest rates went down, down, down. now, i think we’re out of a major inflection point in interest rates and i think the trend is higher unless growth really breaks down and so i think we’re just shifting from an idyllic environment for financial services companies to a much tougher one and my guess is the financial sector as a whole will have a hard time growing earnings any faster than the overall economy.

>> will the s&p end the year up flat or down, doug?

>> flat or modestly down.

>> all right, folks, there you have it. securities firms in the spotlight today and going to be in the spotlight for of course the second half of the year. this after posting profits close to record levels. how is the second half looking and how is the weakness in volume going to affect them? we’ll look at that when we return.

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Listen Market briefing --- Matt (slow)
Nasdaq--- Julie (slow)
Morgan Stanley --- Su (fast)
>> counting at the “world financial report.” matt nesto here. tuesday trade, a strong finish at the wire, smarty jones. the s&p 500 also known as, up .3%, the dow .2% but the nasdaq by a nose with a full 1% gain. treasuries little changed. the 10-year yield up, price down, 9/32. the nasdaqa volume bounced back as the index had a late-day rally. julie hyman has a wrap-up report from the martha market site.

>> the nasdaq with its second busiest day this month, it would be the busiest day excluding last friday with the expiration of options and futures. with volume picking up today, not looking too shabby and up 1% or almost 20%. telecommunication shares, in particular, we saw them as the biggest decliners in yesterday’s session, they were the biggest gainers in the session today, up just about 1.4%. semiconductor shares also coming back, the philadelphia semiconductor index with a rise over 3% in the session. some of the semiconductor names were the biggest gainers so if you go down the list, you have intel, qualcomm and maxim integrated, all three semiconductor names. news for qlogic, another semiconductor company, helping it today. merrill lynch upgrading the shares from neutral to buy, saying they think the shares are fairly valued at this price. shares are down 45% on the year. they said given that drop, they’re looking good as these levels and within a year they think the shares can reach $34. helping those shares in today’s session. another technology company today, j.d.s. uniphase, benefiting from an announcement by s.b.c. communications that will it spend as much as $6 billion to build a fiber optic network offering digital tv in order to compete with tv and satellite. alcatel supplies s.b.c. with networking products and j.d.s. supplies alcatel so j.d.s. uniphase rising on that news, as well, in the session. also, a couple of i.p.o.’s today today. momentum pharmaceuticals and sinomics rising both more than 10%. color kinetics down slightly.

>> and on we go. brokerage shares rallied after morgan stanley and goldman sachs reported close to record profits, surge in investment banking, as well as bond trading helped to push the gains of the nation’s second and third largest securities firm. su keenan has been on the brokerage beat today and joins us with a wrap.

>> goldman sachs shares ended the day up 2%. morgan stanley up 1.75 on the strength of the fixed income business, which they reported today. federated’s david grun is surprised by the degree of strength. he managed 200 million in assets including shares of morgan stanley and goldman sachs. morgan stanley, nation’s second biggest securities firm, said revenue from fixed income sales and trading rose to 1.68 billion dollars, a record. the pickup comes as clients lock in interest rates in advance of a widely anticipated move by the federal reserve to raise rates.

>> the fixed income market will come down, it will be necessary for them to rely more heavily on other products, notably equity offerings and mergers and acquisitions, to keep their business going and i’m not sure that business will be there as strongly over the next couple of quarters as it was over the last quarter.

>> morgan stanley’s profit more than doubled to $1.2 billion or $1.10 a share. morgan stanley’s net revenue rose 32% to $6.7 billion with merger advisory revenue more than doubling. mark schultz, analyst and portfolio manager, holds more than 600,000 shares.

>> we saw continued good momentum from fixed income carried through into the quarter and of course that’s been one of the things that could have been causing concern and weighing down the stocks in the sector recently. and the numbers from the equity side of the business look pretty% -solid and looked like momentum was gathering nicely there.

>> and momentum in goldman sachs, the nation’s third biggest securities firm, earned% -$1.2 billion. net revenue in the second quarter rose 38% from this time last year, more than $5.5 billion. goldman’s trading in principal investment revenue surged 35%, making up more than half the firm’s business. this is part of chief operating officer henry paulson’s plan to take on more risk. he also benefitted from underwriting and merger fees and in the last quarter goldman held the position of wall street’s top merger advisor. both firms may be close to a settlement with regulators over i.p.o. allocation. the “wall street journal” quotes people familiar with the situation as saying morgan and goldman have each agreed to pay $40 million to settle allegations they improperly awarded shares of i.p.o.’s in 1999 and 2000. the s.e.c. has accused firms of extracting promises from shareholders to buy more shares at a higher price once the i.p.o.’s started trading to create demand. the “wall street journal” is saying it could be several weeks, not months, before a formal agreement is announced.

>> that will be interesting because one of the factors affecting brokers is interest rates and our next guest will find out what rising interest rates mean for the market . we’ll hear from doug cliggott with brummer & partners in our special series, “markets at midyear.”

International equities
>> the low carb craze has been crushing a number of companies. shares of krispy kreme are down 45% just this year. american italian pasta has lost 28% of its value. darden restaurants is another company that could be hit. hasn’t yet. its growth engine has been the olive garden chain. but the company’s chief executive is not worried.

>> if you are on a low carb diet you can go into olive garden and very easily eat the mixed grill or some of the other items and just hold the pasta and get broccoli on the side. so olive garden is making it very easy for people who are on a low carb diet to continue eating there and for their friends who want to be more indulgent to have their great pasta, too.

>> and just say no the garlic bread. shares of darden restaurants were lower today. the company said tuesday that fourth quarter sales at their primary chains came in a bit short of analysts’ expectations. darden also owns red lobster and profit topped estimates by two cents a share. the c.e.o. talked to bloomberg about the full-year forecast for darden.

>> we are going to grow next year in the 8% to 12% rain think and in future years -- range and in future years we’d like the street to look at us as a double digit grower which could include some years with the 15% and also some years a little under that.

>> darden says profit this year will rise to $1.68 a share, four cents below the average analyst’s estimate. we continue with our special markets at mid year series this time looking abroad. earlier brian sullivan spoke with the head of international equities and he says investors should set their sights on turkey, a country that wants to join the european union.

>> on its own turkey is very cheap, like 10 times p.e., but usually we don’t go into these markets unless there is a very substantial profit to be made. so for the real bang to the buck, the home run is to make it to the e.u. and it’s a grand slam home run. if there is no e.u. then it’s like a double to use a baseball analogy.

>> so even if turkey does not gain entrance―now you expect that turkey will gain entrance into the e.u., correct?

>> yes. it is not going to be easy but i think at the end they will make it yes.

>> some requirements were set out. looks like turkey has accomplished most of those.

>> exactly.

>> when would that happen?

