朗读练习作业

Nasdaq --- June (slow)
Asia Pacific market --- David (slow)

>> expect light west to southwest winds. high temperature is at 27 degrees celsius. a person familiar with air bus says the world’s biggest airplane maker made more planes for boeing in the second straight year. airbus delivered the 320 planes last year. boeing delivered 258 planes last year. airbus and boeing are both benefiting from a recovery in demand after its three-year slump. delta airlines cuts domestic ticket prices as much as 50% to win back customers from low-fare competitors. the third biggest airline dropped restrictions like saturday night stays. delta, a.m.r.’s american, united and northwest are facing competition from carriers like southwest airlines and air-tran holdings. those budget carriers have lower operating costs and are profitable with lower ticket prices. shares of the major airlines are down on concern that revenue may drop if they match delta’s fares. mixed news from two u.s. retailers after christmas. nordstrom’s says december sales rise greater than expected 9.3%. the upstale retailer benefitted from strong demand for luxury items. and circuit city, december sales fell 5.8%. the number two electronics chain failed to draw customers with discounts. nordstrom shares had the biggest gain in six months. circuit city’s 8% decline made it the day’s worst performer in the s&p 500 index. an index measuring the u.s. services industry expands at the fastest pace in five months. the december gauge of nonmanufacturing activity rose for a third month in december. the institute survey’s purchasing executives at companies including retailers, banks, and airlines. those executives say the orders are accelerating and they’re boosting inventories. u.s. stocks fall sending the dow jones industrial average to the longest losing streak since july 2002. take a look at how the bench marks closed --

>> julie hyman reports from the stockton.

>> the losing streak continues thus far in 2005. the s&p 500 down for a third day in a row. the s&p 500 down .4%. that brings losses now on the third day of 2005 to about 2.3%. the dow having the sixth straight loss. that’s the longest losing streak since july of 2002. it’s now down about 1.7% thus far in 2005. now in talking to investors, a lot of them talked about the hype that we’ve seen about 2005, thus far the optimism expressed by many investors, many strategists as well. indeed the investor intelligence survey which is on a weekly basis is down 62% and 21 bers bear. so some contrarian folks are saying maybe there is too much optimism and now people are pulling back and sort of rejiggering their expectations for 2005. we had a lost corporate news driving trade. we had a couple of important down movers. in fact, procter & gamble gaining after it was initiated at new coverage with a buy rating. analysts there saying among other things that they―that company has good presence in developing markets relate toist piers. also a.i.g. boosting the quarterly dividend by 67% to 12.50 cents a share. so the shares up a little over 1.5%. l.s.i. logic also did well in today’s session. it boosted the fourth quarter profit and said the problem is inventory buildup is substantially over. it was up 14% but dnl help other semiconductor stocks today. also we saw mixed trade in retailers, i should say in today’s session. nordstrom was higher after the december same-store sales rose 9% beating the own forecast. however, circuit city missed its forecast. the sales fell almost 6%. and office max fell today after the retail division president gary peterson did resign. so mixed trade on those. we’ll get more december same-store sales as we go through the week. i’m julie hyman, bloomberg news, at the stockton.

>> copper rebounds in tuesday’s losses, experiencing the biggest rise in seven weeks in new york trading. traders are optimistic demand will remain strong. copper rose 3.2% in trading in new york. the gains follow an 8.9% drop in tuesday on concerns the rising dollar and falling prices in china might signal declining demand for manufacturers. china aviation oil may ask creditors to forgive 60% of the company’s debt. people familiar with the plan say china’s monday ply may propose the debt writeoff within three weeks. china aviation survival depends on the plan’s approval by creditors including goldman sachs and others. that’s because they proposed $100 million bailout by china and singapore may not go ahead unless lenders accept a debt writeoff plan. they filed for bankruptcy after losing half a billion dollars on speculative oil trades. coming up, the dollar falls against the yen and falls after a three-day rally versus the euro. we’ll ask a strategist in boston why it’s losing its appeal.
在线播报
Listen Market briefing --- Cathy (slow)
Inflation --- Susan (slow)
Tokyo market --- Ron (slow)

>> welcome to blook live from hong kong. extensive coverage of the assume relief summit is in indonesia headed your way in this edition of “bloomberg live.” we’ll have live reports from jakarta. a preview an hour and a half from now. we’ll be hearing from the leading participants including the director general of the asian development bank in 50 minutes. and later, an administrator from the united nations development program will brief us on the state of current relief efforts. also coming up, market wrap from new york and live previews of today’s trading in asia from sidney, tokeyo, and hong kong. and we’ll be talking to a currency strategist live in 20 minutes, and a regional economist in 30. the dow runs its longest losing streak since july 2002. concerns the fed may raise the pace of interest rate increases sent the index to the sixth straight decline. the dow and s&p 500 both fell .3%. the nasdaq loses .8%. airline shares fell after delta airlines, the third biggest airlines slashed fares by 50%. one dow component managed to jump. american international rose after announcing its biggest dividend increase in 26 years. it raised the quarterly dividend by 67% to 12.5 cents a share. and the bond market , the two-year note yield held at the high ens since 2002 that is after a report showed the service industry expanded in december more than forecast. the i.s.m. services index rose to 61.3 in november. economists surveyed by bloom were expecting a reading of 61. asia stocks falling. toyota motor and sony declined. there is concern a sear riffs interest rate increases by the federal reserve will hurt demand for asian goods. the bank of new york’s indices atrack asian stocks. futures point to a lower opening. the dollar resumed the downward course in new york trading. the dollar fell against the yen and the three-day rally versus the euro. you are looking at the current market quotes on your screen. the japanese yen is 104.14 to the dollar. the euro 1.3263. the dollar dropped back as investors ignored more reports showing the economic strength than the focus on the big picture. the dollar dropped for three straight years from concerns that the current account and budget deficits are growing too wide. oil dropped after a surprise increase in u.s. fuel inventories last week. prices were up 4% yesterday. according to the energy department, heating oil rose two million barrels to over 121 million the week ended december 31. analysts were not expecting any change in inventories. temperatures in the northeastern u.s. are expected to average 10 degrees fahrenheit or 6 degrees celsius above normal through january 12. analysts say the mild winter may ease demand for heating oil. an index measuring australia services industries rose last month because of a pickup in holiday spending. australia’s jobless rate fell to a 28-year low in december boosting retail sales in asia pacific’s fifth largest economy. the nation’s treasurer expects 3% economic growth this fiscal year. the bank of australia released the index of australian services in 20 minutes. and to find out which australian stocks may be active to day, let’s go to david tweed, our stocks editor in sidney. good morning, david. how are australian stocks expected to trade this morning?

>> first of all, the indications are fairly mixed, i have to say. we’ve got the futures when they last traded up about three points. but the bank of new york a.d.r. index for australian shares was down about .6%. so a lot of direction there. the background of this, of course, is that yesterday mining stocks in australia were the big decliners on the index with b.h.p. falling. that was after an 8.9% decline in copper futures. in new york, trading overnight, those futures did rebound by 2.4% in the trading at around about $1.38 at the moment. the thing is, though, b.h.p. shares trading in london did extend their decline. they dropped 4% the day before yesterday. they dropped further .7% in overnight trading. and in new york, they also ended at around $14.86 which is below yesterday’s close of $14.99 in sidney. same thing for rijo. we saw the extension of the decline in london. i might just also add that gold is trading at a two-month low in new york of about 4 $427.30. so that is not a good time for our gold miners. and crude oil is also down 1.3%. just to point out that the oil has actually lost 22% since it reached the record back on october 25. cathy?

>> what about for shares of reliant’s mining? how are they expected to open after the takeover offer from consolidated minerals?

>> true. we’ve already kicked off on our mergers enacquisitions in australia. we did have that bid by consolidated minerals. consolidated minerals is a man ca knees producer. it strengthens steel. and they’d like to expand in nick which will is nickel prices tripled over the past three years. nickel, of course, is used to coat steel and make night stainless steel. the offer from consolidated actually values reliant’s shares at 11% above the close when they last traded on friday. so that’s what we’ll be looking for today, a jump of around that much. back to you, cathy.

>> i’ll see you later. thank you, david. in world news, the u.s. secretary of state visits some of the area’s hit hardest by last week’s assume disaster. bloomberg’s ron madison has more in world news in tokyo. good morning, ron.

>> good morning. u.s. secretary of state colin powell does get a first-hand look at the devastation in indough nearby yafment powell has been touring the assume-stricken areas with the president’s brother, florida governor jeb bush. powell said he had never seen anything like the destruction he witnessed.

>> i’ve been in war. and i’ve been through a number of hurricanes, tornadoes, and other relief operations. but i have never seen anything like this. flying over and seeing how the wave came ashore pushing everything in its path, cars, ships, freighters overturned all the way up to the foothills.

>> meantime 20 more americans have been added to the list of those killed in the south asian assume. the u.s. state department says that brings to 36 now the number of americans killed. another 3,500 remain unaccounted for. germany has increased its asian assume aid to $688 million. the increase makes germany now the biggest donor since last week’s disaster. german chancellor gare heart schroeder said his country is adding an additional $662 million to the initial commitment of $20 million. the money will be distributed over a period of three to five years. the aid is likely to be concentrated on slee sri lanka and indonesia. as many as two million victims of the disaster need food aid and another five million people have been left homeless. interact now, two bomb attacks leave 15 police officers dead. military officials say 10 police officers were killed when insurgents attacked a police academy in the town of hillah. al-jazeera says 20 were killed in that attack. another five police officers were killed in an attack on a checkpoint in the town of baqouba. cathy, that’s the latest look at world news, i’ll have another update in just a bit. back to you.

>> thank you for that ron. and a new year of competition is kicked off around the world. just ahead, we’ll tell chu company won the battle for contracts last year.

Nasdaq --- June (slow)
Asia Pacific market --- David (slow)

>> the nasdaq two-day drop of 3.1% is the largest in five month. june grasso filed this report from the nasdaq market site in times square.

