朗读练习作业

Earnings --- Ellen (slow)
Interview: PFC Energy---Qureshi, Jamal---Analyst

>> more news after the bell, straight to ellen braitman for details.

>> after the bell, earnings out from medtronic, the medical device maker, 54 cents a share for the company’s latest quarter. if you exclude items, on that basis, matching what analysts were expecting for the second quarter. sales coming in at $2.765 billion, a little shy from analysts’ estimates but 54 cents a share excluding items on the profit front matching for the second quarter.

>> thank you. continuing on, we’ll look at energy prices. crude oil rebounded from a four-month low after an energy department’s report showed an unexpected decline in u.s. inventories. where are oil prices headed from here? joining us with his outlook on energy prices is jamal qureshi, oil market analyst with p.f.c. energy. hi, jamal.

>> hi.

>> why did inventories fall last week when they were expected to rise?

>> the key difference was that we had a real drop in crude imports. we were at about 10.5 the previous week. they came down to 9.7 this week, and that’s not too surprising given that the refinery runs are not coming back that strongly. it looks like we have a lot of refiners who are taking the opportunity from the outages to do deep maintenance.

>> where do we stand in terms of production status in the gulf? how much is back on line and how much more do we have to go?

>> we have 725,000 barrels a day still out. it’s about half back, and will be an ongoing lingering problem. it looks like we won’t have most of the production back until the second half of 26.

>> how will that hurt the industry?

>> now it’s more of a problem of what’s happening on the sweet crude side. for a long time, we had built up a glut of crude. now we’re seeing it is that’s flipped particularly with the sweet cruised which have been redirected into the sour pipeline and we’ve lost some of the sweet crude.

>> let me get your outlook on crude oil prices. yesterday, crude oil closed below the 200-day moving average, which is $56.98 a barrel of the we had a significant move upward in today’s session. could the inventory today be a catalyst for a turning point in prices?

>> it could be but i think actually we have to look at what’s happening in the broader picture, not just the crude stocks. despite the draw down today, crude stocks are quite full. we bounced off the 200-day moving average but to really get out of this upper 50’s range, you’re going to need something stronger on the fundamentals side and we had quite a bit of weakness on the heating oil numbers and that’s where the market is focused heading into the winter so we’ll need sustained cold weather to bounce us strongly off the the 200-day moving average.

>> inventories rose more than expected in heating oil, any chance that could bring down heating bills?

>> certainly. because of the drops in crude prices overall as well as natural gas, that means that we’re probably not going to see quite as dire a situation, weather-dependent, of course, but if the rest of the winter turns out to be normal weather, the predictions from a month ago will be overly dire because we’ve built up a cushion of heating oil.

>> in terms of supply?

>> in terms of supply and inventories and what’s available and in terms of incremental imports of heating oil in europe. they have a glut in central europe and we could see more material moving over if needed this winter.

>> i want to ask a question about crude oil prices. we looked at a six-month chart of crude oil futures. late august, early september, we saw a peak. in the last 2 1/2 months, each time crude prices drop and rebound, they peak at a lower price point. what is the succession of lower peaks mean now in―to you in terms of prices?

>> if we’re going to talk about the technical indicators, i look at those as much more of a short-term set of indicators. we have to see what’s happening on the fundamental side. i truly believe that will drive things much more and at this point we have softer looking gasoline but have to watch the demand numbers to see what happens there and the weather-dependent situation that determines how the winter goes, whether or not we’ll face tight gas prices in the spring.

>> on those fundamentals, predicting a cold snap on the east coast. how will that impact prices?

>> i think we’ll see rebound there. the weather forecasts are supportive. if you look globally to europe and the far east, you see a similar trend for the next week. what comes after that is more important because we’ll see a return to more normal winter temperatures in the early winter but for us to really pull prices back up substantially, say, to go over $60 again, we’re going to need to see more sustained cold and draw-down of inventories as a result.

>> what is your outlook for crude oil prices? do you see us going back above $60 before year’s end?