>> that’s the good thing about it. you have to look at it short-term so you don’t need to be very patient to make money on this investment. one is in october there is going to be a progress report from the e.u. on how turkey has done and then in december hopefully the e.u. then will seat date for them to start negotiations and we expect it to be around july of 2005 so you don’t need to be very patient. just wait until the year end and then you’ll find out how things are going.

>> but even if turkey does not gain entrance into the e.u. next year you still believe it is a good market and the market will go higher but it does gain it’ll soar.

>> forget it.

>> i like it. let’s talk about turky and how to play it. do a lot of turkish stocks trade at level one or --

>> very few, very few. i think the best way for a u.s. investor is to buy through a closed end fund and the turkey investment funds run by morgan stanley is one of the, in our opinion, one of the best turkish funds around. the only trick is for your viewers to make sure that it’s not trading at a very high premium --

>> how much of a premium would you allow it to go above net asset value and still be a bargain?

>> ideally within 10%.

>> no more than 10% over it.

>> on general terms.

>> we’ve talked about eastern europe as well. let’s move from turkey and go even further east into russia.

>> yes.

>> you do like the russian market .

>> yes. again, this is a medium-term play. we believe like as turkey is planning to become the 51st state of europe we believe russia will end up being the canada of europe. it’s a huge market with huge mineral resources and huge natural resources.

>> and it’s cold.

>> that’s a good one. what you need in russia is reform to continue and they are continuing at a very strong pace. and then you have to fuel oligarch control of the economy vladimir putin is doing something about it in a heavy-handed way but at least he is doing something about it. russia is a great growth story and will be done slow paced but the investment is very cheap and the possibilities are very bright.

>> coming up next we’ll get head start on asian markets . head to our hong kong bureau for a preview. now for a free view of tomorrow’s action in europe.

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Listen Market briefing --- Lane (medium)
Nasdaq--- Julie (slow)
Fedex --- Su (fast)
>> welcome back to world financial report. we see the dow jones industrial average was up by .8% as was the s&p. the nasdaq up 1.3%. we have news from standard and poors. gil yad sciences is going to be replacing bank one in the s&p 500. and at this point alliance data assistance will replace gilead in the s&p midcap 400. the important point here is gilead in after-hours trading up $1.70 because as it gets into the s&p 500 index there are a lot of fund managers out there who will have to buy their stock in order to keep their 500 stocks whole within the s&p 500 index funds that they manage. all right. the nasdaq had its highest close since june 8 rallying late in the session. julie hyman has details on today’s trading.

>> the nasdaq today in addition to closing at its highest level since june 8 also bumped up against the top of the trading range that we’ve been stuck in all month. it rose as high as 20.23 today before closing at about 20.21. a lot of traders have been complaining that we have been in this narrow trading range and haven’t bounced around more than about 3% for the whole month. this is the least volatile month, in fact, that we’ve seen on the nasdaq since at least back in 1996 so in quite some time. also today we did see the volume picking up just a bit as well which is probably good news in terms of the gains that we saw in today’s session. networking stocks a particular source of strength in today’s session extending yesterday’s gains. yesterday we had a couple pieces of news that really helped these networking stocks. s.b.c. planning to spend $6 billion in order to build out a new fiber optic network for cable television. on the other hand, we had sprint saying it’s going to be spending $1 billion to upgrade its wireless network so because of this wide range of networking stocks on the rise today, we had june per networks up 12%. j.d.s. up 6%. another fiber optic provider up 24%. tellabs up 5% and sienna up 13% this really providing a lot of the strength we saw particularly on the nasdaq 100 though we did see strength across the technology categories. computer related stocks did well. we saw semiconductors stocks do well also for example. some of the stocks that weren’t doing quite so well were the education stocks once again led by career education. now that company said it received a formal order of investigation from the securities and exchange commission. it dropped about 25% in today’s session after falling 16% on friday. now, on friday, what the stock was reacting to was an amendment filed to a previously filed lawsuit. that lawsuit alleges the company falsified student enrollment documents to inflate revenue and inflate student enrollment rates. because of this we saw career education fall once again in today’s session because of the probe. we also saw a lot of the other education stocks fall. apollo group, as well as the tracking stock for apollo university of phoenix online and they were lower in today’s session. back over to you.

>> the ability to manage fuel and other costs helped shares of fedex reach a record high today. the world’s largest overnight delivery service had its biggest profit growth in almost two years and it is likely to continue.

>> taking their forecast upward. fedex corporation’s fourth quarter profit rose 47% on the words of a.g. edwards, the company is on a tear. the international shipper predicts the growth in demand will continue. fedex is raising its forecast not only for the current quarter but for the full year. and this is the result of higher sales and shipments for its international air and ground business. now, the chairman frederick smith says the number of packages shipped from china climbed 50% in the fiscal year ending last month. fedex also continues to cut or manage expenses. two examples are its early retirement program and as lane mentioned success in passing some of the higher fuel costs onto customers. you’re looking at the numbers now, fourth quarter profit rose to $412 million or $1.36 a share. that compares with $280 million or 92 cents a share. revenue rose 21% in just over to just over $7 billion. this partially reflects the purchase of the kinko’s copy store chain. fedex bought kinko’s in february to better compete in the retail market with u.p.s. stores and its sales contributed to 7% of fedex’s total. looking at the share price fedex’s shares rose as much as 2.3% today. the stock has gained 29% in the past year and that beats the 16% gain in the s&p 500. shares of u.p.s. ended up .5% today. this as full-year chart. they are up roughly 16% in the past 12 months. executives say growth in asia and latin america is outpacing that of the u.s. for fedex and it is reflected in their business so far. fedex’s average daily shipments rose 12% in the past three months of its most expensive packages. the company is trying to expand its roots to china under a new agreement between the two countries. arthur hatfield says the long-term and near-term growth for the company is in the international business.

>> if luke at fedex’s penetration level i’ll call it in the u.s., the u.s. is a mature market . they basically can deliver express packages to any address in the u.s., and the u.s. is very adept at using express parcel services. other countries around the world, developing countries, less industrialized countries, don’t have the penetration level of express services we have in the u.s.

>> well, fedex dominates overnight shipping in china and plans to service 100 more cities. it also services 200 cities and, lane, establish a package sorting hub as part of the plan.

>> huge potential. thanks. up next, why turkey may become the best performing market in the world and how investors can buy into that country.

