NYSE --- Deb (fast)
>> more on breaking news that came out moments ago. refco said after the bell, c.e.o. william sexton has resigned of the the company says robert dangremond will be the interim c.e.o. refco filed the 14th biggest bankruptcy in u.s. history a week after the company said former chief executive phillip bennett had hidden a $430 million debt. bennett was charged with securities fraud october 12 and indicted november 10 by a federal grand jury in new york. morgan stanley chief executive officer john mack said he wants to double the firm’s profit in the next five years. mack spoke today to an audience in new york. mack said morgan has room to improve in almost every business, he elaborated to bloomberg news after the meeting.
>> changes in retail where we have mr. gorman coming on to change the training program and we are doing a search on asset management so you’ve seen those changes and our division heads to manage not only our risk capital but manage people.
>> morgan stanley was the worst performing stock this year in a widely tracked index of brokerage firms. the firm’s profit in the latest quarter slid 83%, $1 billion in costs from the planned sale of a leasing unit eroded the bottom line. we’ll get analysis a little later in the hour. in any event, stocks started the day higher but by the closing bell, they were lower. deborah kostroun filed this report on what happened in today’s session.
>> after getting off to a pretty good start, stocks falling in the afternoon session. in fact, as we started the day, the dow jones industrial average was at an eight-month high. we had a lot of positive economic data that came out today. the p.p.i. rose, retail sales declining less than expected and if you look at the laggards on the day, retail, autos and insurance. general motors, the biggest drag in the dow jones industrial average but also jerts, so far, year to date, that is the worst performer in the dow jones industrial average, down 43%. remember, yesterday, g.m. announced a new round of incentives and ford saying today it is still preparing a response to the g.m. discounts. taking a look at johnson & johnson, that was actually the biggest gainer in the dow jones industrial average. guidant, also the second biggest gainer in the s&p 500. johnson & johnson salvaging its takeover of guidant with an agreement to cut that price by $4 billion, or 15%, now that acquisition price comes to $21.5 billion mainly because of investigations into recalls of implantable defibrillators that guidant had. guidant and johnson & johnson expect to close that deal in the first quarter of 2006. insurers were lower on the day. a.i.g. released earnings and a.i.g. planning to restate the past five years of results for a second time. this is is to correct accounting, also saying that hurricane claims triggered a 36% decline in their third-quarter profit. retail, that was the biggest drag on the market today. home depot was lower even though they said third-quarter profit jumped 17% and the company raised its earnings forecast but it has been doing quite well over the past few weeks. target, that was the biggest disappointment of the day. target’s second biggest drop in the s&p 500, shares tumbling after the company saying november sales may fall below its forecast. todd leonne saying target is a great performer and because it was down so much scares a lot of people.
>> the new york stock exchange has settled the lawsuit that threatened to block the big board’s purchase of archipelago holdings, according to the plaintiff’s lawyer. the settlement keeps the 70-30 split in tact, clearing a major obstacle for the nyse, which would become a for-profit, public company, by purchasing archipelago. the 213-year-old big board will also extend its reach into trading of options, exchange-traded funds and stocks listed on the nasdaq marketsite. oil futures fell to their lowest price in almost four months ahead of a key inventory report. nymex oil futures ended the session below 57 dollars a barrel, down 71 cents to close at $56.98. all this as analysts predict across-the-board gains in tomorrow’s government report on fuel supply. the combination of higher oil imports and reduced fuel demand because of warm weather is helping cause the latest gains in the nation’s fuel supply. in the words of r.b.c. capital markets analyst, supplies are fine, there’s nothing to drive prices higher in the near term. tomorrow morning, the energy department releases the latest report on the nation’s energy stockpiles. according to analysts surveyed by bloomberg, crude oil inventories likely rose by two million barrels last week and gasoline inventory probably rose by the same amount. the analysts say distillates likely rose by a third of a million barrels. technical factors played a role in the drop in crude futures today. it is the first time since may nymex futures closed below the 200-day moving average. chart watchers such as fimat’s john kilduff, views this as a sign of weakness ahead and said this is a significant sell signal. natural gas down for a fifth day in seven. heating oil, gasoline futures tumbled more than 2.5%. stay with us as “after the bell” continues.
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Listen Market briefing --- Lori (medium)
Ben Bernanke --- Peter (slow)
Ben Bernanke --- Mike (fast)
Interview: PIMCO---Gross, Bill---Managing Director / Partner
>> ben bernanke, white house adviser nominated to replace alan greenspan as federal reserve chairman, pledges to carry on greenspan’s interest rate policy.
>> hello, i’m lori rothman. bernanke also said he want it is to move toward more openness for the fed if the senate confirms him for the job. bloomberg’s michael mckee will talk live with bill gross, chief investment officer of pimco, in the next few moments. the settles numbers -- investors focused on disappointing sales outlooks from target, shrugging off more encouraging news on inflation. we do have breaking news, right now, from refco. refco’s c.e.o., william sexton, resigns. we’ll bring you more on that and continue to follow it as the story develops. refco’s c.e.o., william sexton, resigns. of course, the previous c.e.o. was just indicted from that company. ben bernanke, back to ben bernanke, pledged to the senate banking committee today that he will follow in alan greenspan’s inflation-fighting footsteps if confirmed as chairman of the federal reserve. he also said he’ll continue the push for more transparency at the fed and that effort will include the possibility of establishing numeric inflation targets for inflation, something greenspan has opposed. bloomberg’s peter cook is live on capitol hill, now, with a recap of the day. peter?