>> iver economic group on the nasdaq ended the day lower with technology shares leading the decline. analyst downgrades began the drop in computer share. dell the biggest drag on the nasdaq computer index after the biggest maker of personal computers was cut to outperform from strong buy by raymond james on valuation. share of dell had come to within 10% of analysts target price. sun microsystems, which led the nasdaq lower yesterday after a downgrade from sanford bernstein is the worst performer of the nasdaq 100 percentage after a merrill lynch analyst lowered the fiscal first quarter revenue estimate. he reduced the earnings estimate by one cent to two cents a share. and amazon.com also one of the worst performing stocks on the nasdaq 100 by percentage. at the world’s biggest internet retailer was reduced to sell from hold by analysts at citigroup smith barney on concern the company may see limited margin expansion and lower north american sales growth than the competitors. it led internet shares down. monster worldwide t owner of the most used internet site for employment advertising was cut to hold from buy by american technology research, google, yahoo, ask jeeves all down. not all computer shares did drop, however. microsoft advanced after j.p. morgan raised its second-quarter earnings per share target for microsoft 3% to 34 cents saying the company will benefit from an improving software spending environment and apple computer was one of the best performers on the nasdaq 100 after j.p. morgan analyst raised the first-quarter earnings forecast. i’m june grasso, bloomberg news, at the nasdaq market site in times square.

>> new zealand stocks rise on the first day of trading this year, setting records along the way. for the latest market action, we go to david tweet in sydney. david, what is behind the gain we’re seeing this morning in the new zealand market ?

>> it is actually the eighth straight gain for the new zealand top 50 there or gross 50. and it’s also trading at a record, but you have to remember that’s a small market and it is really dominated by a single stock. that stock is tell com new zealand or telecom corp. of new zealand. it has been increases the dividends and that is one of the reasons we’re seing that stock rise 6% in the last seven days. people have been coming whack back to the dividends. that said, though t new zealand economy is in pretty good shape. it is expected to expand by 4.5% in 2005. sorry, that is the year ending on march 31. and that’s actually faster than the 3.8% increase that analysts or economists surveyed by bloomberg had forecast back in september. so that’s really the story behind the u.s. market . also one other point is the u.s. dollar has been rising against the new zealand dollar, and that does make new zealand stocks cheaper to buy for u.s. investors and new zealand telecom corp. being such a big company in the index is one they tend to go for particularly with the dividend yield. cathy?

>> the australian stock market closed at a record yesterday. how are they expected to open today?

>> not such a rosy picture today. the index futures are down around about 0.7%. the new york a.d.r.’s were down around 2% or 1.9% which is the biggest drop since the beginning of december. the story behind that is the decline in metals price. remember, there is a preponderance of australian mining companies in the a.s.x. 200 that represent about 19% of the index. we saw copper prices sliding almost 9% in new york last night. that was from a 15-year high, i might add. we also saw aluminum prices declining. the reason those prices are declining is because of the increase in the u.s. dollar has created concerns that there will be lower demand for the metals which are all priced in u.s. dollars. and also concern that during 2005 we’re going to see slowing demand growth in china. remember that barclay’s capital in december said it expects china demand growth for copper to slow to about 10% from 15%. so watch out for companies like rio tinto and companies like b.h.p., of course, phelps dodge in the united states, the world’s second biggest cop prore -- copper producer and the shares dropped 3% in overnight trading. on the upside, though, the decline in the australian dollar against the u.s. currency might be good news for some of the australian exporters or companies active in the u.s. look at news corporation whose shares did drop 2% in u.s. trading and companies such as computer serve and westfield group. back to you, cathy.

>> thanks for that, david. after the break, manufacturing activity in singapore accelerates in december. the head of research will deliver the outlook for the economy and markets next.
在线播报
Listen Market briefing --- Cathy (slow)
Inflation --- Susan (slow)
Tokyo market --- Ron (slow)

earthquake and tsunami. powell and florida governor jeb bush are in jakarta ahead of tomorrow’s summit of asian leaders. the dollar rises the most in more than half a year against the euro and yen. stronger orders of u.s. factories helped the dollar release the recent decline. u.s. stocks fall after comments from the federal reserve show policy makers believe rates are too low to contain inflation and rising prices may curb economic growth. the nasdaq dropped to the biggest two-day loss since august. and japanese car makers win u.s. market share from detroit’s big three. toyota, nissan, and honda report december sales rose more than 20%, while general motors declined. toyota also became the first foreign car maker to sell more than two million vehicles in the u.s. in one year. a jury convicts cendant’s former vice chairman kirk shelton of 12 charges including fraud and conspiracy. the same jury says it could not reach a verdict on 16 charges against the former chairman walter forbes. they were accused of trying to inflate earnings before the company was bought out by h.f.s. in 1998. cendant was created out of that merger. cendant shares are still trading below the price on the day the merger was completed nearly seven years ago. the company controls franchise brand names including avis, ramada hotel, and century 21 real estate among others. the u.s. federal reserve says interest rates are still too low to keep inflation stable. minutes of the fed’s december 14 meeting show that policy makers are concern that rising prices may become a risk to growth. for more on what hah means for the u.s. economy and global growth, we’ll speak to susan gossling. good to see you. what do you make of the fed’s comments on inflation?

>> i think the fed is exactly right. interest rates in the united states are relatively low compared to inflation. the fed is being quite slow during this growth cycle to raise interest rates. maybe a little bit behind the curve and i think it’s encouraging we’re seeing they’re continuing to move towards the normalization of rates.

>> now, consensus among economists and the bush administration show u.s. growth this year to be about 3.5%, which is lower than last year’s. what is your own forecast?

>> well, we always see that there are a range for potential outcomes for growth and we like to take into account a range of possibilities to get a robust outcome from the investment strategy for investors. however, what we can see for the u.s. is savings rates and particularly household savings rates are relatively low and at some point they will need to increase and when they increase, growth will be slower in the united states. that may or may not occur this year. expectations are that it would during 2004 and didn’t come through. as time goes on, it does become more likely. at some point we will see a period of slow growth in the u.s.

>> what about for china? we have some economists not ruling out the possibility that china may be headed for a hard landing. do you think that’s likely?

>> well f you go go about a year ago, industrial production running 20% and there were lots of fear of hard landing. what we have seen since then is well managed policy responses from the government that’s taken industrial production reading now down to below 15%. really some very judicious management of policy there is that has significantly reduced the risk of a hard landing in china.

>> central bankers there are gathering for the annual meeting this week. are you expecting any significant announcement from them, especially on the revaluation of the chyneeze currency?

>> well, china has been under some pressure particularly from the u.s. who sees the currency as being undervalued and that giving them an unfair competitive advantage. so it’s possible we may see some adjustment, perhaps a staged series of adjustments or even possible at some point we may see a repegging with the basket of currencies to pat that. and the issue is a revaluation will result in less job creation in china and that may be politically unacceptable. it’s by no means clear what we’ll see.

>> amidst the uncertainties that you have mentioned, you stress on the importance as having a diversified portfolio for the investors. what are you telling the clients now?

>> well, what we’re telling clients now is we’re in an uncertain environment and that needs to be taken into account. now, that is always the case, but i think there is proof of unl usually high level of uncertainty and if you try to bet on a particular scenario ocurg, chances are you will be wrong. you need to diversify the portfolio and that will protect you against the possibility of a range of different things happening. and it really is what underpins the achievement of long-term financial objectives.

>> got to leave it there. thank you for that, susan. susan gossling of m.l.c. in sydney. in news outside the business world, the effort to help those devastated by last week’s asian earthquake and tsunamis tops the world news. ron madison has that story and more in tokyo.

>> the united nations and other aid groups are using as much as $3 billion pledged to tsunami victims. many of the bottlenecks are starting to clear up and more aid is reaching some of the hardest hit areas of indonesia and sri lanka. in sri lanka, nearly 200 u.s. troops are now on the ground there. associated press says the u.s. plans to deploy about 1,500 marines as well to the country. british military support has also arrived. a military spokesperson said it was important to assess the need before rushing in to help.

>> we think this is important. i think it’s important to identify what specific tasks we could add value in before we start throwing capability forces into the area and almost contributing to the problem rather than attempting to solve it.

>> meantime in indonesia, a plane chartered by the united nations high commissioner for refugees arrived at the airport in jakarta on tuesday morning. it was carrying 92 ton of blankets. the u.n. says it has the use of 40 helicopters for aid delivery. american helicopters are v also been carrying water, biscuit, and other bare necessities to ravaged indonesian communities. the red cross says the death toll in indonesia alone could surpass 100,000. insurgents ambush and kill the governor of baghdad province. the governor hadari was killed as the convoy passed through baghdad’s northern neighborhood. six of the bodyguards were also killed in the attack. the governor was reportedly riding in an armored car. the killing is one of the highest level assassinations since interim iraqi government took power. al-hadaari was the attempt of a failed assassination attempt last year. secretary of state colin powell says the killing shows insurgents are determined to try to stop the january elections. cathy, that is the latest look at world news. back to you.

>> thanks for that, ron. and coming up, computer-related shares lead the nasdaq lower. a report from new york will wrap up the day’s trading action.

Oil prices --- Su (fast)
NYSE --- Julie (slow)

>> 9:12 a.m. in sydney, a rainy tuesday in the city. we expect rain to ease in the morning but showers redeveloping in the afternoon with possible thunderstorms. high temperature is 32 degrees celsius. the first trading day in the year in the energy markets begins with a plunge in oil prices. rising temperatures in the u.s. sent crude futures down in new york trading. at one point, prices fellulose to $41 a barrel. heating oil futures dropped, as well. what’s the story, su?

>> cathy, cuts demand and causes investors to scramble and readjust positions, leading to the volatility today. analysts say more volatility is ahead. weather is the story here in the u.s. it’s unseasonably warm at a time when imports have surged, supplies have jumped and refineries have boosted heating oil output. forecasters expect temperatures to remain higher than normal in the northeastern u.s. over the next week to 10 days. that’s the part of the country that uses 80% of the nation’s heating oil. refco’s marshall steeves says we’re almost at the mid winter mark and it’s now clear initial forecasts were wrong.

>> at the outset of the winter, most of the private forecasters were calling for a cold-than -- colder-than-normal winter, above-normal heating oil demand but to date, the opposite has been the case. it’s true things could turn around but for now it looks like we’ll see a normal winter or perhaps a below normal winter in terms of heating degree days.

>> heating degree days refers to the amount of energy used to heat buildings and we think that will be lower than normal. supply concerns are easing around the world, as well. on friday, rosneft took control of yukos’ former oil production unit. bear stearns michael deuceas -- dudas sees a counter trend in the u.s. dollar and middle east driving trading.