Rate hike
>> We are back. credit suisse group is ruling out a merger for now. the bank has had annual losses in two of the past three years and is struggling to keep up with bigger and more profitable competitors, leaving some investors to say that the bank won’t wait too long to find a partner. credit suisse is reorganizeing its business into three units after the departure of john mack, former co-c.e.o. he was hired to revive credit suisse’s investment banking business. he restored csfb to profitability by eliminating 1/3 of the work force. microsoft seeks an immediate suspension of a european antitrust decision. bloomberg learned that the software maker told europe’s highest appeals court it would suffer irreparable damage by bowing to penalties and paying a record $600 million fine. lawyers say it’s likely microsoft will get the temporary stay of the e.u. order but note that microsoft will have a much harder time convincing the court a definitive suspension is necessary. before the software company was ordered to share programming data with rivals and offer a stripped-down version of windows. next tuesday and wednesday, federal open market committee officials from the fed are going to meet to decide on a possible rate hike, a move that we haven’t seen in almost four years. former fed governor laurence meyer says we shouldn’t bother calling this a possible rate hike.

>> they’re going to move 25 basis points, probably one of the most telegraphed moves in the history of the central bank.

>> why did they have to telegraph it? this was done intentionally.

>> absolutely.

>> did it have to be telegraphed?

>> this is part of what i call the monetary policy playbook that i talk about in my book. and one of the first elements in that is signal the markets , don’t fool the market . and many times the chairman would come into a meeting and say i would have moved today but the markets aren’t ready, they’re not prepared, they don’t expect and it will be disruptive. so there is definitely an attempt by the committee and chairman to prepare markets for a move. and i think they would think that’s especially important for the first move.

>> now, the way he has been informing people. we hear a committee but there’s also talk about his relationship with the press and the way things get out. is it appropriate? is it also beneficial in your view?%

>> i think it is beneficial to signal the markets . it’s part of transparency. of course, there’s a great debate about whether the chairman does talk to the press, as i believe he does―but i’m not telling you for a fact, but it’s my conjecture. and there are times when you want to signal but there’s no time for testimony or speeches before the meeting. something happens. and that’s a vehicle for getting the job done and if you believe it’s important to signal the markets , that’s another way to get the job done. i think there are dangers in that because you never know in the press report whether they go the the chairman right, because he’s not going to be that clear about it, or whether it’s their speculation and that’s a confusion that adds noise to the markets , as well.

>> and from there, we turn to world and national news.

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Listen Golf's U.S. open --- Mike (medium)
>> in this week’s “money and sports,” we’ll talk about the payoff from golf’s u.s. open, the cost of attending the olympic games and the price one soccer power may pay for defeat. joining us out of our atlanta bureau, as usual, bloomberg news reporter mike buteau. let’s start with the u.s. open, golf out of shinnecock, not far from new york city, the u.s. open the past weekend, of course. ratings were up 4% from last year. how could that possibly happen with tiger woods not really in the running in the final day?

>> tiger who? ratings up just slightly, 4%, as you said. up from last year, jim furyk won out in chicago and tiger wasn’t a factor last year and wasn’t a factor this year. ratings are up a little bit. retief goosen wins over phil mickelson. phil mickelson was the star over the weekend but when you look at ratings in general, tiger remains the driving force in golf when it comes to ratings and since 2001, the year after the pga tour signed its big contract, $850 million, ratings have gone down 7% so year after year and the further tiger is slipping back in the pack, the more ratings are falling and the more advertisers are wondering whether or not it’s good money to spend on golf.

>> no tiger woods on the leaderboard, that’s not going to sit well with fans. he has a lot of loyal fans out there.

>> absolutely. and as long as he’s in the tournament, people will show up to find out whether or not he’ll find his swing that week and hope they’ll see him catch fire again. but right now, phil mickelson coming in second at the u.s. open at shinnecock, it’s hard to say that the crowd―they might actually have been more in phil’s favor than they were in tiger’s. tiger at this point has kind of become almost an afterthought, if you can believe that, and phil is the king of golf, so to speak. when you listen to the crowds, for whatever reason, maybe it’s the loveable loser factor, but phil is clearly number one in the hearts of golf fans right now.

>> let’s talk about the olympics in our remaining time. obviously, any sporting event of this size will be designed to be a money-making event away from the competition itself. everybody looking to make a buck selling something, t-shirts, you name it. some say it might be going too far but i understand the greek government is trying to step in to bring things under control?

>> yes. this week they’ve introduced a number of bills into legislation for the olympics specifically talking about hotels and price gouging. it goes on every year, whether it be a super bowl or whatever event, the olympics, there’s no bigger sporting event in the world and no bigger opportunity for a hotel to make extra money price-gouging but the government wants to stop it. they’re essentially saying if you get caught price gouging, we’ll shut you down three months and you could face a fine up to $18,000, significant. if it goes further, it goes into advertisers, if you’re find advertising where you’re not supposed to be, ambush marketing , it would could be a $60,000 fine. so significant legislation to curtail people making extra money and a few bucks here and there off the olympics.

>> and i supposed to generate ticket sales, i remember reading that ticket sales for the individuals, not corporates, were lagging a bit?

>> absolutely. and there seems to be credible fear of―whether it be terrorism or the infrastructure around the olympics―whether or not things will run smoothly. there doesn’t seem to be that dire need to get to athens to see the olympics. salt lake was a big hit in the u.s. but getting to lanes athens might be a more of a logistical problem for people this is the “world financial report” so it’s only fair that we talk about soccer or football depending on where you’re watching from. greece knocking out the defend defending champion and criticism for the legendary david beckham from england. what’s the wrap there?

>> david beckham falling on the hearts of people who who can’t figure out why he can’t find the net. but the real losers in england are the pubs, the english economy which stood to make as much as $735 million if england had reached the quarter so significant money lost here and the pubs will be empty here.

>> mike buteau, a pleasure to have you on and appreciate you joining us here today. folks, you like the sound of a popping cork? is that could be a thing of the past, because using corks, dating back to the ancient greeks, now there may be an upscale alternative.

Brazilian soybeans and China --- Catherine (medium)
>> commodity prices have climbed this year and so, too, have the shares of energy companies, among them u.s. oil and gas producer quiksilver. shares are trading at an all-time high, today at $60.21, up 145% in the past year. the c.e.o. of the company, glen darden, says rising oil and gas prices are keeping the company active. last week quiksilver reiterated expectations of 15% production growth for 2004. the company says it can maintain that rate for four to five years.

>> it’s a difficult business because we’re fighting declines all the time. but we happen to be involved in two very high growth areas, the canadian play and texas. so with our inventory of leases and our test wells that we’ve drilled, we can see a large fairway to develop. so that gives us confidence to project over a number of years.

>> and he’s equally confident about the direction of commodity prices.

>> the demand is firming up. the economy is improving, which increases the demand for our product and we’re supported by the higher oil prices and i don’t see those coming down significantly over the next 12 months. so i think natural gas prices will be fairly strong for the next year or so that we can see.

>> k.w.fnt―k.w.k. is the ticker. general electric and honeywell international have reached agreement to provide equipment to chinese companies.% catherine yang joins us from hong kong this tuesday morning with the details of the quarter. catherine, good morning. what are the details?

