Interview: Wachovia securities
>> both the s&p 500 and dow finished up for the week, despite higher oil prices. doug sandler, chief equity strategist from wachovia securities, joins us from his office in richmond, virginia, for a closer look at stocks. thanks for joining us. it was a good prediction of yours that january would be a rough month for stocks. we head next week into march. how does it look?
>> going forward, well, i guess for the long term, we’re really looking at a market that trades in a range. that means you have to look a little harder, work harder for opportunities. energy is a great example. there are folks and portfolios that made a lot of money this month provided you were in the right place. so we think there are still pockets of opportunity, but it’s a matter of finding them.
>> let’s talk about energy. energy stocks certainly led the market higher this week. do you stay with that play or at this point is it played out?
>> i would tell you it depends how cute you want to be. our view is we think energy prices will be higher and energy stocks will be higher. if you’re wondering, do i buy a stock today, energy stock, and maybe in the next couple of weeks will i look hard or stupid, it’s hard to tell at this particular moment because of the run we have in energy stocks. but you move that horizon out a couple of months, i think you’ll look smart in a few months. i think you might get a better opportunity to buy these stocks in the next couple of weeks after a little bit of a pullback. energy stocks tend to trade on greed and fear. right now people made a lot of money and we’re in the greed stage. i feel you might get a better chance to buy them but continue to look for positions because you’ll look spart in a few months.
>> what about telecoms, we see a lot of consolidation. any value you see there?
>> i don’t see a lot of value in telecom. particularly, you’re talking about the traditional land line companies. our view in telecom is you’re actually probably better off -- if what you’re looking for in telecom is stability of revenues in companies with high barriers to entry, i think you’re better off in utilities, you can get similar growth or better growth, similar valuations and you give up a little bit in dividends, but in most cases, you make that choice to come down a little bit in dividend, it’s actually going to pay off so we like the utility space for the telecom investors out there that are traditional telecom, grandma and grandpa, utilities are a better buy at these levels.
>> we we see interest rates going up, focus on the federal reserve, alan greenspan testimony next week. what about financials?
>> i think there are pockets of opportunity in financials. you mentioned mergers, a great example is the m&a firm. i don’t like playing mergers by trying to figure out who gets bought next because it’s too risky. number one, if the firm you look at doesn’t get bought and the second risk is the takeout premium into the stock price. so i like to play the m&a advisers, the goldman sachs of the world, and we own that stock. these are the kinds of companies because no matter what happens with the merger, whether the firm you think will be purchased gets purchased, whatever happens, the adviser gets paid and i think the m&a advisers are still reasonably cheap here.
>> alan greenspan goes to the hill next week and will be asked about the economy. he’s been sanguine. we saw reaction to the g.d.p. report. do you we―do we continue to see good news priced in?
>> our view on the economy, it’s slow and steady. for those people that are expecting a hot economy, i think they’re going to be disappointed and those expecting recession, they’ll be surprised to the upis ide. in the end, i think things chug along pretty nicely here, interest rates stay in a range and your question on the economy in general, is where you get the periods where people think inflation is coming back aggressively, i think you want to buy some of the financials. a great example was the beginning of the week when you could have bought utilities significantly cheaper than they ended today. people thought inflation was coming back and on wednesday we had good inflation data and lo and behold, the financials capped a good run
>> we have greenspan on wednesday, jobs on friday. anything else that is market moving next week that you can anticipate?
>> people will watch the price of oil and there’s not a lot of other news coming out, there’s not a lot of earnings announcements so the market will probably chug along with the motion it’s going now. i think you’re going to find pockets and that’s what we’re trying to do every single day.
>> thank you very much, doug sandler, chief equity strategist at wachovia securities. there was movement in the markets this week but the s&p 500 largely unchanged when it was all over. our bob bowden will join us next with what that says about prevailing investor sentiment.
在线播报
Listen Market briefing --- Mike (fast)
Qwest --- Su (slow)
NYSE --- Deb (slow)
Nasdaq --- Robert (slow)
ebbers intends to take the witness stand next week in his conspiracy trial, according to his attorney. the lawyers announced their intent to call their client to the witness stand during the hearing in new york federal court. ebbers will be subject to cross examination by prosecutors who may provide additional evidence against him. the defense is seeking to rebut testimony from former chief financial officer, scott sullivan. sullivan said ebbers directed an $11 billion fraud at worldcom. ebbers is charged with fraud, conspiracy and filing false statements and faces a maximum of 25 years in prison. worldcom is now m.c.i. shares fell friday as investors showed disappointment with qwest’s revised bid to buy the company. we told you on thursday the nation’s fourth largest local phone carrier was sweetening the terms of the previous offer but not giving shareholders more money. su keenan has more on the reaction so far. su?
>> let’s start with a review of the bid. there are two key revisions to qwest’s offer for m.c.i. they offer to pay shareholders more cash up front and add insurance for investors in case their stock falls. that was the case today. look at qwest, tumbling more than 8% by the close. the total value of qwest cash and stock bid, including a special dividend when the deal closes, remains unchanged at $24.60 a share. qwest c.e.o. richard notebaert said the deal would win faster approval from the f.c.c. and require fewer m.c.i. assets to be sold and m.c.i. shareholders would keep a a bigger stake in the combined company were the offer accepted. m.c.i.’s c.e.o. michael capellas was quick to react, saying the company will do its “utmost” to complete a combination with verizon, which he calls the right partner. federated’s katie glass itys m.c.i. shareholders ofnt a higher cash offer but says qwest will likely get the attention of the m.c.i. board which did not acknowledge the first offer.