>> if we see normal winter weather for the next month, month and a half, i think so because we will see heating oil draw downs and i’m referring to what’s happening globally. we need to see the stocks start to come down a bit in germany and places like this, as well as on the u.s. east coast and if that happens, then, yes, i think we’ll get into the low 60’s by year end.

>> thanks for joining us.

>> thank you very much.

>> once again, our thanks to jamal qureshi, oil market analyst at p.f.c. energy. when “after the bell” continues, we’ll check world and national news and applied materials is out with earnings today, beating expectations. we’ll speak with a portfolio manager.
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Listen Market briefing --- Lori (medium)
Applied materials --- Brett (slow)
Tax cut --- Peter (slow)
NYSE --- Deb (fast)

four months. a drop in energy prices gets the credit for that. the headline number shows prices rose .2% after a 1.2% surge in september. economists we surveyed expected the consumer price index to be unchanged. factoring out volatile food and energy costs, core c.p.i. rose .2%, in line with economists’ forecasts. treasuries rose, headed for the biggest two-day gain since august in reaction to c.p.i. government debt prices extended a gain when bernanke said long-run price stability is essential for the economy. bernanke’s nomination was sent to the full senate today. optimism inflation remained contained has pushed the difference in yields from two-year and 10-year treasuries to the narrowest point since 2001. closing numbers -- shares of applied materials rising in the after-hours session. the world’s largest maker of semiconductor equipment reported better-than-expected profit and sales. brett gehrig has more.

>> orders at applied materials rose 15% in the third quarter to $1.69 billion. not only was that the first increase in a year, it was higher than the company’s own forecast back in august. chief executive mike splinter said orders from taiwanese foundries, faces that build chips for other companies’ designs, would increase after falling to less than 1/3 of normal levels. analyst steven chin says the top four foundries are working at more than 80% of capacity. taiwan semiconductor and united micro have plants running close to flat-out. applied materials had to contend with chipmakers cutting back on capacity increases as well as rising tax expenses throughout the quarter. net income fell to $246 million or 15 cents a share, a drop of 46%. taking out two cents a share in tax-related costs, profit was 17 cents a share, beating the average analyst estimates by three cents a share. sales fell 22% to $1.72 billion, also topping analysts’ forecasts. as for the stock, shares of applied materials up 4% so far this year, trailing the almost 7% gain of the philadelphia semiconductor index, but, lori, c.e.o. plinter says 2006 will certainly be a growth year for the company. back to you.

>> thank you. also after the bell, network appliance, the company whose computers store and distribute data, said second-quarter net income rose 28% on increased demand for storage systems which boosted sales. second-quarter net income rose to 70.7 million or 18 cents a share from $55.3 million or 15 cents a a year earlier. sales rose 29%. medtronic is the world’s biggest maker of electronic heart devices. after the bell, the company said quarterly profit rose 52% helped by gains in defibrillator sales. second-quarter net income climbed to $816.5 million or 67 cents a share. it was $535.7 million, or 44 cents a share, a year earlier. revenue increased 15% to a total of $2.4 billion. sales of medtronic’s defibrillators rose 34%. medtronic’s board authorized a stock buyback of an additional 40 million shares. in the energy markets today, u.s. oil companies could face a $5 billion increase in tax bills thanks to a proposal working through the senate. opposition to the proposal could threaten a larger tax-cutting measure pushed by republicans. peter cook joins me from washington with more on this story. hi, peter.

>> hi, lori. the proposal in question is not a windfall profits tax like some of the pieces of legislation debated last week when top oil executives testified on capitol hill, instead, an accounting change proposed by charles grassley and added to his package of tax cuts passed by the committee yesterday and on the senate floor this afternoon. the proposal would alter how oil companies account for inventories. they currently use a treatment called last-in, last-out accounting.

>> this would require them to pay the tax on the difference between the costs that they sell the oil, the world market price, and the first-in, the oldest, the price at which the oldest barrel was purchased.

>> given the recent rise in oil prices, the american petroleum institute says the change amounts to a backdoor windfall profits tax unfairly aimed at a single industry. grassley’s proposal drew sharp criticism from fellow republicans on the finance committee who said they feared it would hurt small independent energy companies. one analyst in washington doubts the proposal will survive a house senate conference.