>> good morning, matt.

>> that we see?

>> general electric and honeywell are among u.s. manufacturers benefiting from commerce secretary donald evans’ visit to china this week. these companies will sign contracts. general electric is the world’s biggest maker of turbines, will be selling two electric transfer systems to china southern power. and honeywell, the world’s ligest―biggest maker of air conditioners, will provide refridge rants to consumer electronics maker. evans’ visit comes amid criticism that the bush administration is not doing enough to address the widening trading deficit with china. matt.

>> speaking of china, i understand that brazilian soybeans will have easier passage into that country now that a ban has been lifted. what will that mean for brazil and china?

>> this means brazil will be able to resume annual exports to china worth $1.3 billion. talking about china, the world’s biggest buyer of the beans and the one-month embargo had threatened to cancel 11% of total exports. both these countries reached an agreement on herbicides and accepted standards to remove herbicide-laced feed from cargos of beans. soybean futures rising 2% monday and down 12% since april 29 when china rejected the first shipment of brazilian beans. it’s not only overseas growers taking stakes in the fastest growing beer market , interbrew buying stake in a chinese brewer to strength its position. it’s the maker of rolling rock and paying $53.2 million to control a chinese brewery. interbrew is the world’s second largest beer maker and says it expands its share in the eastern province of china.

>> another round of beer for my friends. thank you very much. a channel―chanel designer going down scale.

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Listen Walgreen --- Mike (medium)
>> pilgrim baxter will pay $100 million to settle regulators’ claims that it allowed favored investors to trade mutual fund shares at the expense of smaller clients. baxter is the u.s. mutual fund unit of the british insurance company old mutual. the securities and exchange commission imposed a financial penalty, as well, of $50 million in restitution of another $40 million. pilgrim baxter will cut its fees by $10 million over five years in the settlement, all coming from a case started by new york% -attorney general eliot spitzer. co-founders gary pilgrim and harold baxter face civil claims by state and federal regulators for allowing market timing of the company’s funds. a lawyer for kenneth lay, the former founder and chief executive of enron, asked to meet with u.s. prosecutors.% a person familiar with the case says the lawyer wants to discuss the investigation into fraud that triggered the energy company’s collapse. the federal grand jury is two weeks away from being asked to hand up an indictment of mr. lay. according to the “houston chronicle,” a former prosecutor says he doubts lay is seeking a plea bargain offering cooperation in return for% leniency because there are no higher ranking officials who might be the target of the investigation. shares of the nation’s largest drug store chain closed higher. this is walgreens reporting third-quarter profit up 16%. net income coming in at $344 million, working out to 33 cents a share, a penny better than estimates, up from 29 a year ago. sales in the period ending may 31 rose 15%, $9.5 billion worth of stuff out the door at walgreen. the company pushed surface -- services such as digital printing and film processing. prescription sales also rose as walgreens expands into states such as california and texas with growing numbers of retirees. let’s look at walgreen, a company founded in 1901, originally. and they became public in 1948. what i’ve done is put together a 20-year chart. have a look president you can see the exponential rise in the logarithmic chart, steady as she goes.% what’s interesting, you see this high water mark coming in about late february, 1999. $33 a share. remember that figure, folks, because you can see the straight line over here, the trend line. that’s pretty much where we are so over that period of time, the shares of walgreen have gone essentially nowhere while statistically they’ve gone about 9% higher at a time when the s&p 500 -- not including dividends―down in price alone about 8%. relatively it’s good but the company itself has certainly hit the wall from this level of march in 1999. it traded higher at one point but has subsequently been in a downtrend since the high water mark in november. we see two red lines here, technical resistance. first at $37.50. we tried once and failed to go through. the second level, if we broke that, would be at 40. and last but not least

Market briefing --- Matt (slow)
Yuan free floating --- Catherine (medium)
>> two reports today from morgan stanley and goldman sachs, four of the country’s investment firms have posted near-record profits for the second quarter. however, since that period closed, trading volume has fallen by about 20%, a fact some say could crimp results going forward. let’s take a closer look at a couple of things i’ve put together on the bloomberg terminal.% first and foremost, take a look% at volume.% that bide air―wide arrow marks their second quarter ending in may, averaging 1.5 billion shares on the new york stock exchange and it’s tapered off since then. some say it’s the summer season getting an early start. perhaps. also worth looking at is the down trend. the white line is the s&p investment banking index and the orange line is the combination of the nyse and the nasdaq volume. you can see clearly the two moving down together. also, worth looking at, is this inverse correlation. this is clearly two securities moving in the opposite direction. the grown arrow follows the dollar index up 2.5% year to date. if you look at the dollar versus primary rivals, it’s up against 12 of 16 foreign currencies year to date. the dollar index is rising. you hear a lot of people saying they’re sitting in cash, demand-supply, i think you understand how that works. the red arrow is the volume number declining as we pointed out year to date. one of the other stories that’s% a factor is lackluster interest in the market . we’ve been talking about a trading range. some wonder what is a trading range. i put a red box around it to show you exactly what it is. it’s the market stuck westbound a―within a particular area. in this case, the s&p 500 bouncing between 1100 and heaven 50, a 4.5% price swing. doing that mostly for most of the year between 1100 and 1150. looking at the three-month price moves, some of the declines have brought p.e. levels down to low levels. about half of what people are expecting from the s&p 500. u.s. commerce secretary donald evans says china may be willing to be more flexible in its exchange rate. catherine yang joins us from hong kong with more. cathy, good morning. what does this mean, rather than having a fixed rate, that we may soon see markets determining or the yuan free floating?

>> the revaluation of the yuan is just one of the three items that secretary evans presented on his wish list when he met with wen jiabao in beijing. he wants to make clear the rules for imports on foreign investment. evans says fixing these issues is necessary. the recognition for china as an economy, chinese companies are benefited and exporting to the u.s. evans cited that wen didn’t put a time line on it. evans is on a week-long visit to china to promote american exports at a time when the bush administration is criticized for not doing enough to address the widening trade gap with china. today, evans will meet with the chinese trading minister and vice premier to address the duty to stop u.s. duties imports to china. corning is confessing duties of 16% slapped on imports last weekend. the other is general motors. matt?

>> cathy, thank you. we’ll have to leave it there because of time. you know how the commercial guillotine works at bloomberg. london’s art auction is underway. will it take a cue from new york? strong art sales here. look at that painting.

在线播报
Listen Palmone --- Matt (slow)
>> a management change at coca-cola. daniel paloma is out as chief marketing officer, 13-year coke veteran chuck root is in.% he was recruited by steven heyer who submitted his own resignation on june 9 after the board passed him over and picked neville isnel for the top spot, instead. shares of palmone soared today after the company said profit and sales this quarter will be better than estimates. the stock up 37% at $29.36, excluding some costs. the maker of hand-held computers is expecting to earn as much as 17 cents a share versus expectations for a breakeven quarter from the analysts. driving palmone’s performance is the demand for its trio device.