>> one of the things, not just oil, but commodities in general, when we come up to the iraq elections at the end of the month, those will be very, very big headline events, a lot of news. that will send sentiment shifts into the marketplace so i think that’s what we’ll see in 2005.

>> he’s not alone in predicting a wild ride for oil prices in the months ahead. morgan stanley’s byron wien puts oil at the top of his list for investment surprises in the new year, saying oil may take the trophy for most volatile commodity. his prediction is that oil prices may swing between $30 to $60 a barrel in the next 12 months, that’s a buckle your seat belt warning for investors. prices rose 34% in 2004. so, again, caecket, a story we’ll continue to follow through 2005, one of the top.

>> it may all depend on the weather. thank you, su. u.s. stocks fall in first trading day of 2005, led by energy and other commodities. the s&p 500 closed lower by .8%, the dow jones lower by .5% and the nasdaq losing more than 1%. julie hyman reports from the new york stock exchange.

>> a drop in the price of crude oil did not help stocks today. a couple of reasons for that. we saw energy stocks as really a heavy weight within the s&p 500, down just about 3%, accounting for between 1/4 and 1/3 of the drop in the s&p 500. also we saw a rotation out of the best performers of 2004, really selling of those kinds of stocks today. energy falling into that category, up, as you can see, 25% last year. some of the big declines today coming from exxon-mobil, chevrontexaco, conocophillips and schlumberger leading the way down. exxon-mobil, about a week ago, was trading at a record high. we saw a similar move in oil services stocks for the same reasons, that index with its biggest decline in about a month. it was also a great performer last year, up just about 28%. some of the big declines within that group led by transocean, also nabors, one of the other big decliners within that group. also today, we saw a similar phenomenon with steel stocks, down almost 4%. again, this was the big performer in 2004, in a rotation out of this particular group. in 2004, up 55%. we have had concern creeping into the market about exports out of china potentially putting pressure on steel prices because there will be too much supply coming to market . some of the great performers of 2004, allegheny technologies leading the stocks in terms of percentage declines. also in today’s session, limiting some of the declines on the dow, although not doing much by day’s end, were shares of wal-mart. that company saying december same-store sales rose 3%, at the high end of their previous forecast. this is their biggest monthly gain since july with a currently of after-christmas shoppers. i’m julie hyman, bloomberg news, at the new york stock exchange.

>> coming up, the dollar rises against the euro. we’ll ask a senior currency strategist with the bank of new york whether he thinks gains are sustainable.

在线播报
Listen Market briefing --- Cathy (slow)
Asia Pacific markets --- David (slow)

welcome to “live” from hong kong, i’m catherine yang. coming up in the next hour, we’ll wrap up the day’s market action in new york, including a live report on crude oil’s drop. oil drops 3% in the first trading day of the year. higher-than-expected temperatures in the eastern% -united states cut demand for heating oil. the northeast accounts for 80% of the country’s residential heating oil consumption. the national weather service predicts warmer temperatures starting january 8 to 12. we’ll have more on will oil markets in a live report from new york in 10 minutes. the dollar jumped from a record low versus the euro back into the 1.34 range. and you’re looking the live market close on your screen now. the euro worth 1.3466 to the dollar, the yen, 102.79. a report indicating u.s. manufacturing grew at a quicker-than-expected rate helped lift the dollar. the i.s.m. index rose to a four-month high, the second straight month of gains. exporters boosted the index. on wall street, u.s. stocks fall on the first day of trade. investors sold some of last year’s best performers after disappointing data on employment and construction spending. all three benchmark index his reached three-year highs last week. the i.s.m. employment index had its weakest reading in a year, falling to 52.7 in december. the labor department’s monthly jobs report is released january 7. energy shares fell in line with the fall in oil prices. technology shares also fell after sun microsystems was downgraded to underperform from market perform by an analyst at sanford c. bernstien. the rally in the 10-year note stalls after the i.s.m. manufacturing index rose in december. continued growth in manufacturing may prompt the fed to keep increasing rates, lowering the appeal of government debt. asian stocks fall in u.s. trade. chinese oil companies including petrochina and cnooc declined. the bank of new york’s indexes that track asian a.d.r.’s fell and nikkei futures point to a lower start for japanese stocks. the tokyo stock exchange opens for the first time this year, beginning with a ceremonial hand-clapping event which we will bring you to live. financial markets in asian land china, australia and thailand also release business. thailand releases december consumer priss this afternoon in bangkok and economists we surveyed expect the inflation rate in thailand held at a five-month low of 3%. an index measuring australian manufacturing activity probably rose last month. those figures are due in about 20 minutes. david tweed joins us from sydney with more on how markets may open in the region this morning. good morning, david. let’s start with australia, first. what are you watching?

>> in australia, we’re looking at the three related factors which will probably have an impact throughout the region. we had the drop in crude futures as we see there are warmer-than-usual weather in the united states, so crude futures down 3.1%. in australia, we’d expect to see oil stocks declining in line with those futures, looking for woodside petroleum and b.h.p. that said, u.s. manufacturing in december did grow, another story we’re reporting today. one of the reasons why is that some of the economists we’ve been speaking to say that the decline in crude prices from the record highs reached last year is giving manufacturers and consumers some confidence and so we’re seeing that manufacturing is in fact responding to that. and at the same time, we see copper prices up 2.1% in new york, trying at a 15-year high, that is, of course, good for mining companies in australia, where, of course, extremely dependent on commodity exports. we might see rio tinto, stocks like that, trading higher in australia going into the open. that said, i might mention to you that b.h.p. billiton’s american depository receipts were trading at the end of the close in new york around about 15 cents lower than their close when last traded here in australia. as for the futures here, we don’t have trade in the futures so we don’t have an indication by looking at those.

>> what about for westfields. how are those shares reacting to last week’s refinancing?

>> i thought a surprise that story, given that many were away. we had a $4 billion debt refinances, a loan, the biggest syndicated loan in australia with 34 banks participating. they were oversubscribed, they got $4 billion, showing the confidence that banks have in what westfield is doing. last year it merged three business units into one so could be able to go out and finance its development at a lower interest rate. the shares rose 2% in the two days after the financing was announced and dropped 1.2% on friday. so it will be interesting to see how they react on the first day of trading here in australia. cathy?

>> and finally, how have national foods’ shares done since the takeover offer by san miguel.

>> it broke last week, san miguel, the philippines’ brewer, said it would make an offer for the stock at $6. there is a rival offer from a new zealand dairy cooperative at $5.45. we’ll have to see what fonterra, the new zealand company, actually does. it’s a holiday in new zealand today but we could see something happening as the week progresses. back to you.

>> thank you, david. and in news outside the business world, the global relief efforts to help those hit the hardest by asian tsunami disaster tops world news. ron madison has the latest on that story and more from world news in tokyo.

>> u.s. president george w. bush has enlisted the help of two former presidents to help out with the tsunami efforts. former president george bush and bill clinton will lead the campaign to raise funds from the private sector.

>> to draw even greater amounts of private donations, i have asked two of america’s most distinguished private citizens to head a nationwide charitiable fund-raising efforts. they bring tremendous leadership experience to that role and they bring good hearts.

>> meantime, aid is reaching asian coastal areas now. ships, planes and helicopters carrying food, clothing, clean water and medicine have converged on jaesh and -- indonesia and other countries. more than 150,000 are said to be dead across the region. indonesia is the hardest hit. rescue efforts continue in sri lanka where some 30,000 have lost their lives. u.s. secretary of stateand jeb bush will be among those leaders attending a summit in jakarta in february. iraqi insurgents launched car bomb attacks throughout the country. the press reports iraqi officials as saying four people died in the suicide blast near the baghdad headquarters of prime minister iyad allawi’s party. and a car bomb attack north of baghdad killed 18 iraqi national guardsmen and one civilian. the press reports the u.s. military as saying the soldiers died when a car bomb was detonated near the bus they were traveling in. that is the latest on world news.

>> thank you, ron. after the break, we’ll learn what analysts are saying about the outlook for oil prices in a live report from new york. this is “bloomberg live.”

Interview: Martha Stewart---Allan (slow)

white collar crimes and trials in the news in 2004. martha stewart convict and and serving time if prison. john rigas and his son, timothy, found guilty of fraud and conspiracy. they could be sentencedext week. allan dodds frank has more on why 2005 could be bigger for the courts.

>> in 2004, martha stewart dominated many headlines from federal court although the money involved in her crime was small next to the accounting crimes that were centerstage with enron and worldcom and healthsouth.

>> in the public’s eye, the success of the corporate fraud prosecutions may well be measured not by the martha stewart conviction or the conviction of the rigases in 2004. instead, it will be what happened in the scrushy trial, the ebbers trial and enron cases.

>> former tyco c.e.o. dennis kozlowski and his chief financial officer mark swartz will be retried in new york state court. in a few blocks, bernard ebbers goes to trial. in alabama, richard scrushy of healthsouth goes to trial. in texas, enron executives will be appearing in federal court.

>> these people in trial in 2005 are the c.e.o.’s, the top people in the corporation. it’s really going to put the prosecutors to the test to see if they can make their cases stick against the top people. we’ve seen lower level managers pleading guilty and cooperating. now the tough test is coming to see if the prosecutors can hold the top people liable.

>> one trial carried over the holiday in hartford, connecticut, the jury enteringed the second―entering the second month of deliberations in the trial of walter forbes and shelton.

>> thank you very much. as for stocks, a large part of how things will do in 2005 has to do with how things went in 2004. so, let’s take a look at a few comparative worksheets that rank, well, the benchmark indexes. you can see the first chart that we look at here shows so much of the move that we’ve seen in the fourth quarter really turn things around. you can see 7% spread for the dow in the fourth quarter gave it a 3% gain for the year. s&p, up almost 9%. so we’re talking about indexes that were down that managed to turn themselves positive year to date thanks to the fourth quarter. 14%, almost 15% rally. the nasdaq 15% fourth quarter really dug it out of a hole, giving it an 8.5% gain for the year. looking at it group by group, same story. what were these fourth-quarter winners? 10 1/2 months of this year, the markets really were nowhere. they were down. but hotel, restaurants and leisure stocks catching fire in the fourth quarter, almost 20% here. a mixed year on wall street. one thing about 2005, consumer confidence has been riding as he head into it. why isn’t wal-mart celebrating? we’ll look at wal-mart’s and its recent woes.
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Listen Market briefing --- Matt (slow)
NYSE --- Julie (slow)
Nasdaq --- Bob (fast)

>> welcome to “world financial report.” i am matt nesto. u.s. stocks excreted a second year of gains spurred by a big rally in the fourth quarter in technology shares, companies like apple computer leading the way higher. we’ll be talking about apple in our report from the nasdaq marketsite coming up shortly. for the day, there you see it, the stocks stumbled over the finish line in the last few minutes of trading. down .1% down the board. this is the year-to-date talwith the s&p 500 up 9%, the nasdaq, 8.5% higher. and the dow, the loser by a long shot, in fact, with only a 3.1% gain for the year. before we get off to julie at the new york stock exchange, let’s check on the volume this final trading day of the year, volume at 787 million shares. stocks capping off a two-year rally. julie hyman has some of the year’s winners and losers.

