Interview: John Snow ---The stand on the dollar
>> welcome back. the world financial report, treasury secretary john snow says the president’s tax cut policies helped the economy and job growth and should be made permanent. earlier today on bloomberg television, he talked about the administration’s policies beginning with the stand on the dollar.
>> the dollar reflects the fundamentals. we need to keep the fundamentals of the american economy strong. we need to continue to sustain growth, job creation, low inflation, high productivity. we need to continue to make sure america is the best place to invest money as it is. and on a risk-return basis, there is no other place like the united states. and we need to deal with our deficit. we need to take the steps to bring the deficit down. the president’s committed to that. we know deficits matter. we know we have to restrain spending. and the budget that you will see soon, that will be released, the president’s 2006 budget will be a very tight budget, constraining spending, and helping us to get the deficit in a much better picture.
>> now secretary snow, when you just said there that the dollar reflect the fundamentals, has there been any shift at all in the bush administration’s policy for a strong dollar?
>> no. as i’ve said on countless occasions, we support a strong dollar. we think a strong dollar is good for america. it’s our policy. it has been our policy. and will be our policy.
>> now with the dollar following, though, each of the past three yoors, especially against the euro, how do you define a strong dollar then?
>> well, we define the strength in all its dimensions. our focus is on the things that sustain strength. and as i said, first and foremost now is dealing with the deficit. and we will be working with the congress and n. a bill: way, i hope, to restrain spending and see that the president’s objective of cutting the deficit in half over the course of the next few years will be achieved.
>> and i want to followup with you on that point. certainly you’re saying really bringing the deficit down a key here. one of the big questions has been in the budget that you’re going to propose in february, that the administration will come out with, will the social security reform bill be included in that budget?
>> well, i’m going to wait for the budget could come out to -- where that question will be answered. but we are already heavily engaged in―on the issue of social security. it’s a pressing issue. it’s an essential issue. the president is invested in the issue. he’s gone to the american people with it. we’ll continue to do that. we need to―we need to modernize social security. we need to protect it and secure it. so it will be available for future generations.
>> and when you talk about your goal to have the budget deficit within five years, does that goal, that target of having the budget deficit, does that include in the deficit itself the necessary funds to fix social security?
>> well, as i―as i’ve said, we’re―we haven’t put the 2006 budget out yet. but everything that we do in the administration will be focused on achieving the president’s objectives. remember by fixing social security, we bring down the long-term deficit in the united states. our actions here, i think, will be applauded by financial markets in america and abroad.
>> i want to ask you one question about today’s jobs report. certainly no major surprises at least. the market ‘s opinion. wage growth, though, did come in a bit weaker than anticipated. certainly not good for workers. but on the inflation front, do you feel any more secure that inflation is not a problem given the wage data you heard today in the jobs report? well, i think we continue to benefit from a low inflation environment. and i think that will―that will continue. and that’s―that’s a helpful and benign note for the american economy. and i think it will continue. i think we’ll continue to benefit from a low inflation environment for the foreseeable future.
>> what metric are you watching most closely to determine if you become a little less sanguinetti win about that inflation outlook?
>> the usual. the usual metrics that the c.p.i., the chain link c.p.i., the g.d.p., deflator and core inflation. the key is the core inflation rate. and as i say, i―we had pretty good news on core inflation. and it’s―it’s―the core inflation rate. and it’s well under control now.
>> that was u.s. treasury secretary john snow speaking with bloomberg’s burnham. the president named senators connie mac and john breaux to head a panel that will recommend ways to make the tax code simpler. according to the president the code is complex and discourages savings. he’s setting up a study. during the first it term the president signed into five tax cuts totalinged 2ds trillion. the new panel the will report back to the president at the end of july. when we come back after the break, today’s jobs report supports those who expect the fed to proceed with interest rate increases. our sue keenan takes a look at that story after the break.
在线播报
Listen Market briefing --- Mike (fast)
NYSE --- Julie (slow)
Nasdaq --- June (slow)
>> welcome to world financial report. our top story . u.s. employers adding 157,000 workers to payrolls in the month of december. the figure was below economist expectations but the support capped the best year for job growth since 1999. manufacturers added 3,000 jobs in december and 76,000 jobs for the year. first annual gain since 1997 in manufactures payroll. the unemployment rate held steady tying a three-year low of 5.4% in december. average hourg earnings gained .1% raising at a slower rate. this bolstered speculation that federal reserve will keep raising interest rates this year. and the s&p 500 completed its worst five-day start to a year since 1991. let’s get to the numbers as they settled on friday with fractional loss as cross the board. the dow jones industrial average down about .2%. s&p 500 down .14%. and the nasdaq down .07%. and checking volume at the big board, almost 1.5 billion shares traded. over at the nasdaq, almost 2.2 billion shares were traded. also decliners outpacing advancers by the same ratio as the nasdaq. the treasury market shrugged off the jobs data finishing the day little changed checking the 10-year. we see change in price down 1/32. the yield up one basis point to 4.27%. the five-year down 4/32. the yield 3.71%. the two-year down 2/32. the yield at 3.18%. more on today’s jobs report and what it may mean for bonds and the fed later on in the program. stocks finished the day and the week lower as we indicated on concern about the economy and interest rates. for more on today’s trading action, here’s a report that our julie hyman filed from the big board.
