Market briefing --- Matt (slow)
Oil beat --- Su (fast)
NYSE --- Bob (fast)
>> welcome to "world financial report." i'm matt nesto. we mentioned it, crude oil rose to a record closing high today on concerns about supply. oil futures in new york finishing the session above $48 at $88.88 a barrel and the latest survey by bloomberg news finds 59 traders and analysts expect prices to move higher next week. that's the most bullish response since late august and respondents say that crude oil futures could touch $50 a barrel. here is su keenan on the oil beat again with details.
>> it was the seventh straight day of higher pries and looks like we're entering a phase that will take the price to unbelievable highs. that is a direct quote from one of the 41 analysts and traders surveyed by bloomberg news on the direction of oil prices. take a look. 24 of the analysts and traders surveyed predict an increase in crude oil futures next week. 14 expect a decline. three said prices will be little changed. supply concerns remain with the nation's oil stockpiles now close to a three-decade low due to hurricane ivan. and refiners are increasing their purchases to make up for disrupted supplies. crude oil futures have rallied more than 70% from this time last year. wendell perkins, who oversees $800 million of the johnson family of funds in wisconsin, sees trouble ahead.
>> it's very possible that we could see the price of oil go over $50 a barrel, which psychologically is a barrier. it is still our belief that oil will settle back down into the low 40's. but the longer term concern is still there about the oil price issue and its ongoing impact on not only economic activity, but clearly on earnings. this is a concern that will be in the market for quarters to come.
>> quarters to come, he says. well, oppenheimer and company's fie dell gate represents a bearish view. he is talking about days to come and telling clients there'ss no where for oil to go but lower. mackenzie financial sees prices falling in the longer term, the next year and a half.
>> in our estimation, in any normal environment, we should see the higher end of a range, say $30 to $35, perhaps given the current tightness, something closer to $35 to $38. but it's still down $10 or more from here.
>> and david spika of westwood holdings, expects lower prices, but continued supply concerns and that is why he's still bullish on energy stocks.
>> lower expectation for oil in 2005 is $35 a barrel. admittedly, that is a conservative estimate when the futures market is the pricing in $45 a barrel and we're at $48 today. if you look at where energy stocks are valued today, they're being valued of oil assuming $30 or less per barrel.
>> meanwhile, the energy department says it will make short-term loans of oil from the petroleum reserve, as two refiners face with storm-related oil productions. a shell group says it will receive 1.4 million barrels from the reserve. in russia, president vladamir putin says his government has no plans to nationalize the country's biggest oil exportser, yukos. he did say that state-run oil companies can bid for yukos assets if they're sold to cover the $7 billion tax bill that the government wants paid.
>> unbelievable. 59% of our analysts expecting oil to top $50 next week. we'll see. we'll talk about it a week from today. appreciate it, su. on to economics we go. orders for dirblee goods rose this august by the most since march, a sign that manufacturing could be gaining momentum. if you excludes orders for transportation equipment, the less volatile durable goods orders rose more than 2%. in fact, 2.3% overall orders at u.s. factories fell by half a percent last month, mainly because of a decline in aircraft orders. economist steven stanley says today's numbers are a positive signal.
>> these orders numbers are all over the map from one month to the next. you have to look at the trends and things, i thought, have been a little disappointing in june and july so i'm encouraged to see a nice number in august. it looks like once again the idea that we're coming back from the soft patch.
>> also today, a sign that the housing industry is slowing, but still strong. sales of previously owned homes fell for the second month in a row. they were down about 2.7 % in august, rising home prices may be keeping potential buyers on the sidelines. they're up 24% over the year. still, those sales remain very close to record levels. well, the durable goods report gave investors some optimism in early going today. the soft economic patch perhaps ending. that sent the s&p and dow higher. let's look at the numbers here today. you're just about eight points higher for the dow, works out to .8%. s&p can't quite get two points that. works out to .1% higher. but the nasdaq falling almost seven points on the day, brings you down just about .4% on the day. well, the s&p closed higher today as the government report suggested strength in manufacturing. for more on the trading action, bob bowdon has this report from the big board.
>> oil-related stocks were many of the stars on friday, particularly the oil field services stocks and the drillers. here is a list of a few that rallied. halliburton rallying for a second day after the company said it may sell its k.b.r. unit, involved with some of the controversial accounting practices in iraq. that stock, halliburton, up seven out of the last eight sessions. valero shares up 3% today. marathon oil up 2.3%, benefited from its smith barney upgrades to buy. that stock at a five-year high and noble corp, up 2.6%. the drop continued for fannie mae shares, down for their fifth consecutive session, after fannie mae fell 6.5% wednesday, 5% yesterday, falling another 2.4% today. news yesterday that a federal regulator is claiming c.f.o. tim howard for vie lating accounting rules and hitting fannie mae after the close of yesterday, news of a shareholder lawsuit. speaking of down stocks, maytag continued their fall after the news that high steel prices will cut into that swedish maker's profits and maytag shares down eight consecutive sessions, 5% yesterday and 5% today. whirlpool object fractionally affected by that news from electrolux. as you see there, down .6%. the airlines were killed today over that $48 a barrel oil that we finished above in the new york mercantile exchange. delta shares down over 8%. a.m.r. shares down 7%, as you see there. certainly airlines getting hurt by the high oil prices. that is the latest from the nyse. i'm bob bowdon, bloomberg news.
>> simply put, we saw treasuries falling today after the durable goods report. that added to speculation that the federal reserve will raise interest rates, at least one more time by the end of the year. the 10, the five, the two, all falling pushing those yields up from earlier lows. two days down in a row, in fact, for the treasury market . as the third quarter winds down, there is a major performance discrepancy emerging. the s&p 500 down about 2.5% this quarter, while treasuries are on track for their best quarter in about two years. he's take a look at the terminal. i want to show you a historic thing that we haven't seen in at least 40 or 50 years can. this is the feds target rate one time, two time, three times the rise there and then you see, of course t 10, five and two-year going down. you don't see-we have never seen this happen before. this is the broken bond market theory that we have been talking about here on this program. if you take a look at the last three rate hike cycles, this never happened before, the last one, as you see here, occurring june '99 to november '99, all moving pretty much in tandem. if you look at the one prior to that, january '94, to may '94, the feds target rate up, up, up and then the bonds dutifully, obligingly following suit. one more example to belabor the point, march '88 to august '88, this chart will show you raise, raise, raise, raise. up it goes. you can see the yields a little bit of a hesitation for that longer pause there. but still the up trend in tech. never have we seen the bond market do this where an initial rate hike or three of them, in fact, was met by a decline in the treasury yields. so, you've lived history if you are buying hold fixed investor. if you are a bond trader, chances are, because there were a few people that called that decline in rates, chances are you're smarting right now. well, stay with us. we're going to spotlight one of our profit builders, unit corporation. the stock has delivered annual income growth of almost 90% for five years. we're going to hear what the c.e.o. has to say for that success, next.