>> it gives qwest at least a seat at the table in that the m.c.i. board will be forced to take a long, hard look at this deal and come back and say which one is really the best for their shareholders. now, if verizon is eager to own the m.c.i. assets, they can turn around and make a counter offer. i think we’re at the beginning of the game rather than the end.
>> capellas told investors on today’s conference call that m.c.i.’s board will review qwest’s $8 billion revised bid while pressing ahead with verizon, which has made an offer roughly 20% lower than qwest’s. shareholders have urged capellas to push for more money, they don’t think either offer is large enough.
>> the u.s. economy is growing faster than previously thought in the final months of 2004. a 3.8% annual rate is the new estimate from the commerce department, up .7% from the original calculation a month ago, making for a 4.4% increase in output of goods and services for all of last year, the best showing since a 4.5% jump in 1999. the average of forecasts for this year, 3.6%, closer to the average for the past decade. in the bond market , there was reaction on the long end -- u.s. sales of previously owned homes unexpectedly fell .5% in january. sales of existing homes last month totalled 5.94 million on an annualized basis. the national association of realtors revised its data back to 1989 after realizing it had been overestimating sales. analysts say altogether the january figures show housing still looks good. stocks moved higher on the g.d.p. news. for more on today’s trading action, here’s a report from deborah kostroun at the new york stock exchange.%
>> it was a record-breaking day in many ways at the new york stock exchange. the dow is now at its best level of the year and that’s all thanks to an impressive performance by energy stocks. energy stocks of all stripes dominated the stock market again. the market cap of the world’s biggest company, exxon-mobil, crossed 400 billion dollars. chevrontexaco, conocophillips also soared. investors are putting to rest any fears that crude oil prices will plunge this year.
>> many of these companies can make excellent profits even if the price of oil drops into the 30’s. obviously, in the 50’s, that’s pretty attractive.
>> industries with the ability to raise prices also moved close to or reached all-time highs. oil tankers, oil services, coal, steel, homebuilders and h.m.o.’s were all bid higher. the economy also gave stocks a lift. fourth-quarter economic growth was revised up to nearly 4%. the g.d.p.’s inflation gauge hardly changed.
>> we see this more as a goldie locks scenario. we think returns, earnings on the equity side are good, quality of earnings are good, margins might be down a bit but with fixed income rates the way they are, equities look attractive.
>> coal with its biggest jump in six months, attracting shoppers with cosmetics at kohl’s and cutting costs. h&r block shares, fees from filling out tax returns up 11% last quarter. and it’s all that demand, demand, demand leading to all the record highs we saw in today’s session, not only through integrated oil but also the oil tankers and oil services and coal stocks. i’m deborah kostroun at the new york stock exchange. bloomberg news.
>> robert gray has details on today’s nasdaq trading from the nasdaq marketsite. he’s in times square.
>> the nasdaq composite index closing at the highs of the session on friday to close out this presidents’ day week, higher for the week, erasing gains we saw earlier on tuesday and wednesday. the semiconductors were leading the rally for the second straight day. the semiconductor index, philadelphia semiconductor index, the s.o.x. now higher for the year by 2% after the gains we’ve seen over the past couple of days. kla-tencor helping to lead the gains, the semiconductor production equipment maker making bullish comments at a goldman sachs conference. broadcom announcing its first ever stock buyback for up to $250 million on thursday, carrying over into friday’s session and marvell technology, rising after it came out with earnings a penny higher than the analysts’ estimates. speaking of gainers, synaptics surging after confirming in an s.e.c. filing it will provide its touch-wheel technology in the new ipod lineup for apple. this stock was cut in half earlier this year on concern it would not provide that for the ipod. that stock surging some 16% in friday’s session. some of the worst performers in friday’s session were satellite radio stocks. sirius and x.m. satellite radio. robert beck at bear stearns outlining the concerns on these two stocks. a billboard report that howard stern fans may not move to sirius in drove when is 3 moves over there. the s.e.c. is investigating trading in sirius around the time it announced the stern show was moving. sirius also buying the rights to nascar. some investors wonder figure they paid too much and whether x.m. will have to overpay to get the next series of rights that are up and x.m. delaying the launch of a new satellite. a positive catalyst for them with the successful launch of that satellite, sirius c.e.o. mel karmazin addressing investors next week and investors don’t believe that officials will be implicated in any illegal trading of that stock.
>> we want to recap the day on wall street, sending everyone home happy. the dow jones industrials higher by 93 points if you want to round, 10,842, putting the dow in positive territory for 2005. the s&p 500 finishing up on the day by 11 points, 1211, not quite making it to a 2005 high, but still for the year. nasdaq up by 14 on the day, 2065. the benchmark indexes as we say, finishing the day higher. we’ll look and see if the momentum will continue next week. we’ll ask doug sandler with wachovia securities, next.