>> stocks finishing 2004 on a slightly down note. stocks had been higher much of the session, relatively unchanged before eroding gains in the final half hour of trading. it was the lightest volume full day of trading today. only 787 million shares trading hands in the session. although we ended the day on a down note, it was a good year for the dow and s&p. the dow the laggard with the gain of 2% and the s&p with a gain of 9%. much of those gains coming in the last quarter of the year. mcdonald’s up almost 30%, a company that gets much of its sales overseas when we had a declining dollar, boosting its profit. merck, the worst performer on the dow in the in year, down 30%, most of the declines coming in the last quarter after the company pulled vioxx from the market . in terms of groups, hotel, restaurant and leisure stocks up almost 38%, led higher by starbucks, the big percentage gainer within that group. steelmakers doing well on the year, up 60% with a good run there, although in the past few sessions, they’ve eroded that gain a little bit. homebuilders doing well on the year, up in the neighborhood of 36% as we’ve had home sales breaking records month after month through the year. on the downside, we didn’t have many losers group-wise on the year. semiconductors were the poorest performers by far, down 22% with concern of rising inventories at many of these companies. intel leading the way down. only four groups within the s&p 500 ended the year lower. that was the year that was. i’ll see you in 2005. i’m julie hyman, bloomberg news, at the the new york stock exchange.

>> let’s take a peek at the nasdaq, a quiet week pretty much all around this holiday week, the nasdaq volume at 1.3 billion shares, too, too, finishing down .1%. bob bowden wraps up 2004’s best and worst performing stocks from the market site report.

>> it was a photo finish but the nasdaq composite index did not quite meet the s&p 500 for 2004, but a lot of nasdaq stars in the year, such as this, the top-performing nasdaq 100 stocks, kmart holdings, those shares up over 300%. the company acquired sears towards the end of the year, although the gains of quadrupling the stock happened before that swition was -- zivings was announced.  acquisition. autodesk makes three-d architectural design software, up over 200%. and apple computer up over 200% on the sales of ipod digital music player. the worst nasdaq 100 stocks include level three communications, positive news about selling services to france telecom in north america, but the stock down 41%. chiron shares, the maker of the flu vaccine pulled due to production problems in the u.k. plant. the worst performing nasdaq whond stocks, synopsis -- synopsies. still, it was an up year for 2004 with tech stocks generally finishing higher. that’s it from the nasdaq marketsite, wishing you a happy new year, i’m bob bowden, bloomberg news.

>> let’s look at the currency markets here because the dollar fell today to a three-week low against the yen. it also locked in its third consecutive annual drop against the yen on expectations japan will let the yen continue to strengthen. so you bought less yen, 103 yen per dollar. however, the euro and pound fell, so the dollar gained there. mixed session for the dollar. on to bonds, we go, the bonds up, 10-year yields falling to 2.22. the five-year also inching higher. two-year note is wrapping up, we should point out, its worst year since 1999 as a result of five federal reserve rate increases. andrew harding, overseeing $6 billion in fixed income assets at national city, expects the fed to raise rates a couple more times in 2005 but is bullish for bonds.

>> i just don’t see people backing out of the bond market . when the 10-year note gets to 4.5 or if it gets to 4.75, i think you’ll see money pouring into it. the technicals are very good for the bond market ex-the federal deficit.

>> if you have to buy the bond market , bill fitzgerald favors municipal bonds, tax-free bonds and says that in 2005, state and local governments are in better financial shape than they were a few years ago.

>> at a time when the federal government is issuing more and measure treasury securities, with the supply municipal bonds declining, they should outperform in 2005.

>> he says one state that is still struggling is california because it has about a $6 billion budget deficit. j.p. morganchase led the pack among banks that lent a record $2.3 trillion in 2004, spurred by a surge in mergers and acquisitions and decline in borrowing costs. the amount of loans made this year was up 53% year on year. j.p. morgan arranged 32% of the 1.26 trillion in loans made in the u.s. bank of america and citigroup, second and third. in europe, barclays, the biggest lender. in the u.s., executives and directors were just as impressed with the stock market ‘s rally in the final two months of the year. corporate insiders were so impressed, they sold $51 billion worth of shares in their own companies this year, the largest amount since 2000 when shares of internet-related companies plunge. purchases also rose, up 13%, to $2.11 billion. executives at technology companies top the list of corporate sellers. bill gates from microsoft sold close to 82 million shares of his own stock for about $2.2 billion. michael dell at his own company sold 32 million of his own stock, working out to a little over $1 billion. and larry ellison of oracle sold 87 million shares. we’ll talk about a fund making noise. investors poured $1.3 billion into the streettracks gold fund last month, the largest inflow into an exchange-traded fund. streettracks gold trust is the first fund traded on the new york stock exchange to be a proxy for gold. it enables investors to buy gold without the risk and volatility of futures contracts and options. demand has been spurred by fund managers barred from owning physical commodities who want to bet this year’s rally in the precious metal will continue into 2005. if you thought 2004 was busy with the martha stewart trial, wait until you see what’s on tap legally speaking in the new year. we’ll look at the high-profile cases centerstage in 2005. that’s next.

Interview: Huaneng Power

>> higher coal prices this year% -trimmed profit at chinese power producers, including juanening power international. demand for power has surged due to expansion in china. shares of huaneng have fallen 4% while huadian power have fallen, as well. yang lui told haslinda amin power will continue to grow.

>> if you invested in huanening power, you made three to five times earnings. this sector will consolidate, depending how much the capacity will increase. nevertheless, this is still the safest sector, very much correlated with chinese consumption growth. as you know, in china, there are over 20 provinces with very much a shortage of power. so i guess this sector will continue to be a relatively safer play.

>> given that you say it’s a safe sector linked to the chinese economic growth, what returns are you expecting?

>> going forward, the return will not be as exciting as it was in the past three or five years but i believe this sector will have double-digit growth. i feel now that, from 2000, the power consumption has very much correlated with g.d.p. growth. it’s 1.5 times of the g.d.p. growth, the ratio, relatively speaking. in this sense, if g.d.p. growth is around 8% to 9%, the power consumption growth will be around 15% to 20%. that would come to the companies you particularly mentioned, huaneng, huandung and china power. as you know, in china, there are only three or five big names are going at this stage so investors can follow them and participate in this sector so bankly we have―bankly, we have -- basically we have to have weighting in one of these names but maybe you should diversify to sectors.

>> which sectors do you recommend?

>> the ones that would supply the i.p.p., basically, power generations. for example, the coal, alumina and copper. these sectors are relatively positive because these are three commodities that will have a big year next year.

>> yang lui, what are the risks to inflation in china because of the record coal prices we’re currently seeing?

>> the coal price just started to trend up from last year, purely on a demand basis. as you know, copper is a non-recovering resource. basically, you consume and there’s less and less reserve. so, in china, around 70% to 80% of chinese energy consumption from coal, we are still a coal basic energy company. in this sense, i think the coal price will continue going up and next year will be a big year for the coal prices and coal industry to play so, basically, given the construction and capacity of constraints, i think the coal price will stay firm.

>> we know china has the world’s fastest growing major economy and needs commodities like oil and coal to fuel it. how concerned are you that demand for commodities may outstrip supply, slowing china’s expansion?

>> it’s hard to generalize the whole commodity price trend going forward but we have to be very specific on a few sectors we are following. basically, we have to closely monitor the demand-supply condition situation, plus the commodity production capacity. some production capacity will go up. for example, like petro chemicals and cement and aluminum, they probably will not be as expecting like before but some sectors, like copper, coal and alumina, they will stay firm because the demand craving is still there given the massive public construction, the demand for residential properties, the power generation facilities will expand. all this overlaps the weaker dollar and the copper price will continue to outperform. so basically, if you stick to the monopoly play, the market leaders, you will probably be in the winning position.

>> that was yang lui of atlantis investment.
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Listen Interview: Jump in crude

we’re waiting for consumer prices out of south korea. korea finance ministry said in early december it may miss its target, though, of 5% economic growth next year unless taxes and interest rates are cut even further. in terms of what we’re expecting in terms of consumer prices, we are looking for them to rise .1% in november according to economists surveyed by bloomberg. we’ll be waiting for the numbers and bring them to you as they come. let’s look at what’s happening with gene otani, waiting for us to give us the latest on what’s happening with stocks after we saw that jump in crude, up just about $2 a barrel. gene?

>> looks like crude oil futures currently trading at $43.45 a barrel, down by .4%. australia starts with their trading session in less than 30 minutes. we’ll keep an eye on woodside petroleum, australia’s second largest exporter of fuel, and santos, the country’s third largest. news corporation’s fox television network is charging a record average of $2.4 million for advertisement during the super bowl in february. 6.7% more than last season’s national football league championship game. the super bowl may generate $139 million in revenue for fox based on that rate and help the network boost sales. rogers communications, canada’s biggest cable television company, acquired the remainder stake of what it didn’t already own in rogers sportsnet for $37 million from news corporation. copper prices fell amid speculation hedge funds sold to lock in this year’s 39% rise in prices. prices have risen largely on increased demand from china and accelerating growth in the u.s. we’ll be watching b.h.p. billiton, the world’s third biggest copper producer. rio tinto is the fourth biggest copper miner. gold prices in new york fell almost 2%, the most in three weeks, as a gain in the dollar against the euro eroded the appeal of the precious metal as an alternative to u.s. stocks and bonds. newcrest mining, australia’s biggest gold mineer, will be monitored, as well. all four analysts surveyed by thomson financial this month have upgraded their net income forecast for 2005 and 2006 for fletcher building on expectations earnings will be boosted by commercial construction work as home building slows. fletcher building up .7%, leading the top 50 new zealand index. we see gains in contact energy, .6%. telecom new zealand currently unchanged.