>> according to joint tax committee, it will cost $5 billion more in taxes, most of that happening in 2006 and a little bit in 2007. so clearly, it’s something that they’re going to fight pretty hard to eliminate from the final package and at the end of the day, i suspect this will not be in the final tax package.

>> mississippi republican senator trent lott said today the proposal is a “deal breaker” for him and he is prepared to vote against the larger tax cut package if not removed. democrats want to go further. byron dorgan is trying to add an amendment imposing a windfall profit tax on major integrated oil companies.

>> crude oil rose today, the commodity rebounded from a four-month low after an energy department report showed an unexpected decline in u.s. inventories. crude oil supplies fell more than two million bales last week and gasoline stockpiles fell more than 950,000 barrels. distillates, including heating oil, rose more than 2.5 million barrels last week. prices rose on speculation heating oil demand will surge as a cold weather front moves into the eastern u.s. today. natural gas rose to a three-week high of 6%. a mixed day on wall street with energy stocks among the biggest gainers. deborah kostroun has more from the new york stock exchange.

>> with cold weather moving across much of the united states, that is creating a lot of demand for heating fuel and that led energy stocks to be the best performers of the 24 industry groups in the s&p 500. also, crude oil rising from its four-month low after the energy department reported an unexpected decline in inventories. natural gas closing above $12 for the first time this month and in fact rising to a three-week high as that cold front is stoking demand for fuel. speaking of commodities, we did see oil services, integrated oil, all of those stocks higher on the day. gold prices rose by the most in 16 months. gold is seen as a hedge against rising consumer prices and you saw gold up $10 on the day. not only was it gold, but also silver, palladium and platinum, all of those commodities sharply higher. the philadelphia gold and silver index higher in reaction to gold’s rise. freeport-mcmoran closing at a high for the day. tyco’s chief executive saying the board is considering splitting up the company, discussing several actions to boost the stock price, including accelerating buy backs and also a dividend. american express had its biggest drop since october 2002. c.e.o. kenneth chenault saying fourth-quarter earnings won’t be as high as some analysts’ estimates. delphi saying they will eliminate 25,000 jobs, and won’t try to reach agreements with workers on wages and benefits. ford announcing a new incentive program in response to discounts offered by general motors. and general motors, it is also the biggest drag in the dow jones industrial average for the year, down 46%. i’m deborah kostroun at the new york stock exchange for bloomberg news.

>> thank you. we are getting more details on applied materials from a conference call. applied materials reported its fourth-quarter numbers after the bell today. applied materials now says, in terms of guidant, first-quarter orders will be up 7% to 10% from the fourth quarter. fourth-quarter orders came in at $1.69 billion. amat sees first-quarter profit of 14 to 15 cents a share and first-quarter sales up 3% to 5% from the fourth quarter. first-quarter thomson financial earnings per share estimate was 17 cents a share and shares of amat are down in the after-hours session. still ahead on “after the bell,” we’ll go inside today’s oil inventory numbers and get an outlook on crude and gas prices for the month ahead with p.f.c. energy’s jamal qureshi.

NYSE --- Deb (fast)

>> more on breaking news that came out moments ago. refco said after the bell, c.e.o. william sexton has resigned of the the company says robert dangremond will be the interim c.e.o. refco filed the 14th biggest bankruptcy in u.s. history a week after the company said former chief executive phillip bennett had hidden a $430 million debt. bennett was charged with securities fraud october 12 and indicted november 10 by a federal grand jury in new york. morgan stanley chief executive officer john mack said he wants to double the firm’s profit in the next five years. mack spoke today to an audience in new york. mack said morgan has room to improve in almost every business, he elaborated to bloomberg news after the meeting.

>> changes in retail where we have mr. gorman coming on to change the training program and we are doing a search on asset management so you’ve seen those changes and our division heads to manage not only our risk capital but manage people.

>> morgan stanley was the worst performing stock this year in a widely tracked index of brokerage firms. the firm’s profit in the latest quarter slid 83%, $1 billion in costs from the planned sale of a leasing unit eroded the bottom line. we’ll get analysis a little later in the hour. in any event, stocks started the day higher but by the closing bell, they were lower. deborah kostroun filed this report on what happened in today’s session.