>> our numbers show it’s continuing to take share and stabilize and provide a platform to grow smart tones from. and smart phones represent enormous growth for us over the next several years. we feel very good about our performance this quarter and optimistic about next year.

>> if you think that palmone shares are overly reliant, the company, on one product?

>> we never give guidance on the products until we announce them but we do an awful lot of work with our customers to understand what do they want, what else can the product do to simplify their lives and make it easy for them to connect to the information they want. stay tuned, we’ll have interesting things coming in all of our products.

>> palmone shares have doubled in value since the beginning of may from $15 to almost $30 a share. this stock used to be $1,000 4 years ago. s.b.c. communications says it will spend as much as $6 billion to build a fiber optic network that offers digital television service. this as the company steps up competition with cable tv providers. microsoft will supply internet protocol tv software for the network to be rolled out over five years. s.b.c. will use the connections to sell fast internet and web telephone calling services to consumers and small businesses. last month, comcast announced it will offer digital phone services by the end of 2006. sprint is stepping up spending to keep up with rivals and says most of the billion dollars budgeted for network upgrades will be spent this year and next rather than spread out over the next two years, trying to keep up with competitors such as verizon wireless and at&t% wireless, both announcing similar upgrade networks recently. the rise in spending could lift earnings for lucent, nortel, ericsson and motorola. president bush reacts to news that a south korean hostage in iraq has been beheaded. mark crumpton has details on that and more.

Oil and gas prices --- Lane (slow)
>> welcome back. chevron texaco chief executive david o’reilly says oil and gas prices may continue to rise. o’reilly told the u.s. chamber of commerce that rising demand for oil in china and natural gas in the u.s. is pushing prices higher.

>> don’t worry about the world running out of oil. and gas in the near term. but i do worry about people recognizing that we’re in a much more mature phase of the energy supply business.

>> o’reilly says high gasoline prices in the u.s. are the result of high crude oil prices varying lending standards mandated by state and local governments and a lack of new refining capacity. yesterday u.s. energy secretary spencer abraham asked the national petroleum council to study the nation’s oil refineries and recommend ways to boost gasoline production. shares of chevron texaco have risen 29% in the past year. a divided securities and exchange commission today ordered mutual fund boards to appoint independent chairmen. the controversial rule will affect hundreds of mutual fund companies who currently have insiders chairing their fund boards. the governance changes approved today mark the latest mutual fund reforms in the wake of recent abuses uncovered in the $7.5 trillion industry. republican chairman william donaldson provided the swing vote when he sided with the commission’s two democrats. donaldson said an independent chairman would ensure that shareholders’ interests and not fund companies’ come first.

>> conflicts of interest sit at the very core of the mutual fund investment adviser relationship and are huge. so much so that if we were to devise a mutual fund governance structure from scratch it seems to me self-evident that we would conclude that these conflicts could only be effectively resolved if the leadership of the mutual fund and investment adviser were different, separate and independent of one another.

>> large fund families like fidelity and van guard opposed the change arguing it would do more harm to investors than good. their top executives will have to give up chairing hundreds of individual funds. donaldson’s two republican colleagues on the commission voted against the rule. paul atkins and cynthia glassman said the commission lacked any evidence showing it would actually help fund shareholders. they also worried it would raise costs.

>> it is a fact that many of the top-rated funds today, based on high performance and low fees, have inside shares. why should we tell shareholders that they can no longer have the form of governance that produced that high level of performance? and, further, why should we require them to pay for it?

>> mutual fund industry analysts estimate about 80% of the approximately 500 mutual fund companies have boards led by insiders. today’s rule change will take effect 18 months after it is published in the federal register. bill clinton’s memoir is breaking records. the 957-page “my life” sold more than 400,000 copies in the u.s. during its first day at book stores. the publisher says it’s printing an additional 725,000 copies due to demand boosting the number published to 2.25 million. the book chronicles the former president’s childhood in arkansas, his rise in politics, and two terms of office. his wife, hillary’s autobiography sold about 200,000 copies on its first day. in world and national news saudi arabia has an offer for suspected terrorists.

在线播报
Listen Credit Suisse --- Matt (slow)
>> credit suisse group is ruling out a merger for now. the bank has had annual losses in two of the past three years and is struggling to keep up with bigger and more profitable competitors, leaving some investors to say that the bank won’t wait too long to find a partner. credit suisse is reorganizeing its business into three units after the departure of john mack, former co-c.e.o. he was hired to revive credit suisse’s investment banking business. he restored csfb to profitability by eliminating 1/3 of the work force. microsoft seeks an immediate suspension of a european antitrust decision. bloomberg learned that the software maker told europe’s highest appeals court it would suffer irreparable damage by bowing to penalties and paying a record $600 million fine. lawyers say it’s likely microsoft will get the temporary stay of the e.u. order but note that microsoft will have a much harder time convincing the court a definitive suspension is necessary. before the software company was ordered to share programming data with rivals and offer a stripped-down version of windows. next tuesday and wednesday, federal open market committee officials from the fed are going to meet to decide on a possible rate hike, a move that we haven’t seen in almost four years. former fed governor laurence meyer says we shouldn’t bother calling this a possible rate hike.

>> they’re going to move 25 basis points, probably one of the most telegraphed moves in the history of the central bank.

>> why did they have to telegraph it? this was done intentionally.

>> absolutely.

>> did it have to be telegraphed?

>> this is part of what i call the monetary policy playbook that i talk about in my book. and one of the first elements in that is signal the markets , don’t fool the market . and many times the chairman would come into a meeting and say i would have moved today but the markets aren’t ready, they’re not prepared, they don’t expect and it will be disruptive. so there is definitely an attempt by the committee and chairman to prepare markets for a move. and i think they would think that’s especially important for the first move.

>> now, the way he has been informing people. we hear a committee but there’s also talk about his relationship with the press and the way things get out. is it appropriate? is it also beneficial in your view?%

>> i think it is beneficial to signal the markets . it’s part of transparency. of course, there’s a great debate about whether the chairman does talk to the press, as i believe he does―but i’m not telling you for a fact, but it’s my conjecture. and there are times when you want to signal but there’s no time for testimony or speeches before the meeting. something happens. and that’s a vehicle for getting the job done and if you believe it’s important to signal the markets , that’s another way to get the job done. i think there are dangers in that because you never know in the press report whether they go the the chairman right, because he’s not going to be that clear about it, or whether it’s their speculation and that’s a confusion that adds noise to the markets , as well.

>> and from there, we turn to world and national news.