>> we have breaking headlines coming out from south korea. we’ll tell you what’s happening. south korean december consumer prices rising .2% from november, that is coming in higher than what economists we surveyed expected, they were looking for .1%. we see a year-on-year basis, consumer prices rising 3.0 we’ll get the latest from tai hui with standard chartered bank. what you do think about the figures coming in right now?

>> i think the numbers are slightly below what we were expecting. we looked at previous months indicating .4%. this suggests the inflationary picture in south korea, is tame as the bank of america will have room―the bank of korea will have room to raise rates further.

>> the plan was to keep rates lower to increase investment. what’s going on there as it doesn’t seem to be happening?

>> it has to do with consumer and investor sentiment largely due to the correction of the household balance sheet in south korea. what we expect in 2005 is a combination of simulation of monetary and fiscal policies so hopefully that will kickstart the consumer and investor sentiment and hopefully start expansion. the spending environment is somewhat more questionable but we believe that korea should be able to achieve growth of 4.5% to 5% next year in south korea.

>> what do you think will be the impact from higher crude oil prices and a strong yuan?  a strong won makes imports cheaper and helps offset the negative impact somewhat from higher crude oil prices but is it enough to offset that?

>> i think the strong won should be able to offset partly the impact of high oil prices. looking forward, we do expect oil price to be highly volatile but on a downtrend for the next six months or so. so a stronger won should be able to help offset that impact and that will allow the bank of korea to maintain low interest rate policy because the inflation is likely to remain tame.

>> would weak be domestic demand encourage authorities to sell the won to protect exports? if that is the case, at what level do you think the b.o.k. will intervene?

>> i think there is a debate between the minister of finance and also the bank of korea. the bank of korea seems to be fairly constable to stay away from such intervention where mofi seems to be keen to maintain export competitiveness. i believe with the actions so far from the bank of korea, it is likely to remain comfortable with a stronger won as long as it’s not too volatile to create uncertainty for businesses.

>> judging from recent economic data from korea, do you think the won will head higher in 2005?% 

>> we expect the won to strengthen in 2005 but that’s along with the rest of asian currencies, on the back of the weaker u.s. dollar. especially given the fact that we do expect the chinese rem peg to go in the first half of 2005, allowing the korean currency to appreciate somewhat against the u.s. dollar, as well. another thing to watch is the japanese yen, given the korean authorities tends to have close interest on the korean won-yen cross exchange rates.

>> thank you very much, tai hui from standard chartered bank. coming up, the yen falls to a record against the euro. traders and investors speculate the b.o.j. will sell the currency in the coming days.

Interview: Currency

>> bright and sunny in the sydney harbor. isolated shower or two but mostly sunny in western sydney. the high temperature there is 23 degrees, quite a contrast with what we see out the window in tokyo where it’s raining with a chance of snow today. there is the weather. the dollar falls to a record against the euro for a fourth straight trading day. traders and investors speculate european and u.s. officials will tolerate further declines in the u.s. currency. the dollar is headed for its third straight year of losses against both the yen and euro. joy masters joins us from sydney on the phone, a currency strategist with macquarie bank. u.s. consumer confidence, we saw that jumping beyond analysts’ estimates in december but that didn’t give a lot of support to the dollar. sentiment out there seems bearish. what’s going on?

>> i think that’s right. i think the underlying sentiment remains against the u.s. dollar. mid to late december, we saw profit-taking going up providing support for the dollar but with that over, we have seen a return to negative sentiment. fresh highs on the euro and the consumer confidence number only seeing the euro pull back 50 points or so before finding a solid base.

>> what’s the impact of the stronger euro? italian business confidence dropped to a nine-month low.

>> you see the impact of the euro across almost all of their economic statistics and given that the only sector of most of those economies that had been growing was exports, this will have a significant effect on their economy, which we’ve seen in april when the euro pushed up to that fresh stage. on the inflation side, that is counteracted somewhat by oil prices. policymakers there seem remarkably relaxed which may be a reflection on their tendency to focus more on inflation than growth, but also the number of people involved in decision making in europe and the fact that this is a new problem for them to face.

>> jo-ann, u.s. exporters probably feeling the benefit of the u.s. dollar. at what point is the u.s. currency going to be problematic for the u.s. economy?

>> the u.s. faces a different set of economic circumstances in the sense that the export sector is less important for them than it is for europe and australia and asian economies. historically, the u.s. dollar has weakened considerably in the past 12 to 18 months but historically, is not at crisis levels yet.

>> what about the u.s. government? is it betting on a weaker dollar to help with the record current account deficit?

>> while that’s not one of the official lines, there’s no doubt the administration is happy to see a weakening of the u.s. dollar and would happy to see more. providing the markets remain orderly and liquid, i think they’d be happy to see current dollar depreciation.

>> if we see keep seeing further weakness, do you think this is a good time to jump into the yen?

>> look―i’d be cautious. i think there is more downside for the u.s. dollar but i don’t believe it’s open ended. in fact, we have a story mid 2005 that cease the u.s. dollar find a basis to turn around as markets become more comfortable with the level of the current account deficit and start to focus on america’s relatively growth outperformance and what will increase with the relatively preferential interest rate structure. i’m not convinced dollar-yen is sustainable below 100 and in that sense, perhaps over the next couple of months, we’d look for the dip to buy.

>> we saw overseas investors bought japanese stocks every week but nine this year. do you think the yen is headed for a fourth advance in 2005?

>> i’m sorry, i didn’t catch the last part of that?

>> i wonder if the yen will head for a fourth advancing year in 2005?

>> yeah, look―i think it will test lower in the first half of the year and certainly if the last couple of days is any hint for the beginning of 2005, certainly push towards 100 looks likely. but i’m not convinced it’s really sustainable below 100.

>> and when do you think the m.o.f. will start telling the b.o.j. to sell yen?

>> that’s a question on the minds of traders each and every day. and certainly as you head towards 102, that becomes extremely likely and we saw a solid bounce out of dollar-yen out of that sub 102 area a few weeks ago. euro-yen is at historic highs and that will provide a little comfort. i think the m.o.f. would be uncomfortable to see the dollar-yen below the 101.50 area.

>> joann masters with macquarie bank. still to come, more americans say jobs are plentiful. boosting u.s. consumer confidence to a five-year high.

>> we saw u.s. consumer confidence jump in december. it at thisive-month high, beating out some of the most optimistic forecasts. the conference board’s index rose to 102.3 from a revised 92.6 in november, which was also stronger than first reported. expectations for the economy over the next six months climbed to the highest level since july. let’s get a closer look at the health of the u.s. economy and speak with alan ruskin, head of research at forecast. were you surprised by the survey results?

>> yes, i was. i was thinking that we would see some improvement but nothing like the improvement that we did see. there were reasons one could be at least a little optimistic about consumer confidence to the extent that we’ve obviously seen the stock market stronger since the election. we’ve seen oil prices coming down and you’ve got rid of election uncertainty. all of that was going to contribute to stronger numbers but the strength did catch me by surprise.

>> expectations, really, for the economy in the next six months were also higher. do you think that means u.s. consumers will continue to spend like they did in the last three years in 2005?

>> well, i certainly don’t think you want to use that expectations data as any indication of the future. in fact, what one finds if one uses econmetrics techniques, at least, is that the consumer confidence data in general is at best a coincident indicator of what’s happening to the consumer at this point in time. i would have thought that in general the consumers’ fundamentals are really what one could consider so-so, meaning that real disposable income growth will probably be hovering around 3%, leading to consumption growth in that order, about 3%. we probably won’t see much additional decline in the savings ratio, close to zero to begin with. and it will lead to moderate growth for the economy as a whole.
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Listen Interview: Tsunamis

>> more than 50,000 people have died from sunday’s tsunamis that swept across countries along the rim of the indian ocean. thousands remain missing after the magnitude 9 earthquake off the coast of indonesia caused giant waves that reached as far as somalia on africa’s eastern coach. officials say millions are homeless and the death toll may rise further. eight agencies are organizing what may be the most complex relief effort ever. more than $100 million in aid has been promised. u.n. officials say dozens of airplanes are carrying food, medicine, water, purification tablets and other things to countries including indonesia, india, thailand and other countries in southeast asia. the u.n. says the main concern is water and sanitation. in sri lanka alone, more than 18,000 people are dead. giant waves caused a train to just be flung off the tracks. more than 1,000 were killed, among those, more than 100 foreigners. more than 4,300 are said to be done in india. sonia gandhi has been visiting areas devastated by the tsunamis. she says the biggest challenge is to help surseveres get back on their feet.

>> we have seen the destruction. we are absolutely heartbroken for the suffering of those and empathize deeply with those who have lost deer ones but one of the biggest challenge for all of us is to see the rehabilitation of the people, especially the fishermen who have lost their lives and loved ones and other.

>> in indonesia, more than 27,000 are dead. the death toll jumped after bodies were collected from a strict that was not previously accessible. the dollar hit another record low against the euro. speculation persists u.s.und european officials will tolerate further decline in the currency. u.s. dollar unchanged against the yen, 103.08, a slight drop against the euro. it had dropped as low as 1.3644. the dollar heading now for its third straight annual decline against the euro and the yen. u.s. markets cuched three-year highs―touched three-year highs after a report shows consumers are more confident about the economy and job prospects. the consumer confidence reading came in at 102.3 after a revised 92.6 from november. that beat even the most optimistic forecasts, u.s. consumers expecting to earn more in the next six months and many expecting to spend more, as well. more than 29% of those surveyed say they will be buy things like appliances in the next six months, up from 25% in november. the dow and s&p closed higher .73%, the nasdaq up more than 1%. retailers gained after a report showed sales surged in the run up to the christmas holiday, making up for some of the weaker results we saw earlier in the month. sales rose 4.3% through the week to december 25 compared with a year earlier as last-minute holiday shoppers who were attracted by discounts offered by sears and macy’s. analysts say demand for luxury items boosted sales and people purchased gift certificates, which will likely boost results later this week. the 10-year note yield inched toward a three-week high after the consumer confidence report. rising confidence may boost spending and lead to inflation, which is bad for bonds. shares of all nippon airways has be active today. the carrier bought a 3.4% stake in bit wallet, operator of the eddie monetary system.