>> after getting off to a pretty good start, stocks falling in the afternoon session. in fact, as we started the day, the dow jones industrial average was at an eight-month high. we had a lot of positive economic data that came out today. the p.p.i. rose, retail sales declining less than expected and if you look at the laggards on the day, retail, autos and insurance. general motors, the biggest drag in the dow jones industrial average but also jerts, so far, year to date, that is the worst performer in the dow jones industrial average, down 43%. remember, yesterday, g.m. announced a new round of incentives and ford saying today it is still preparing a response to the g.m. discounts. taking a look at johnson & johnson, that was actually the biggest gainer in the dow jones industrial average. guidant, also the second biggest gainer in the s&p 500. johnson & johnson salvaging its takeover of guidant with an agreement to cut that price by $4 billion, or 15%, now that acquisition price comes to $21.5 billion mainly because of investigations into recalls of implantable defibrillators that guidant had. guidant and johnson & johnson expect to close that deal in the first quarter of 2006. insurers were lower on the day. a.i.g. released earnings and a.i.g. planning to restate the past five years of results for a second time. this is is to correct accounting, also saying that hurricane claims triggered a 36% decline in their third-quarter profit. retail, that was the biggest drag on the market today. home depot was lower even though they said third-quarter profit jumped 17% and the company raised its earnings forecast but it has been doing quite well over the past few weeks. target, that was the biggest disappointment of the day. target’s second biggest drop in the s&p 500, shares tumbling after the company saying november sales may fall below its forecast. todd leonne saying target is a great performer and because it was down so much scares a lot of people.

>> the new york stock exchange has settled the lawsuit that threatened to block the big board’s purchase of archipelago holdings, according to the plaintiff’s lawyer. the settlement keeps the 70-30 split in tact, clearing a major obstacle for the nyse, which would become a for-profit, public company, by purchasing archipelago. the 213-year-old big board will also extend its reach into trading of options, exchange-traded funds and stocks listed on the nasdaq marketsite. oil futures fell to their lowest price in almost four months ahead of a key inventory report. nymex oil futures ended the session below 57 dollars a barrel, down 71 cents to close at $56.98. all this as analysts predict across-the-board gains in tomorrow’s government report on fuel supply. the combination of higher oil imports and reduced fuel demand because of warm weather is helping cause the latest gains in the nation’s fuel supply. in the words of r.b.c. capital markets analyst, supplies are fine, there’s nothing to drive prices higher in the near term. tomorrow morning, the energy department releases the latest report on the nation’s energy stockpiles. according to analysts surveyed by bloomberg, crude oil inventories likely rose by two million barrels last week and gasoline inventory probably rose by the same amount. the analysts say distillates likely rose by a third of a million barrels. technical factors played a role in the drop in crude futures today. it is the first time since may nymex futures closed below the 200-day moving average. chart watchers such as fimat’s john kilduff, views this as a sign of weakness ahead and said this is a significant sell signal. natural gas down for a fifth day in seven. heating oil, gasoline futures tumbled more than 2.5%. stay with us as “after the bell” continues.
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Listen Market briefing --- Lori (medium)
Ben Bernanke --- Peter (slow)
Ben Bernanke --- Mike (fast)
Interview: PIMCO---Gross, Bill---Managing Director / Partner


>> ben bernanke, white house adviser nominated to replace alan greenspan as federal reserve chairman, pledges to carry on greenspan’s interest rate policy.

>> hello, i’m lori rothman. bernanke also said he want it is to move toward more openness for the fed if the senate confirms him for the job. bloomberg’s michael mckee will talk live with bill gross, chief investment officer of pimco, in the next few moments. the settles numbers -- investors focused on disappointing sales outlooks from target, shrugging off more encouraging news on inflation. we do have breaking news, right now, from refco. refco’s c.e.o., william sexton, resigns. we’ll bring you more on that and continue to follow it as the story develops. refco’s c.e.o., william sexton, resigns. of course, the previous c.e.o. was just indicted from that company. ben bernanke, back to ben bernanke, pledged to the senate banking committee today that he will follow in alan greenspan’s inflation-fighting footsteps if confirmed as chairman of the federal reserve. he also said he’ll continue the push for more transparency at the fed and that effort will include the possibility of establishing numeric inflation targets for inflation, something greenspan has opposed. bloomberg’s peter cook is live on capitol hill, now, with a recap of the day. peter?