>> ben bernanke appears to be well on his way to becoming the next fed chairman. both republicans and democrats on the senate banking committee said they expect the full senate will confirm bernanke to become alan greenspan’s replacement at the fed, but that did not stop senators today, at the confirmation hearing, from probing bernanke’s views on eye range of issues, most notably, support for inflation targeting. bernanke, as he did when first nominated, said his first priority if confirmed would be to continue the policies pursued by alan greenspan during his 18 years as chairman, keeping inflation under control.
>> if i am confirmed, i am confident that my colleagues on the federal open market committee and i will maintain our focus on long-term price stability as monetary policy’s greatest contribution to general economic prosperity and maximum employment.
>> bernanke also told the committee he hoped to continue the fed’s push towards greater transparency and that effort, he said, should include consideration of numeric inflation targets. greenspan has opposed inflation targets and democrats today questioned bernanke about that. he responded that his idea of inflation targeting still allows for fed flexibility and is consistent with the fed’s current dual panned mandate of―mandate of price stability.
>> i’m not proposing any change in the way policy is conducted, rather, a modest bit of additional transparency which i believe the federal reserve would achieve its stated mandated objectives.
>> bernanke said he would only move forward with inflation targeting after more study and consultation with colleagues. democrats pressing bernanke for views on tax and spending issues, but largely steered clear.
>> what i would like to do is retrain from making recommendations on specific matters of taxes and spending and specific references to pay-go in a similar manner.
>> we can assume that will be your policy after confirmed as chairman?
>> that’s my intention.
>> afterward, richard shelby of alabama said he hopes to have a vote on the bernanke nomination this week the full senate will have to consider the nomination after that before ben bernanke can take over for alan greenspan as chairman of the fed some time next year. back to you.
>> thank you, peter. u.s. treasuries rose after bernanke told the congressional committee that long-run price stability is essential for the economy. checking treasuries -- suggesting the market believes the fed will move aggressive to keep inflation in check. what would a ben bernanke confirmation mean for the future of the fed and monetary policy? michael mckee has more. hi, there, mike.
>> joining me, now, from newport beach, california, for more reaction to mr. bernanke’s testimony and questions and answers this afternoon, pimco’s chief investment officer, bill gross. thanks for join joining us. we see the 10-year note up about 3/8 on the day, indicating the market sees ben bernanke perhaps as a buy. how about you?
>> i always thought he’s been my favorite over the past six months and i’m glad he’s now in the process of confirmation and ultimately i hope he’ll be appointed and confirmed. i think he’ll be good for the bond market not only because of his inflation targeting, but because of his outlooks towards savings and their effect on interest rates.
>> tell me, do you think he will be more or less hawkish than alan greenspan on inflation?
>> oh, i think inflation will be, you know, a primary target for bernanke. i think where they will differ is that greenspan has always had a problem with why interest rates are so low, that’s his conundrum. bernanke answered that in 2005 when he talked about a global savings glut and suggested in other pieces that interest rates were probably 50 to 100 basis points lower on a perhaps semi permanent basis so i suspect that bernanke feels that interest rates are a little bit more neutral now than what greenspan does and in that case, perhaps he stops sooner and will be more dovish but i still think he’ll be an inflation hawk.
>> we’re at 4%. you suggested earlier today they might go to 4.25, that would be if they do it at the next meeting before ben bernanke takes office. his first meeting, then, he holds, no fed chairman in memory has done that, they’ve all come in and raised rates to show they’re serious about controlling inflation.
>> i think that meeting will be predicated on the state of the economy and state of inflation at the time. inflation, based on energy prices, will be coming back down. the core never did any up and i suspect in two months’ time that housing will ultimately impact economies in the united states, local and nationally, on the weakered side so i’m looking for the fed to look at a weaker economy in january 2006 and interest rates to be held at that point.
>> bernanke said today as far as the fed’s twin mandate is concerned, if you have one, you have the other, that low and stable prices help produce low and stable unemployment. do you agree?
>> that’s standard fed speak, standard central bank speak and i think that’s true. ultimately, low inflation promotes stronger growth. high inflation is destructive of economic growth as is deflation so a 2% target, which is what bernanke has suggested in the past, would be his goal, i think is the right number, the right level to promote steady, economic growth.
>> let’s talk about pimco. you talked earlier today about the mortgage market being attractive. we are seeing mortgage interest rates continue to rise. how long would you want to buy into that?
>> i’d want to buy them at a level that’s attractive relative to where i think the fed stops and if the fed stops at 4.25, the current mortgage market is 5.5 to 5.75% yields with a.a.a. type guarantees are attractive to me. they’re certainly more attractive than the standard treasury in the five- to 10-year camp and personal more attractive than cronts in the -- corporates in the b, aa area. corporates present the highest yield available.
>> we talked about waning enthusiasm from you for t.i.p.s. if ben bernanke is going to be a strong inflation fighter, you’re not going to want to buy them, are you?
>> t.i.p.s. have a break-even of 2.5%, that means if inflation is higher than 2.5%, you’re better on a t.i.p., if lower, better on a nominal treasury. that’s my standard going forward and probably the fed’s, too, in terms of a headline c.p.i. so one way or another, a t.i.p. is a 50-50 proposition relative to a nominal. if you’re looking to insure against higher inflation, it’s not a bad bet but we don’t overweight them at the moment in our portfolios.
>> thank you very much. lori, back to you.
>> thanks so much. coming up next, updates from the new york stock exchange and nasdaq market sites. stay with us.