>> a.n.a. paid $18.9 million for the stake at bit wallet, promoting the product at airports. separately, it will add a boeing 737 freighter in january 2006 to expand capacity for rising cargo command at home. another stock to watch is toyota motor. it may buy 10% of misawa homes holding in an attempt to answer the government’s call for help to keep the house builder running. toyota is japan’s biggest carmaker. it’ says the misawa stake will be minimum. toyota will build and sell houses with the company. and daiei, japan’s third largest retailer, will receive bank waivers, share writedowns and funds from sponsor companies totalling $6.9 billion as part of a bailout plan, having its equity cut. in korea, watch s.k. corp., south korea’s largest oil refiner. s.k.’s affiliate became its biggest shareholders, raising the stake in the oil refiner bringing s.k. group’s stake to 15.5%.

>> we’ll see you back here later on. south korea’s industrial production probably rose last month as exports of cars, chips and cell phones reached an all-time high. the government reports november factory output figures coming up in about 25 minutes. economists surveyed by bloomberg expect production in south korea rose .3%. coming up on the program, how far will european and u.s. officials let the dollar decline?

Interview: Currency

>> welcome back, everyone. we saw asian stocks rising in u.s. trading. that plunge in oil prices easing concern a bit today about economic growth in asia. asia is a net importer of the commodity. the bank of new york’s indices, there you see the asia 50 a.d.r. index up .8% -- toyota and honda are among the rising shares there. stocks also rose on expectation a report may show japan’s industrial production increased last month. nikkei futures closed down in singapore, just slightly there, .04%. japanese industrial production probably grew for the first month in three in november because companies expanded output to meet overseas demand. economists surveyed by bloomberg expect factory output climbed 1.8% in november. the report is released at 8:50 a.m. tokyo time. also today, november data on consumer prices, employment, household spending and retail sales. those reports may offer plans about whether japan’s economic expansion picks up pace this quarter. the dollar weakens against the euro, hitting a record low of 1.36. investors really speculating that the u.s. and europe won’t do anything to stop the dollar’s decline. record u.s. budget and trade deficits have deterred foreign investors, pushing the dollar to a third straight annual loss against the euro and yen. toru umemoto joins us. the u.s. currency climbing 7-- dropping sen.5% -- 7.5% against the euro and declining against the yen. will we see more dollar decline?

>> i think so. 10% dollar decline against the euro and yen in the coming six months.

>> considering that we may see the dollar dropping against the currencies like that, do you think it’s a good time for investors to pick up the yen?

>> i think so. it’s a very good chance to increase japanese equity. equity or real assets, it’s a very good idea for foreign investors to increase their japanese allocation.

>> the continuing story has been the twin deficits in the united states. has concerned about that been priced into the dollar?

>> i believe the account deficit and fiscal deficits are the main drags on the economy.

>> we have seen interest rates in the u.s. heading higher. do you think that will lend support to the u.s. dollar next year?
>> in the second half it could because the federal reserve is likely to increase the fed funds rate, i think, by 25 basis points in every fomc meeting in the coming year. as a result, the fed fund rate will be 3.5% or 4% by the end of the year and e.c.b. and japanese monetary authority could leave the rates unchanged. the reserve will be 3.5% or 4% interest rate differential between the japan and the united states. this will appreciate the dollar to some degree. secondly, i think the dollar will recover against the major currencies.

>> a lot of the exporters planning on 106 to the dollar for their earnings. really haven’t seen a lot of intervention by the bank of japan. some analysts we spoke to really looking for the yen to hit as low as 90 as we head into 2005. when are we going to start seeing intervention by the bank of japan?

>> i don’t think the b.o.j. would intervene. in real effective exchange rate of the year, yen is not expensive. historically speaking, for example, after 1985, the yen is relatively cheap in the real exchange rate basis so this is not confirm for the authority at all i think.

>> we want to talk about what happened with the earthquakes over the weekend. the nikkei did slide on concern that reduced tourism would affect the market . do you think there will be any effect of the earthquake on the yen?

>> very limited effect. asian global factory relationship, this will have a limited impact on the asian economy as a whole.

>> we have to end it there, thanks so much for your thoughts. speaking with the market analyst with keio university’s global research center. and still to come, an executive with jetstar asia.

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Listen Interview: U.B.S.

officials say aftershocks may cause more flooding and tsunamis from thailand to india. the u.s., europe and india pledged a combined $53 million in aid. thai prime minister talked about his country’s recovery efforts.

>> i am concerned about people’s lives. i am trying to help those still suck in some places. we are trying to recover the dead bodies and trying to send tourists back to their home, rejoining their family, wife, children. we’ll help them to do that. we’ll take care of all of them.

>> sri lanka was the hardest hit country. police report 10,000 there dead. the magnitude nine earthquake occurred sunday morning, centered just north of sumatra. economic growth in australia is starting to slow down. the government and investors say the recent gains in the australian dollar are cutting exports, which do make up 1/5 of gross domestic product. peter costello says higher oil prices and continuing drownt are hurting the economy there. u.b.s.’s chief economist, scott haslem, says it is a concern for the asia-pacific region.

>> i think 2005 will be a period of rebalancing growth. 2004 had a very strong domestic economy driven by the housing and consumer sectors. looking into 2005, there are certainly signs now that the consumer is slowing down a bit and housing is going through a downturn. so, yes, i think it will be a period of slower growth and consolidation.

>> upturn on the consumer side. the jobs picture just continues to brighten. i don’t think we’ve seen employment levels in australia like this since the 1970’s so more and more people have jobs and more discretionary income.

>> that’s certainly the case. the unemployment rate now is at a 27 year low. it hasn’t been this low for a long time. people are employed and have income growth. the consumer sector will do regiony well―reasonably well. the last two years consumers have enjoyed the wealth effects of 20% house value growth but those effects are fading and we think we’ll see a reduction in the pace of consumer spending,ing in precipitous, but a slowdown from 6% to 3% from the consumer.

>> we saw business confidence, after a roar in 2002, has fallen to a six-month low. what implications do you think that has for corporate investment in australia and any possible effects in the wider economy?

>> i think the business confidence indicator you refer to does tend to lead overbusiness continue―overall business continues conditions by six months. i think it is telling us there is moderation coming through in the domestic economy. i think it will be a more challenging year for corporate in terms of the fact that the domestic economy is likely to be slower. but i don’t think it will a material effect on investment. the amount of products in the pipeline is substantial and i think the investment story is probably going to be the most positive part of the australian economy over the next year or so.

>> how is the commodities picture looking? sales of raw materials to other countries, mainland china, for example, reaped a great deal of revenue for australia in the last 12 months or so. there seems to be little sign of waning in demand for things like poking―coke and coal and other materials.

>> for the coal and iron ore exports, there doesn’t seem to be an end to demand there. those exports are doing exceptionally well on a reasonably solid upward trend over the past year. looking forward, the prices are likely to drift up in those commodities even in an environment with overall commodities topping out. that will continue to be a significant positive for australia. i also think australia has struggled in terms of the infrastructure and supply issues this year and quite possibly next year we’ll see better exports even within an environment of a slowing world economy.

>> what’s going to happen with the australian dollar? here’s a subject of perennial discontent among many people doing business in australia. do you expect any rapid movements in the a.u.d.?
>> you need to think about the aussie dollar in two different ways, you need to think about it against non-u.s. dollar currencies like the euro and yen and there, i think, after several years of the economy running here domestically at a 5% to 6% pace, that things will be slower. i think we will merge to the next view of interest rates more likely to be down than up in australia next year and in that environment, i would expect the australian dollar, as the commodity price cycle is probably topping out, that we would underperform most non-u.s. dollar currencies. however, against the u.s. dollar, you can’t escape the fact that the u.s. dollar is on a structural weakening trend and against the u.s. dollar, i expect the aussie dollar will creep higher.

>> when the final numbers are tallied, what kind of growth will there be for australia in 2004 and what do you expect for 2005?

>> i think 2004, you’re going to be looking at something around 3% to 3.5%. for this year, i think when you look out to next year, we’re pencilling about 3%. given the recent data, the risks are on the downside and it more than likely will end up with something a touch lower, somewhere in the 2.5% to 3% range.

>> that was scott haslem from u.b.s. australia. coming up, is the dollar going to keep falling against the euro and yen in 2005? we’ll ask that question of an analyst in tokyo.

Interview: For the record

>> why doesn’t starbucks appeal to the biggest institutional investe “for the record” asked howard schultz and jim donald. among the biggest restaurant companies you actually have the smallest percentage give us sense how do in terms of the stock.% of institutional ownership.% you keep the big institutional investors interested in the stock?

>> i think the only word i can think of is performance. and if you’ve been a holder of starbucks this year alone, the stock―your increase is up over 70%. i don’t think there’s retailer or restaurant that you can point to that thathad that kind of year. let’s look back every year. starbucks story began at $200 million in terms of market cap in june of 1992, we’re sitting at $23 billion today. i think it speaks for itself.

>> you think big institutional investors are making a mistake?

>> over the long term, institutional investors have turned their back on starbucks have been sorry. i can silt here today as i have in the past and tell you that i’ve never been more excited and enthused about the prospects of the company as i am today because of the strength of the brand, and the leadership that we have in the company and i must say not because jim is sitting here, but the fact that jim has come to starbucks with a level of insight and guide answer that i think is going to really serve us well.

>> jim, what is going to look different when you become c.e.o.?

>> just a continuation, it’s a―it’s a continuation of all the things that we’re doing. obviously this company has been successful for a long period of time will continue to be that way. as i came in and saw all the moving parts i saw that it was doing 100 things 1% better each and every year i think howard said it best. howard always says, you can’t forget where you came from and growing big and staying small something that i think about every single night. i think about all of the partners around the world and experience they provide in
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Listen Interview: For the record
>> your typical cup of brewed -starbucks coffee just a few pennies worth so why does the company wantof ingredients making for heavy profit margin.% to sell you a sandwich? howard you’re making this big push into food, give us a sense why.

>> i think our customers have told us for years that our food wasn’t that good. to be honest―honest with you i think one of the achille’s heels is we in the long we did not want fob a restaurant.% refused% -to bake anything.% run we’ve cracked the code on how to bring great innovative food into the company, have it be fresh, have it be innovative and the kind of things that people would expect. also we want to surprise our customers. what we have seen this year d jim’s leadership with his team that we have really reinvented the whole food experience at starbucks got more food in the pipeline that we’re excited about.