>> ben bernanke appears to be well on his way to becoming the next fed chairman. both republicans and democrats on the senate banking committee said they expect the full senate will confirm bernanke to become alan greenspan’s replacement at the fed, but that did not stop senators today, at the confirmation hearing, from probing bernanke’s views on eye range of issues, most notably, support for inflation targeting. bernanke, as he did when first nominated, said his first priority if confirmed would be to continue the policies pursued by alan greenspan during his 18 years as chairman, keeping inflation under control.

>> if i am confirmed, i am confident that my colleagues on the federal open market committee and i will maintain our focus on long-term price stability as monetary policy’s greatest contribution to general economic prosperity and maximum employment.

>> bernanke also told the committee he hoped to continue the fed’s push towards greater transparency and that effort, he said, should include consideration of numeric inflation targets. greenspan has opposed inflation targets and democrats today questioned bernanke about that. he responded that his idea of inflation targeting still allows for fed flexibility and is consistent with the fed’s current dual panned mandate of―mandate of price stability.

>> i’m not proposing any change in the way policy is conducted, rather, a modest bit of additional transparency which i believe the federal reserve would achieve its stated mandated objectives.

>> bernanke said he would only move forward with inflation targeting after more study and consultation with colleagues. democrats pressing bernanke for views on tax and spending issues, but largely steered clear.

>> what i would like to do is retrain from making recommendations on specific matters of taxes and spending and specific references to pay-go in a similar manner.

>> we can assume that will be your policy after confirmed as chairman?
>> that’s my intention.

>> afterward, richard shelby of alabama said he hopes to have a vote on the bernanke nomination this week the full senate will have to consider the nomination after that before ben bernanke can take over for alan greenspan as chairman of the fed some time next year. back to you.

>> thank you, peter. u.s. treasuries rose after bernanke told the congressional committee that long-run price stability is essential for the economy. checking treasuries -- suggesting the market believes the fed will move aggressive to keep inflation in check. what would a ben bernanke confirmation mean for the future of the fed and monetary policy? michael mckee has more. hi, there, mike.

>> joining me, now, from newport beach, california, for more reaction to mr. bernanke’s testimony and questions and answers this afternoon, pimco’s chief investment officer, bill gross. thanks for join joining us. we see the 10-year note up about 3/8 on the day, indicating the market sees ben bernanke perhaps as a buy. how about you?

>> i always thought he’s been my favorite over the past six months and i’m glad he’s now in the process of confirmation and ultimately i hope he’ll be appointed and confirmed. i think he’ll be good for the bond market not only because of his inflation targeting, but because of his outlooks towards savings and their effect on interest rates.

>> tell me, do you think he will be more or less hawkish than alan greenspan on inflation?

>> oh, i think inflation will be, you know, a primary target for bernanke. i think where they will differ is that greenspan has always had a problem with why interest rates are so low, that’s his conundrum. bernanke answered that in 2005 when he talked about a global savings glut and suggested in other pieces that interest rates were probably 50 to 100 basis points lower on a perhaps semi permanent basis so i suspect that bernanke feels that interest rates are a little bit more neutral now than what greenspan does and in that case, perhaps he stops sooner and will be more dovish but i still think he’ll be an inflation hawk.

>> we’re at 4%. you suggested earlier today they might go to 4.25, that would be if they do it at the next meeting before ben bernanke takes office. his first meeting, then, he holds, no fed chairman in memory has done that, they’ve all come in and raised rates to show they’re serious about controlling inflation.

>> i think that meeting will be predicated on the state of the economy and state of inflation at the time. inflation, based on energy prices, will be coming back down. the core never did any up and i suspect in two months’ time that housing will ultimately impact economies in the united states, local and nationally, on the weakered side so i’m looking for the fed to look at a weaker economy in january 2006 and interest rates to be held at that point.