Market briefing --- Matt (slow)
Nasdaq --- Julie (slow)
>> earnings season, folks. starting with aa alcoa shares are dropping a bit in extended hours. actually, look at that. they’re unchanged now. they were down about 75 cents earlier. not a huge decline by comparison but the dow member kicked off the second quarter earnings season after the close of trading reporting a jump in income of 87%. earnings rose to 46 cents a share up from 26 cents a year ago, still a cent short of those optimistic analysts. alcoa benefited from surging aluminum prices demand in china and a recovering u.s. economy also helped push prices up of the commodity. 25% for the quarter. high margin sales to airplane and auto makers also on the rise. shares of the company closed up 2.5%, ahead of the report. they’re down about 14% so far this year. another earnings report also out with second quarter results, ginen tech, d.n.a. the ticker there. says profit was inline with what analysts were expecting that income at the world’s second largest biotech rose 29% to $171 million, working out to 16 cents a share up from 13 cents a year ago. earnings excluding some items were actually 19 cents a share and that is exactly in line with what the average estimate of analysts polled by thompson were expecting. the move after hours shows you adding just about a dollar on the stock there. the sales for the record were up 41% to $1.1 billion. that was better than expected. ahead of the earnings report, shares of genentech fell just about 1.5% today. they gained more than 40% over the past 12 months. also today two more software companies missing their earnings forecasts. siebel systems says its second quarter sales missed an earlier forecast, saying they totaled $301 million compared to an earlier prediction of $340 million to $365 million so $301 million down from a range of $340 million to $365 million. siebel says customers delayed purchasing. that was why revenue came in light. bmc software announced fiscal first quarter sales rose less than the company expected. sales for that quarter rose to $318 million to $328 million down from a forecast of $345 million to $355 million. excuse me, folks. let me be clear. the company is blaming delays in u.s. customer orders. so two delayed customer orders affecting software companies in extended hours. the nasdaq managed a .2% gain snapping three days of decline. bob bowdon has details of the day’s trade with this report.

>> nasdaq investors just did not want a fourth down session as the nasdaq finished higher though off its session highs. one example people soft. this had been down five sessions in a row and had pretty negative earnings. it said 13 cents compared to the 21-cent analysts’ expectation and the c.e.o. said the adverse impact of the oracle takeover to his business has been substantial. yet investors saw that bad news as good news and the stock ended up rising up 1.8% after early in the day having been down over 8%. moving on, dollar tree was a stock up on the day up 3.6%. the company reaffirmed its second quarter sales forecast in a range of $700 million to $715 million. that’s better than last year’s figure from the same quarter of $626 million and checking some other discount retailers that are traded on the nasdaq also costco stores and fred’s stores stocks up between 1% and 2%. moving on, one group that was lower on the day, clearly chinese internet stocks were lower, led by netees, a stock down 12% on the day. it’s one of china’s third biggest u.s. listed internet companies. the company said second quarter revenue would fail to meet expectations only $24.28 million analysts looking for 27 million. sina and sohu down in sympathy with the netease news. night trading down for the second consecutive session. this company said second quarter earnings would only be six to 11 cents a share. analysts looking for 15. it announced an agreement to settle that employees traded ahead of customer orders. i want to leave you with international speedway that stock up 1% hitting a four-year high on the day it owns the daytona motor speedway and it said earnings excluding items would be 35 cents ahead of the 33-cent expectation. back to you in the studio.

>> and, folks, we will be back shortly.

在线播报
Listen Market briefing --- Matt (slow)
Yahoo --- Su (fast)
NYSE --- Deb (fast)

>> welcome to world financial report.” i am matt nesto. the news has learned the u.s. government is expected to announce the indictment of former enron chairman and c.e.o. kenneth lay tomorrow. a person familiar with the case says lay will be charged for his role in the accounting fraud that drove the former energy trader into bankruptcy. of course, lay presided over the company while it used off-the-books partnerships to hide enron’s debt and also inflate its income. in december of 2001, enron filed for what was then a record u.s. bankruptcy. the company cost investors an estimated $30 billion in stock losses. that doesn’t include unpaid debts or money lost by bond holders. yahoo is kicking off the earnings season with record profits, but shares are plunging. as analysts say the internet bell weather presents numbers that were mostly in line with its own forecast. shares are down as you can see more than 13% in extended hours. the company said second quarter profit more than doubled as it sold more advertising and sue keenan joins us with details and reaction on this double-digit decline on yahoo.

>> and double-digit increase in terms of almost 90% increase in its advertising revenue. a lot of analysts say it’s because this company has a history of exceeding all forecasts out there. some are calling this report tonight lukewarm. one analyst said numbers were mostly in line with profits just ahead of analysts’ estimates of $109 million. it came in at $112 million. yahoo, a history of exceeding forecasts and even in those situations the stock is typically sold off the analysts say. tonight’s news pulled rival internet stocks lower. the selloff spread throughout, ask jeeves, infospace and amazon.com. now, this could be the year that brings the battle of the search engines to a website near you. many analysts and investors are focused on the fact that as yahoo upgrades its technology it faces new competition for both advertisers and investors. there is the planned startup of microsoft’s upgraded search engine which bears a striking resemblance to google’s website. for now msn pays to use yahoo’s engine and process its page search advertising. this brings in extra revenue they say. the director of guardian park avenue funds says he’ll be listening on tonight’s conference call for details on the quick through advertising with an eye toward how this will position the company against future competition.

>> microsoft is going to be coming along hard in the back half of this year and next year with their new search engine. they realize how great this real estate is. in addition, you have google, which is not going to only becoming public, they are building out their investment in international advertising web space, so you have a lot more competition for the same level of revenue that we have right now.
>> meanwhile, google, the world’s most used search engine is planning a $2.72 billion stock sale this year. ironically this would initially benefit yahoo. its 5% ownership of google could be worth $2 billion when the company goes public. analysts say the battle for advertising dollars is already heating up. mark says yahoo’s free cash flow at $194 million versus $174 million last year are bright spots in tonight’s report. he thinks the threat from the new rivals is actually overplayed.

>> google probably will help yahoo stock, not hurt it. there’s a theory that it hurts only from the standpoint of new dollars that are invested in yahoo move over to google. i think what may actually happen is the opposite. google’s valuation may lead to an upward revaluation of yahoo to put it in line. the other thing is i believe this just gets better in aggregate for msn, a.o.l., google, for yahoo. advertising is still a very small piece of the pie.

>> small piece of the pie, he says. they estimate that the online revenue is about 3%. this is all combined with the $200 billion in advertising dollars out there. for at least the next year many analysts think yahoo will continue to lead and the selloff, some are saying, could be temporary. it is, however, surprising.

>> the proverbial buying opportunity as they say. >> it is a concern this could be as good tass gets.