>> what is interesting is the food growth really has been accelerating, but at the lower profit margin business. so why the focus?

>> well, you could say that it has been accelerating nicely, i might add. in the mix, not just the mix of that one particular product or the margin on that one particular product it’s a combination of bringing people into the store, where they purchased beverage or purchased pastries to go with that.

>> pru changing the face of what starbucks looks like in terms of the product? because you also have the music bars that you’re testing now where cbon summers can burn their c.d.’s.

>> i think that it’s critically important that over the long run starbucks maintains and enhances our leadership position in credibility of being the authority around coffee. the challenge and art form with any great retailer i think ifis how do you do that while creating new and exciting products.% you look at this year alone where our music has become an important driver of excitement, and interest with% -our customers, we’ve demonstrated that we can create this kind of balance. but we are and always will be a coffee company first.

>> my understanding, for example, where a grande latte about 15 cents of product for coffee that cost more than $3. is it all really about selling the coffee?%

>> it’s not the profit. i think it’s what we stand for. it’s what our customers expect from us. i think when you talk to our customers you ask them the spral u proposition of starbucks. they givespecifically, tell me about% us very high marks, still today for value proposition of what starbucks represents. i think that speaks to the equity of the brand, the experience, relationship they have with our people. and most importantly hardest thing to achieve in any market , that’s the trust that people have in what starbucks stands for.

>> give us a sense of how it translates overseas because you’re make just but it’s a business that’s% making this big expansion internationally.% turning profitable this year. so jim what’s the goal?

>> we’re in 34 countries right now. but the brand translates very well oversees. we go market by market . we can talk stories all day long about it being a third place over there as i think howard ran into nuns in japan that were from indiana. i justwell.% got back from london i ran into some partners from connecticut over there. and experience now it’s a global experience and something thatso the starbucks% our customers have come to expect no matter what country that we’re in.

>> what about in terms of profitability. because as i said just turning profitable this year in profit margin is about 10 percentage points less than domestic business. how quickly can you close that gap?

>> i think if you examine what we have achieved we opened our first international store in japan in 1996. and in less than eight years now we’ve got over 2,000 stores almost 35 countries. we would be profitable in 2004, we were. i think this is the beginning of a long term significant business for our company which we’re going to have at least 15,000 stores internationally. a very profitable business that will mirror our domestic business. i think long term growth of the company is we will challenge over the long term the fact that international will one day be larger than the u.s. for example we have less than 200 stores in china. that market could be larger than america.%

>> let me make sure i understood, you’re saying interthat i can tallly could be bigger than the u.s. how quickly?

>> clear to us that the number of people that live outside of north america, the relevancy of the brand and experience, the iconic status of starbucks, able to do this year in france was stunning. and as i just said, the unbelievable opportunity that% -we know we have in china.

>> starbucks shares are trading near record high. how does the company plan to keep investors interested? when we return we’ll ask howard schultz and jim donald.

Interview: For the record

>> welcome back to “for the -record” starbucks reebtly boosted forecast for new stores saying it will expand in the u.s. to 15,000 outlets and plans to have 30,000 stores globally. we asked howard schultz and jim donald at what point the company reaches at thation. at what point do you have too many stores in the united states?%

>> that’s a great question. i don’t think we’ve reached that point yet. what we’re hearing from our customers is that we do a lot of focus group studies they’re telling us the number one itd temp on their list for starbucks is more stores.

>> it’s interesting, howard, in your book several times you mention the fear of ubiquity. at what point does that become a negative?

>> i think that over the years we probably have underestimated the size and scale of the market opportunity for the number of stores. we’ve always been extremely sensitive to the issue of u ubiquity. the question we’ve asked is how do you get big and stay small. how do you main taib a very local flavor and local relationship to the community and i think we have managed to use ubiquity as our friend. and what i think the art of being a great retailer is preserving the core, enhancing the experience and maintaining your relevancy whether you have one or ten or hundred stores in the market . and we’ve done that very, very well.% 

>> what’s interesting, interesting comparison or model is what’s happened to krispy kreme lately. and one thing that analysts and invest rs have said one of the problems ran into is donuts became too readily available. that the company lost the cache, how do you avoid that problem?

>> i don’t know that much about krispy kreme. but i think the experience that we’ve created, the intimacy and trust with our customers and again the environment that we’ve created has become really this third place between home and work and extension of people’s lives in ways that candidly i% -don’t think we planned on in the early stages. so we’ve been able to capture and create an emotional relationship with our customers that’s quite different than any one in fast food business. that’s something we pride our stefls on. we’ve never viewed ourselves as being in the fast food business.

>> how do you deal with the fear or how fearful are you that coffee willal out of favor. it’s very popular, very much an activity. you say place for people to meet and do. but what happens when that changes or if that changes.

>> hive been asked that since i was raising private equity for the company, when we had ten stores. this is a fad, what if it goes away.%  i think coffee’s been around for centuries, it’s part of the rich wall of how we start our day. it’s become a relationship product that is well beyond just the coffee itself. and i think we view ourselves in many ways we’re not only in the coffee business, equity of star bruks brand is that we’ve become the quintessential experienceal brand. and the value of what we create is well beyond the coffee itself.

>> we look at the starbucks experience as something that’s not going to go away. and whether the economy is great, whether it’s just so-so whether it’s doing poorly. we’re going to get great cup of coffee and get away from some of the things that are driving whether it’s driving the economy or people to our locations. connection that they get with us through our partners and through our coffee to me just overrides whatever the economy is.%  and it’s all about that experience.

>> how does that translate into the smaller market as they move, does the coffee translate?

>> we’re opening in markets now that i’ve never dreamed we could be in. and not only are we opening but the economics are stronger in many cases because of the rent structure and the value that we brick to that neighborhood or community or landlord. >> give us an example --% 

>> and the demand.

>> give us the example of the drive through how profitable are those?

>> the drive throughs majority of the drive-threw business is incremental. and economics of the existing drive throughs, the future ones we have planned are very significant driver to the long term success of the business.% -

>> because they are more profitable.

>> they are.

>> why is that?

>> because there’s another channel of distribution which is those many people who are stopping with their cars or customers that would not have stopped normally. and i think to our credit we’ve been very disciplined over the last five or ten years not to spread drive throughs across the country until we had mature brand economies of scale in that market so we do not appear as fast food purveyor. i think again it demonstrates the thoughtfulness of how we view the brand and our position want to make very clear that we’re not in it just to grow the business. we want to build an enduring, great company. want the brand to stand for something. that’s why we believe that all of these opportunities that we haven’t chased in the early stages are there for us now and they’re in ways that we are very excited about and i think this speaks for long term value of the company in terms of the stock price.% 

>> i have to say something on drive through. it is still the third place experience that we’re creating in the drive-thrus across the cub tree. one here in seattle where one of our partners is identified as a voice of all the different customers and has his or her name down with the kind of car they drive and what animal is in the seat.

>> starbucks is testing hot food at stores in washington state, it’s also been introducing kiosx, is that let consumer run their own music. is the company moving away from the core coffee base. when “for the record” continues.
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Listen Interview: For the record
>> welcome to “for the record.” started as chain of four coffee stores in seattle that sold only coffee beans. today the company is more than 8700 stores around the world, with plans to boost that presence to 30,000. annual sales are 30% last year, but the company told investors they should expect revenue to grow closer to 20% a year over the next three to five years. what can the company do to accelerate growth? and how can it keep customers coming in to pay almost $4 for a cappuccino that cost us pennies ingredients to make? we sat down with starbucks founder and chairman howard schultz and incoming chief executive jim donald at starbucks head quhawr terse in seattle and asked hem. howard, give us a sense, how quickly can you continue to grow sales?

>> well, i think that we’ve demonstrated over the last three to five years that the growth and development of the company is not only consistant but the growth and development of the company is way, way in front of us. we feel very strongly that these are still the early days embryonic days for the growth of the brand, number of retail stores and as you know we just changed and updated the number from 25 to 30,000. i think at the end of the day we’ll find that number is going to be light.

>> jim, what about you when you look at the coming three to five years, is it can be maintained 20% sales growth what happens after that? for example, a company like mcdonald’s that now more consistently has―compared to double digit sales growth. how do you prepare investors for the fact that sales growth most likely will slow down? >> well, we had that question before. to howard’s point how can we grow so fast we’re also hearing a lot from our customers. every time we talk to our customers one of the key thiks they tell us they want more starbucks. they want more convenient locations. you can imagine that we’re currently give them. when we look at the population in the u.s., for example, and look how many stores we have and we look at the next three to five years we think as howard said we’re in the early days.%  our growth organically can continue over the next three to five years to continue the rate that howard mentioned.

>> what do you say to investors to analysts say you’ve had―we’re concerned you’re going to decelerate below 20% growth.

>> if you look at 2004 which i think is year of ak acceleration, 30% growth in 2004 was the largest single year we’ve had since 1999. and when we look at the next few years of at least 1500 stores a year, we’re opening four stores a day now, hiring 200 new partners, serving over 35 million customers a week. the brand has never been stronger.%  we continue to innovate. i ifink if there is one mistake we’ve made we’ve underestimated the size of the market both domestically and internationally we are getting our arms around the fact that the size of starbucks total store count is very, very significant. not to mention the ways in which we think we can leverage the brand for other channels of distribution.

>> but, jim, certainly investors haven’t underestimated. the shares trade for 40 times estimated 2006 profit. shares near record high. butable litsdz can add hold rating on the stock. what do you say to people whether or not the stock can go higher?

>> we look at the performance in the past and what we said going forward the next three to five years then fill in the blank. we give them why we think this is possible, be it sheer number of stores that we’ll put up or be it this innovative pipe lib that actually gives a little credence to what we’re saying in that growth plan three to five years out.

>> let me ask your reaction to one investor that i spoke with said the air is thin at these valuations, what is your response?

>> i think the air is always thin in relationship to companies that perform at a very high level. the market rewards performance, we’ve had 12.5 years of basically being able to under promise and over deliver. we’ve had 150 consecutive months of positive coms unparalleled by the best of% -the class. we have top 50 grand globally. so when you have these kinds of performance metrics there is very little room for disappointment.%  we recognize that, we’re%  responsible for that. having said that we’re very, very bullish on the long term spos pekts of the company and specifically i think over the next five to ten years what we will prove is that starbucks will be one of the most recognized and respected brands in the world if not the number one.