>> bernanke said today as far as the fed’s twin mandate is concerned, if you have one, you have the other, that low and stable prices help produce low and stable unemployment. do you agree?

>> that’s standard fed speak, standard central bank speak and i think that’s true. ultimately, low inflation promotes stronger growth. high inflation is destructive of economic growth as is deflation so a 2% target, which is what bernanke has suggested in the past, would be his goal, i think is the right number, the right level to promote steady, economic growth.

>> let’s talk about pimco. you talked earlier today about the mortgage market being attractive. we are seeing mortgage interest rates continue to rise. how long would you want to buy into that?

>> i’d want to buy them at a level that’s attractive relative to where i think the fed stops and if the fed stops at 4.25, the current mortgage market is 5.5 to 5.75% yields with a.a.a. type guarantees are attractive to me. they’re certainly more attractive than the standard treasury in the five- to 10-year camp and personal more attractive than cronts in the -- corporates in the b, aa area. corporates present the highest yield available.

>> we talked about waning enthusiasm from you for t.i.p.s. if ben bernanke is going to be a strong inflation fighter, you’re not going to want to buy them, are you?

>> t.i.p.s. have a break-even of 2.5%, that means if inflation is higher than 2.5%, you’re better on a t.i.p., if lower, better on a nominal treasury. that’s my standard going forward and probably the fed’s, too, in terms of a headline c.p.i. so one way or another, a t.i.p. is a 50-50 proposition relative to a nominal. if you’re looking to insure against higher inflation, it’s not a bad bet but we don’t overweight them at the moment in our portfolios.

>> thank you very much. lori, back to you.

>> thanks so much. coming up next, updates from the new york stock exchange and nasdaq market sites. stay with us.

Interview: Riversource Investments---Joy, David---Equity Strategist

>> news after the bell from agilent. let’s go toeb eb.

>> That's right, Lori. the company reports earnings after the bell. agilent fourth-quarter earnings per share, five cents, 38 cents per share on an adjusted better as analysts expected 11 cents.  37 cents. the company says it is remaining comfortable with its fiscal year 2006 forecast, also saying it will buy back up to $2.7 billion in shares, echoing what we’ve heard from intel and time warner, boosting share buybacks. agilent after the close saying it will buy back up to $2.7 billion of shares at prices between $32 and $37. keep in mind, shares up 37% so far this year. the company is the biggest maker of scientific testing equipment and keep in mind it has been exiting the chip-related business.

>> a flurry of reports including c.p.i., p.p.i. and retail sales are due tomorrow and wednesday. how’s the market setting up ahead of the data and will we see a year-end stock market rally? david joy with riversource investments joins us from boston with his outlook. welcome, david.

>> thank you.

>> let’s start with the economic data points. which reports will have the biggest impact on the market ?

>> i guess it’s going to be the core numbers for both c.p.i. and p.p.i. we’ve been lucky so far that we haven’t seen any spillover of the headline pressure into the core numbers and i think that’s generally what’s expected this time around. i would say, however, that i think the markets are a little bit vulnerable to the possibility of some bad news there. but that’s not our expectation. but it will keep the markets on edge until we get beyond them.

>> the economists are forecasting the p.p.i. and c.p.i. numbers that might suggest higher prices are passed along to the consumers. last week we had evidence of that can kimberly-clark and kraft announcing product price hikes. how will the market react if we see higher consumer prices?

>> i think it will depend on the level. let’s say, expectations are running roughly .2% at the core level for both p.p.i. and c.p.i. if we got .3%, i think it would be mostly overlooked. if it was higher than that, i think the markets would be a little unnerved because it would be the first signs it is starting to creep into the core level so there is a line of demarcation.

>> let’s talk about retail sales. the latest round were healthy. do you think consumers are used to higher gas prices and how will that impact the holiday season?