>> ok. let’s talk about the shares of of yahoo because they’re down about 12.75%. prior to the announcement in extended hours they had fallen the past four days down about 10%. if you take a look at this first chart i’ve put up, this is an extended hours chart. we call it gips all. it shows you the intraday trade and then the extended hours. you can see the volatility there with a couple of, well, like us, trying to sort through all those headlines that cross at once but ultimately we did settle on it and the real big one going forward and why the stock is down over 10% is the third quarter revenue forecast is for $610 million to $650 million versus the average estimate now which is $644 million. it’s all about the forecast here now. let’s take a look at some history though while i have your attention. yahoo is pulled up on the screen. this is since the 1986 i.p.o. apologize for the typo. excuse me. 1996 i.p.o. if you look at the share price, obviously a big runup. but it really gets interesting in here because this is a stock you could have bought for $5 bucks a share as recently as october of 2002. we tighten it up and take a look at the run in the stock over the past year and you’re still seeing shares as low as $14 rising to as high as $35, as i mentioned, you can see this recent giveback there. but also underneath, and i’d like to slide this up a little bit, to give you a better idea, this is a relative strength line that 50-day moving average you can see on the top, the green. but the reality is that the relative strength, that blue line on the top, is the overbought line. when you see a strong stock typically you’re going to hit that and the stock would fall down. but on the bottom that pink line is oversold and you can see never once has this stock hit that oversold line. so that’s yahoo for you in a nutshell but the history doesn’t really matter. it’s all about the forecast as i said in the here and now with the stock down a dozen percent in extended hours. well, a rebound in earnings optimism led to a rally, a bit of one. let’s get to the numbers here today. stocks finishing off of earlier highs, up .2% for the dow and the s&p. .1 for the nasdaq. onto the bonds we go. they were down, little changed here today. no change to speak of right there in terms of the 10-year. if we look at some of the shorter bonds, the five and the two, not much of a change there as well the yields holding fairly steady. the dollar under intense pressure here today. we had some economists not raising their forecasts but tightening their g.d.p. growth forecast in the u.s. to 4.5% down from an average of 4.6%. so let’s talk about the currencies. you see real no move there in the latest trade but in new york it was all dollar down. the dollar index swooning to a three-month low. the yen up 1%. the euro and the pound up about .75% each versus the dollar. well, markets snapped a three-day losing streak today as we pointed out but it was just barely. deb has a wrap of the action joining us from the floor of the exchange.

>> you know, you’re right, matt. over the past four days the markets still down 195 points, so as we were leading into today, the market was down 215 so up 20 really didn’t mean a whole lot. but at least semiconductors leading the market and of course that is what led the market lower for the past three trading sessions. however, financials and insurance kind of lagging and that really kind of limited any kind of gains we were seeing. also, we saw gold and copper rallying. some of those commodities rallying while the dollar is declining. take a look at gold. gold is one of the best individual performers in today’s session. some of the gold stocks, along with the material stocks putting in impressive performances but broker-dealers in the financials really some of the drags on the market that we did see. also take a look at caci international. this applies interrogators to the u.s. army in iraq. you can see the big jump-up in that stock. it was halted for about 30 minutes and you can see what it’s been doing year to date, but the u.s. government has concluded that the company doesn’t have to be suspended or debarred from government contracts because the g.s.a., the general service administration, is still requesting information of an investigation into how some of their contracts were obtained. and while we’re talking about caci take a look at titan. they were also lower. they actually supply translators to the u.s. army from the federal government to counsel soldiers and their families. won’t be renewed because of concerns about the way that contract was being used. back to you in the studio, matt.

>> deb, thanks very much. well, folks, if you didn’t know, it is earnings season today. we’re tracking yahoo shares down about 12% or 13% in extended hours. we also got that after they lowered their forecasts. so stay with us.

Adelphia fraud case --- Allan (slow)
Chart of the day --- Tom (slow)
>> the chief financial officer from credit suisse first boston is leaving the firm. her decision coming days before the new csfb chief executive, brady dugan, is expected to announce a new management team. this is according to a person familiar with the matter. she is 45 years old, the company’s highest ranking female executive and a member of credit suisse group’s executive board. a federal judge declared a mistrial in the remaining charges in the adelphia fraud case. allan dodds frank has been covering the trial and deliberations and joins us from lower manhattan with the latest. allan?

>> matt, judge leonard sand called a mistrial after the jury told him we have tried after no avail. after nine days of deliberations, they could not reach a unanimous decision about michael rigas and two counts of bank fraud and 15 counts of securities fraud against him. they acquitted him yesterday of one count of conspiracy and five counts of wire fraud. at the same time, they acquitted assistant treasurer michael mulcahey of all 23 counts and found michael rigas’s father,% -john rigas, former c.e.o. and founder of adelphia communications, guilty of conspiracy as well as fraud counts and securities fraud counts as well as michael’s% -brother, timothy, who was adelphia’s chief financial officer. we heard from michael rigas’s lawyer as they left the court.

>> it’s a good result for us. unfortunately, the government may retry him but i’m positive when they think about it and the acquittal on the counts, they won’t retry him.

>> i asked david kelly, the u.s. attorney who was in court, and he had no comment about whether the government will seek to retry michael rigas. earlier this week, outside the court on a bench, i talked off the record with john rigas and he said i could relate quickly on the record today what he said. he said that wall street had been too eager to give him money. he made a big mistake. they lent him billions and that ended up overleveraging the company, causing the collapse into bankruptcy and ultimately this trial that led to his conviction. matt?

>> thank you very much.% appreciate it.% if we plov on, here, now, another court-related story, m.c.i., emerging from the largest bankruptcy case in history in april, is suing former c.e.o., bernard ebbers, to recover $408 million in loans. the company, formerly known as worldcom, is seeking to dismiss ebbers’ $12 million claim against it. this, according to a suit filed in the u.s. bankruptcy court in new york. imagine this, if you will, $1.32 per euro, what goldman sachs forecasts for july of next year, making europe’s exports more expensive and threaten the franelile german economy, the subject of our “chart of the day.”% here with a discussion is our editor at large, tom keene. take it away, $1.32 per euro.

>> up 6.5%, a big move. here’s what’s happened in rapid order in a quiet summer week. the dollar was stronger and now we’ve seen the stronger euro in the face of somewhat tepid u.s. data. goldman sachs changes their u.s. forecast, lowering them. their currency team in london changes the dollar forecast, calling for a weak dollar into 2005. if we go to the chart, matt, you see the euro back to 2000. red is the trend line, above parity, a dollar per one euro. it all fits well on trend line. goldman sachs’ 2005 forecast is up here with the white circle at $1.32. so we say, so what, the starbucks coffee in london is more expensive and in paris you’ll face that this summer.

>> terrible.