>> after volatile session, stocks finally ended the day lower. we had a lost up and down action. a lost going positive then negative again. on both the dow and s&p 500. both indices ended the week solidly lower. for the dow, the worst week since october. for the s&p 500, longer, the worst week since the beginning of august. the decline of over 2%. also on the week, want to look at the big declines in group terms. we had a really only two groups on the s&p 500 rising this week. real estate, one of the worst performers on interest rate concerns. semiconductors declining this week as well as retailers on the december same-store sales that came in shoddy at best. so that group down 4%. now one of the rising groups i was talking about aun the one that really won on the week that is for the food retailers, food and staples retailers. we’re talking like wal-mart, coss co-that help lift the index. these are the retailers that did do solidly well in terms of the december same-store sales figures. semiconductors i mentioned were some of the worst performers on the week. they were the best performers in today’s session. looks like we had a bounce back effect. because certainly we didn’t have any corporate news, necessarily that was encouraging in today’s session. so the stocks doing well. also people definitely talking about the jobs in today’s session that accounts for the volatility that we did seek. the jobs report did come in a little worse than expectations, we had something really both for bulls and bears in the report. for folks wanting to be more pessimistic, we had the fact that report was worse than expected. o according to other investors, that will allow the fed to be less aggressive going forward. a couple leftovers. we did have a couple companies out with earnings rising. when hal co-do yo doing well in to r day’s session and intel gaining in today’s session. the shares were up 1.5% in today’s session reflecting the gain we saw in sems overall. i’m julie hyman, bloomberg news, at the new york stock exchange.
>> the nasdaq had the six verage day of decline matching the longest slump since august 2600 3. our june grasso has details on today’s nasdaq trading.
>> the worst performing group at the nasdaq today was a transportation index which was the best performing economic group yesterday. the leading decliners bare yellow roadway, j.b. hunt and frontier airlines. two of the biggest decliners today, u.t. starcome, that is the biggest supplier of wireless telephone systems in china yafment fourth quarter sales as much as 745 million dollars missed the forecast because an economic slowdown in china. crimped growth there. taser international, the biggest mager of stun guns says it is cooperating with an investigation by the u.s. securities and exchange commission. the agency is looking into both the safety of the company’s products and an order from a firearms distributor. “the new york times” reported that a government study found that the taser weapons could be dangerous. the u.s. justice department began investigating. shares have almost graw quadrupled in the last year. the computer shares which declined for five straight sessions to day advanced. and they were the leader of the nasdaq for the day. led by intel which was one of the most actively traded stocks, apple which is going to be announcing results on january 12. and also it’s going to announce a flash base ipod and upgrade next week at mac world according to piper jaffray analyst. oracle, which will complete its 10.3 billion dollar purchase of peoplesoft today after investors hand over more than 97% of peoplesoft shares. 90% was needed to create the world’s second biggest maker of business management software. i’m june grasso, bloomberg news, at the nasdaq marketsite in times square.
>> so far 2005 has not been bullish for the stock market . some, like lord abbett say obsession with the chance of a fed rate hike produced an undervalued stock market .
>> i think the market has yet to catch up with the strength in this economy, the strength in earnings and especially since the fed is measured, they’re going to keep rates lower than they otherwise might be, not lower than they are. i think the market has 10% to get to fair value. but that’s where lord abbett is focusing thoon fair value.
>> the next driver of the stock market will be fourth quarter earnings next week. analysts expect fourth quarter earnings will come in 15.3% higher than a year ago. that’s slightly down from the 16.8% growth in the third quarter. analysts predict the best groups for the fourth quarter profit growth will be material stocks at 76% followed by energy companies at 70%. but the future may not repeat and strategists are bearish on energy stocks this year.
>> you almost never want to own commodities and cyclical industries in general when you have supply accelerating demand. that’s the scenario for this year. stocks have not attractively valued. so you really need to have a positive surprise. i just don’t see a positive surprise this year.
>> analyst forecast the week of sector for fourth quarter earnings will turn out to be utilities where they predict 4% growth. 31 s&p 500 companies are expected to report earnings next week clgal co-yarks intel, apple computer, and sun micro system. arthur andersen is getting a supreme court hearing. that as the defumbingt accounting firm seeks to overturn the conviction for obstructing the enron investigation. the high court agreed to review an appeal’s court decision. the jury found andersen guilty of orchestrating a document destruction campaign after hearing of a securities and exchange commission investigation into enron’s audits. that forced andersen, once the largest auditor torks stop conducting audits leading to the firm’s collapse. airbus plans to boost the production 15% this year to a record 370 planes. that will widen its 2-year-old lead over boeing. bloomberg learned also that airbus plans 440 deliveries in 2006 and 465 in 2007. last year airbus produced just 320 planes. analysts say airbus could outperform boeing for the next decade. customers have been tracted to airbus’ new models and smaller cockpits. that reduces the cost of parts and training. also checking shares of boeing, friday they were down about a third of 1%. losing 17 cents ated 50ds.31. crude oil rose friday after opec cut output to keep the surplus from developing. opec, of course, pumps more than a third of the world’s oil and december production dropped 100 barrels a day from the previous month. hedge fund managers helped push prices high they are week as they bought futures in expectations of a rally. checking the price on the day, crude oil finishing up 4.5% at $45.43 a barrel. that’s the weekly chart, there i should say. 4.5% up for the week. among other energy movers, they were down on the day. gasoline down .7%, heating oil down .6%. natural gas futures finishing at .7%. we’ll talk about job creation numbers when we come back with quotes from secretary snow.