>> i’m not sure they are used to them. i think consumers are still buying―by and large expecting energy prices to come back down. they’ve been conditioned to that over the years and with the moderation we’ve seen in the last couple of weeks, i think there is a lingering expectation that prices will come back down. and they have, indeed, if you look at unleaded gasoline futures, down 30% this quarter. but i read a slightly unnerving report recently that particularly in used car lots, s.u.v.’s are once becoming the most popular vehicle of choice. so i’m not sure consumers are quite prepared for the higher prices ahead that we expect, particularly once the weather gets cold.

>> exactly. what kind of crunch on consumer discretionary spending will home heating bills create?

>> that’s the real question. i think if and when consumers become used to the idea that higher energy prices are, in fact, here to stay, that’s when we expect them to modify their behavior. we have consumer spending slowing down this quarter and in response to your earlier question, i think the holiday spending season is going to be ok, but modest and then as we get into the first half of next year, we have consumer spending falling even more than that so it looks as though, to us, the g.d.p. is going to come in below 3% in the first half of next year, all attributable to a slowing consumer sector. >> does any of this encourage the fed to slow down sooner rather than later?

>> i would guess clearly they’re going to raise rates in december. my guess is that they will raise them again in january. of course, this will be data-driven. if the data tells us the economy is slowing of its own volition, and they don’t need to go further, they’ll respond to that. but you also have, i think, the interesting dynamic of mr. bernanke taking over and wanting to establish his credibility to some extent so he may be predisposed to raise interest rates simply to send a message to the market , even if the data is coming in as it has so it’s an interesting time and i think we’re at a critical juncture for monetary hisicy and its implications on the consumer.

>> i’m curious for your outlook for the s&p 500 by the end of the year? >> it seems as though the market wants to go up. it has been clearly propelled by moderating energy prices and as a result, the fact that longer term interest rates have more or less plateaued around 4.6%. if we get good inflation numbers and we don’t get any negative surprises between now and then, i think we can hold on to these recent gains, maybe add a little bit from here but i’m not sure i see a real catalyst to the upside.

>> david joy, riversource investments, thanks for joining us. stay tuned as “after the bell” continues.
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Listen Market briefing --- Lori (medium)
AIG --- Ellen (slow)
Interview: William Blair---Lane, Mark---Analyst

>> a.i.g., a 10-q report with the securities and exchange commission, headlines released right now. the company reporting third-quarter earnings per share of 65 cents. 68 cents on an adjusted basis. the company saying its assets at september 30 were $843 billion. the company saying that the third-quarter net income number includes net catastrophe-related losses of 60 cents a share, equalling $1.75 billion. the company says fourth-quarter losses from hurricane rita will include costs of $400 million. in after-hours’ trading, the shares down .3%. keep in mind, we have the information coming out right now but it was last week a.i.g. said it would restate earnings for a second time to fix errors in derivatives and income tax filings. at that time, a.i.g. said net income for the quarter would be about $1.7 billion because of $1.6 billion in costs from hurricanes katrina and rita as well as other catastrophes. as for those a.i.g. shares, keep in mind, through the close today, up 2.9% so far this year. the company, it has ousted its chief executive, hank greenberg and pledged to resolve a securities fraud suit by new york attorney general eliot spitzer. recapping headlines, third-quarter adjusted net income coming in at 68 cents a share. sending back to you.

>> thank you very much. we want to continue our analysis of a.i.g.’s numbers out after the bell with mark lane with william blair and company. hi, there, mark. can you hear me?
>> i can.

>> let me get your reaction to the numbers.

>> the details are still coming out. what we’ve been able to tell so far is just top-line numbers at this time, including, within their general insurance business, which is their property casualty operations and premium growth, there, seems a little bit light of expectations, probably due to continued competitive conditions within the commercial property casualty market although, given all the recent record catastrophe events in the past civil weeks, i’m not sure the market ‘s too focused on what happened in the third quarter. we weren’t look for surprises this quarter. the company held an analysts and investors meeting at the end of september, reannouncing the bottom-line number last week showing results were in line to slightly ahead of expectations on an underlying basis so we’ll be focused on quality, top-line growth in property casualty, want to see the foreign life business continue to gain momentum. they’ve had problems in the domestic life business, some as a result of the regulatory fallout so we want to see if those results bounce back after issues in the first half.