>> but the serious issue here is a weak europe and germany reliant on exports, their exports become expensive, the german economy slows down and they may even have less inflation and you may get that deflation fear again in europe. so it’s complex.

>> if goldman is right, it would seem that would put the focus purely on brussels and the e.u. to do something.

>> it puts it on the political and economic experiments that is europe. this would be a real test. $1.32 euro, most of the experts i talk to say that’s the first big test of the european union.

>> it’s funny it used the word experiment because you have to remember how young that currency is and it is unchartered waters and they’re adding more members all the time, another dozen or so members.

>> 10 members.

>> 10 members coming in. will that be a factor?

>> here’s how it works -- germany, if they have the deutsche marc, could amend their strategy using the deutsche marc but they can’t amend the euro because they need the votes of the other nations so they have a limited quiver of arrows and limited tool box, so it’s an interesting experiment.

>> thanks, tom, cutting edge stuff from tom keene. also coming up, we’ll look at abbott labs, a company expecting sales of its humira drug to rise to more than $1 billion. that’s a blockbuster in the pharmaceutical circles. we’ll hear from the chief executive, miles white, about the growth strategy.

在线播报
Listen Market briefing --- Matt (slow)
NYSE --- Deb (fast)
G.E. --- Su (fast)
welcome to “world financial report.” i’m matt nesto. let’s give you those closing numbers. it was a wrap of a weekly trend of declines and deb kostroun joins us from the big board with a wrap of the session.

>> this week it was a shortened trading week with a holiday on monday, the july 4th holiday observance on monday. so a four-day trading week. next week, we’ll be runnering to work with 71 companies of the s&p 500 reporting their earnings, likely to provide a lot of direction for the market as we’ve been in a trading range for some time. the market , at least in friday’s session, flirting around that 10,200 area and closing just above it in the dow jones industrial average. one of the things that did help the market on friday, g.e. releasing its earnings, the biggest gainer in the s&p 500. second-quarter earnings a penny better than analysts’ estimates. we also saw technology performing well and remember, what we’ve been seeing in technology, as the market over this past week, when it goes lower, semiconductors tend to lead it lower and when the market goes higher, semiconductors lead it higher but we’ve heard a lot of news over the past week about intel, many analysts weighing in on intel and will they meet their third-quarter numbers. next week we’ll be hearing intel’s numbers for the second quarter. looking at other technology stocks, we did see unisys hitting a 52-week low after saying their second-quarter results coming in below their forecast. unisys at a 52-week low. also, other stocks we were looking at today, t.x.u. this is―shares of t.x.u., the largest power generator in texas, lower all day today. however, they did―they were lower mainly after a dallas tv station playing tapes of t.x.u. traders talking about taking advantage of a nearby municipal utility when they needed to buy power from time of the t.x.u. so utility stocks under water all day. back to you.

>> appreciate it. a record u.s. demand and concern about supply disruptions in asiaia, africa and the middle east combibed to push oil prices higher. inventories fell to a two-month low. a rocky―iraqi and nigerian oil shipments disrupted, and a tax dispute threatened to curb russian output. those nations account for almost 1/5 of u.s. oil imports. today, the price of crude oil was down about 1% in new york trade, significantly below $40 a barrel, however. some analysts say crude oil prices may fall next week, as well. we want to point that out, on rising output from opec. moving on to general electric’s higher-than-forecast earnings. the world’s largest company by market value says demand for plastics and engine parts and loans fueled the biggest percentage sales gain in almost four years. net income rose to 3.92 billion dollars from 3.79 a year ago. per share, 38 cents. g.e.’s chairman and c.e.o., jeff immelt, calling this the best economy he’s seen in years. su keenan looks at how the rosy outlook is affecting the stock.

>> lifting the full-year outlook. and general electric’s outlook often viewed as a barometer for the economy because of its diverse and global business. it is the world’s biggest maker of jet engine, power plant turbines and medical imaging equipment and leader in the credit card and aircraft leasing businesses. philadelphia trust company’s chief investment officer says when g.e. speaks, you listen. you can see healthcare earnings were up more than 30%. john waterman, chief investment officer with rittenhouse asset management.

>> what we’re hearing from g.e. is a lot of confidence in the business and in the economy. so that makes us feel good about owning the stock and about the outlook for the next 12 to 18 months.

>> steve hoedt, national city corporation’s analyst,, says the recovery in some of the weaker business units is key.

>> the numbers shows the economy has gained a bit of strength. i would also point to, within the company’s finance division, you can see the utilization rates for leased products they have that are economically sensitive also were very high in the quarter and that’s another good sign.

>> this is a week when stocks can use a good sign. the standard & poor’s 500 index fell for a fourth straight week, pressured by a series of companies saying earnings will be less than expected. shares of chipmaker conexant plunged as did shares of veritas veritas, both companies cutting forecasts. david sowerby with loomis sayles says g.e. confirms his view that second-quarter corporate earnings will be 28% higher than year ago levels.

>> corporate free cash flow is as strong as i’ve seen it since arguably 30 years or longer. top-line revenue growth up 11% to 12% compared to year-ago levels. there will also be weaklings in the group but this earnings environment, seven straight quarters of double-digit earnings growth, is arguably as good as i’ve seen since the mid 1960’s.

>> g.e. shares rose 1.5% today.

>> want to see cool g.e. graphics.

>> sure.%

>> i put stuff together on g.e. it’s an interesting company to look at and a lot of people loockeds at this company as an industrial but the fact remains that the company is doing more than half of its sales as a financial right now. you take a look at this first chart i’ve put together, i’ve compared it to industrial production for the heck of it. look at the correlation between the indexes rising, a 10-year chart. the white line is the industrial production index and you can see the two rising in tandem, pretty much until the year 2000 and pretty much falling in tandem. what you don’t see, though, is the recovery as much, the industrial production index back to just above its previous high. g.e. not even close to recovering from its all-time high.% so then, the second graphic that we looked at is more correlated to financials and this one really caught my eye. it’s the five-year comparison of g.e., which is the white line here, and the 10-year treasury yield. look at the overlap over a five-year period between g.e. and 10-year treasury yields, just something to talk about this weekend over cocktails. interesting and unusual. last but not least, technical analysis, courtesy of the bloomberg terminal. you see that red circle up top, that was that two-year high that we hit just at the beginning of the year. you can see that the stock struggled to get there and bounced back. also, one other thing i want to look at in terms of relative strength, if you were to look at the stock over the past year, overbought once, we’ll consider this one although it’s technically three overbought signals, and three times overbought but oversold only twice in the past year, most recently in march during this dip in the price right here. right now, we stand kind of in the middle. so the market really―or that relative strength index not giving you a clear buy or sell% -indication. that is the wrap, my way, on g.e. a mistrial in the case of michael rigas. we’ll go to the courthouse for a full report on that up next.