>> let me ask you --

>> one point, because being in retail all my life having the numbers that we’ve been reporting on sales it doesn’t happen in a regular retail environment. as our coms for november showed, everybody you hearsaying not sure how christmas will turn out. go down to the last ten days prior to christmas. we had probably the highest single market in comps since november of 1995 that we reported.

>> i assume it’s not comfortable to be chairman to be incoming c.e.o. with val -- cpral u waiksz at this level?

>> we’re not concerned. we’re very comfortable and confident in what we think the opportunities are. if you look at history of starbucks stock price coupled with the level of performance, anyone who has ever owned a stock for a long period of time has been significantly rewarded.

>> let me ask you are you thinking about splitting shares?

>> i’ll let howard―he’s been around longer.

>> we’ve split a number of times along the way. i think in this time around we’ve set candidly that it’s not something that we’re focused on.

>> and pay can dividend your cash is getting closer to a billion dollars.

>> i think that we have to be very mindful of our fiduciary responsibility with regard to dividend. but having said that, the growth of the company is rewarding the shareholders in terms of the significant long term value. stock is up more than 70% this year. more than 4,000% since 19 the 2. i think our shareholders significantly have been rewarded by the policy we’ve had which has been no dividend and invest the money back into the business.

>> starbucks has plans to boost number of stores from about 8700 to 30,000. when “for the record” continues we asked howard and jim about whether the starbucks name is losing its cash.

Interview: Asia Pacific Region

>> it’s 912:00 a.m. in sydney and it will be cloudy day, warm with lengthy, sunny periods throughout the day. isolated showers expected in the west with high temperatures reaching 26 degrees celsius. this is “bloomberg live” from hong kong. in world news, u.s. military investigators say the strike on a u.s. military base in mosul was the work of a suicide bomber. ron madison has that story from tokyo.

>> good morning. that blast left at least 22 people dead, including 13 u.s. soldiers and five u.s. civilians. air force general richard myers told reporters there were no remnants of a rocket or explosives found, indicating the work is that of a suicide bomber. leaflets are being associated with the group claiming responsibility for the attack. a day after the blast, a curfew of 9:00 p.m. to 5:00 a.m. is imposed on the city. saudi arabia recalls its ambassador to libya over what it claims was a libyan plot to kill the saudi crown prince. the press reports the country’s foreign minister was made following reports of an alleged assassination bid to kill crown prince saudi arabia john hefner―abdullah abeastbound. the “new york times” reported that moammar qaddafi sought to punish the prince. new york city says gay marriage violates rights. the judge is hearing argument it’s validity of the state’s initiative to banned gay marriage. a ruling in favor of san francisco would make california the second state after massachusetts to legalize gay marriages. the state supreme court stopped the practice in march without addressing the constitutionality of the california law. russia has test fired an intercontinental ballistic missile. the missile, which nato identifies as ss-18 satan was launched from a silo on wednesday, successfully hitting its target 3700 miles away. the associated press reports that the launch was to extend the lifetime of the aging weapons. military officials have said russia would keep arnold schwarzenegger―its arsenal for another number of years.

>> that’s the look at world news. back to you.

>> shares of fannie mae, largest source of money for the u.s. mortgage industry, rose after the company ousted chief executive officer franklin reigns and timothy howard, chief financial officer. bob bowden has more on the story from new york.

>> the main issue for fannie mae will be to become adequately capitalized by the june 2005 deadline when the companies agreed to to meet on the subject of capital requirements with the office of federal housing enterprise and oversight. investors also say the process of restoring the company’s credibility will be a tougher challenge.

>> this is a company that’s going to take a $9 billion or so charge. it’s going to have to deal with accessing the capital market . and it’s going to have to tell a story and it’s been discredited and a great source of its finances have come in the debt side from foreigners who are puzzled by this behavior. this is a c.e.o. and a team that did road shows in foreign countries saying, trust us, look at our story. and now they’re fully discredited. i think there’s more trubleds ahead for fannie.
>> fannie mae’s profit restatement could be larger than the $9 billion it cited. bert ely, critic of fannie mae, estimates the company’s shortfall is closer to $13 billion. he says fannie mae may need to shrink its balance sheet and reduce capital requirements, temporarily suspend its dividend, now close to 3%, and possibly sell preferred stock to raise capital. one of fannie mae’s largest shareholders is david dreman of dreman value management and is pleased with the changes underway. while up today, fannie mae shares are down year to date, down 4% as you see on that chart. in the future, shareholders can only hope fannie mae will perform like philip morris -- freddie mac, which had its own problems before ousting three top executives. cathy, back to you in hong kong.

>> thanks for that, bob. coming up, the yen rises for the first day this week against the dollar and euro. we’ll ask a currency strategist in sydney whether the last week of the year is a good time to buy yen.

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Listen Interview: Oil prices
welcome to “ live” from hong kong, i’m catherine yang. we’ll wrap up the trading day in new york and set the agenda for asia. our live guests include a currency market strategist to comment on the dollar’s latest drop against the yen and euro. a u.s. economist will tell you what the latest figures mean for the market and federal reserve. we’ll also hear from the general manager of rio―sanri owe, the company that brings you hello kitty. oil with its biggest drop in two weeks. the u.s. energy department reported a surprise increase of inventory. stockpiles of distillate fuels, including heating oil and diesel, rose 600,000 barrels last week. analysts expected supplies to fall. crude oil imports rose to 10.5 million barrels a day. traders say the downtrend is set to continue as the price rises and demand for heating oil slows. weather forecasters say temperatures in the northeastern u.s. will rise after christmas. the christmas rally continues on wall street. the fall in oil prices and a report showing the u.s. economy grew faster than expected in the third quarter boosted stocks. the dow rose .5%. the s&p and nasdaq closed higher by .3%. the commerce department revised third-quarter g.d.p. up to 4% from an estimated 3.9% last month. financial shares gained after fannie mae ousted two top executives yesterday. chief executive franklin raines and chief financial officer,j. timothy howard, quit under pressure. the resignations came after the company said it may have to restate profits by $9 billion. the s.e.c. havebeen investigating the company for accounting irregularities. we’ll have a special report on new york on reforming the mortgage industry with bob bowden. the 10-year note fell for the first day in three in line with lower oil prices and as u.s. stock market benchmarks reached three-year highs. traders say investors are not attracted to treasuries. yields are down 1% from the year’s high of 4.9%. the dollar slipped against the yen and euro in new york trading. the dollar fell to the 1.34 range against the euro and 103 range against the yen before bouncing back a bit. you’re looking at live market quotes on your screen. the dollar lost ground against the yen following yesterday’s trade report indicating japan’s exports accelerated at a faster-than-expected rate of 13.4%. that sent the yen higher on speculation exports will sustain japan’s economic recovery. also, minutes from a bank of japan meeting indicated central bank policymakers said the yen’s climb would not hurt corporate profits, an indication the bank won’t sell yen to weaken the currency. asian stocks rise in u.s. trading with gainers including two of japan’s largest automakers, toyota and nissan, after a u.s. government report confirmed the economy accelerated in the third quarter. crude oil futures with their biggest drop in two weeks yesterday. to learn what that may mean for trading in asian markets today, let’s go to david tweed, our stock market editor in melbourne today. how are asian markets likely to react to the drop in oil prices?

>> cathy, looking at the futures, it indicates that the markets will welcome the decline in oil futures price. nikkei futures are trading higher at the moment. i thought it might be useful to look at how asian markets have reacted since october 26, the day we saw crude oil reach its record this year. the oil prices have dropped 18%. but looking at the morgan stanley capital international asia-pacific index, during that period, it’s driven by 9% or 10% and the main gainers, the big gainers, have been financial stocks, material stocks, commodities stocks and also consumer staples so a lot of consumer stocks coming back as people have been betting that the higher oil price won’t work like a tax on the spending of consumers. all those three indexes are up more than 10% from that period since october 26, with the best performers in terms of index points, the ones driving the index, toyota motor, b.h.p. billiton down here in australia, of course mizuho financial. looking at the big percent annual gainers, fosters, australian wine company, posco, steel company and also rinker, an australian company that makes concrete blocks used in construction in the united%  states where it gets 80% of its revenue. these are the stocks reacting to the drop in oil prices and improved outlook for economic growth there. cathy?

>> the australian stock market closed above 4,000 for the second day yesterday. how are australian stocks seen opening this morning?

>> we did close above that level, a psychological level, i might add. the futures are showing up around about two points. there are a few sectors that might dampen australian stocks at the moment. to mention them, looking at b.h.p., rio tinto and w.m.c. resources, all these companies are also producers of copper. and copper fell in new york, ending the longest rally since 1988. so you might see some of these prices coming off. also, remember, b.h.p. is also one of the biggest oil producers in australia and they may come out in reaction to the oil price overnight. back to you.

>> thanks, david. microsoft loses an antitrust case in europe. a decision by an e.u. court means microsoft must sell a version of windows without a music and video player. it requires microsoft to license proprietary information on rivals in europe. the e.u. says the order prevents microsoft from dominating rivals including real networks. for microsoft, the decision may limit its ability to add futures to windows and may hurt the company’s competitiveness in europe. shares of microsoft fell .3% in new york wednesday. bill gates holds more than $300 million in stock in warren buffett’s berkshire hathaway. a regulatory filing reveals the world’s richest man owns more than 3500 shares in the company owned by the world’s second richest man. the investment amounts to less than 1% of his net worth. gates was required to reveal his berkshire hathaway holdings after becoming a board member. the food and drug administration says that astrazeneca ads underplace risks of its cholesterol treatment, crestor. the f.d.a. wants the ad pulled. the reprimand comes five days after the f.d.a. called for a closer look at crestor because of its link to kidney damage in high doses. taiwan’s export orders probably crew at its fastest pace in november. rising demand for chips, flat-panel displays from those countries is lifting demand for taiwan’s exports. economists we surveyed expect the export orders rose 24% in november. hong kong and singapore report november inflation data today. hong kong consumer prices probably rose for the fifth month as the city’s recovery enabled restaurants and retailers to charge more. economists we surveyed expect hong kong’s consumer prices climbed .3% in november. in singapore, the inflation rate probably slowed due to falling food costs. consumer prices are reported this afternoon. in japan, markets are closed in observance of the emmer’s birthday. and investigators in a new direction regarding the attack on mosul.