>> how critically are you looking at the catastrophe-related loss of 60 cents a share. if you were to strip that out in the bottom line third quarter, what do the results tell you about a.i.g.’s performance, really, amid the scandals and restatement and what-not?

>> the catastrophe losses overall are very, very manageable and very manageable for a company with the size of a.i.g. if we adjust for the catastrophe losses, the underlying numbers that were preannounced last week seem to be in line, if not better than underlying expectations and really there’s only been a few smaller businesses that have been impacted by the regulatory investigations. the domestic life business, we’ve seen issues with production there. also in of the more credit sensitive businesses, including the institutional fixed annuity business as well as derivatives business but the total of those businesses contribute less than 5% of earnings so earnings have actually been quite strong year to date and we have not seen any material impact on a.i.g.’s bottom-line results from the regulatory investigation.

>> we’ll have to leave it there, mark lane from william blair and company. thank you. breaking news, now, target corporation, second largest u.s. discount retailer, said november comparable store sales may fall below its forecast of 4% to 6%. let’s check shares in extended trading, target shares down 4.1%, trading at $56. the company says sales for the period will be below our planned range based on data for the first two weeks of november. that word from target in a recorded call today. we’ll have more on the story as it develops. in the meantime, deals and potential deals on this monday. knight-ridder will consider a sale and strategic alternative. the publisher hired goldman sachs to help evaluate strategic options and koch industries will purchase georgia-pacific for $13.2 billion in cash. the deal catapults koch industries to the largest closely held company in the united states. bloomberg’s brett gehrig is ahead with the georgia-pacific story. also, host marriott will buy 38 properties from starwood hotels worldwide for $4 billion. the stock at the close, shares of host marriott down 4.5%. the settling numbers as the market closed -- more, now, on koch industry’s deal to buy georgia-pacific for $13.2 billion plus debt. the transaction would be the biggest ever for koch. brett gehrig has the details.

>> chief executive officer charles koch is taking over a business threatened knee rising energy costs and rising lumber prices. international paper and smurfit are trying to cope by selling mills or assets. g.p.’s c.e.o. has spent the past five years transforming the company into one that relies mainly on consumer tissues. charles koch thinks he can squeeze more profit out of that business. he wrote a letter to georgia-pacific workers saying he reinvests 90% of earnings back into businesses to fuel growth. georgia-pacific competes with procter & gamble and kimberly-clark in the tissue business and is biggest plywood maker in north america and third largest maker of boxes. claudia shank with j.p. morganchase says the deal signals that private equity interest in the paper and forest products sector is alive and well. koch has annual revenue of more than $60 billion. in addition to assuming $7.8 billion in debt, koch is paying a 39% premium for g.p.’s shares. that kind of valuation could spark consolidation in the industry.

>> always when you have a deal in an industry, people begin to look around at the other players in the industry, it helps their stock. whether there will be another deal or not remains to be seen but whenever you have some consolidation, it makes people think about whether they should be part of that trend.

>> if the deal is completed, georgia-pacific will be able to focus on long-term profit growth rather than quarterly results. lori?

>> thank you. wal-mart posted its smallest profit gain in more than four years because hurricanes shut stores and climbing energy prices limited consumer spending. coldstream capital management chief investment officer said sales are holding up but earnings are not doing so well, because profit was cut by $40 million in expenses for hurricanes katrina and rita and wilma, which closed 10 stores. shoppers spurned unnecessary spending and stocked up on low-margin essential items such as groceries, which helped boost sales. third-quarter net income increased almost 4% to 57 cents a share from 54 cents a year earlier, meeting the average analyst estimates. revenue in the quarter rose 10%. u.s. same-store sales rose 3.8%.

>> it was good news. it was the smallest profit growth but a lot of that was baked in and i think people actually investors thought it would be far worse than it turned out. you had a lot of things going on with wal-mart, sales started slowing at the end of august. you had the hurricane and a little bit of inflation bubbling up, high energy prices.

>> chief executive h. lee scott is adding more fashionable apparel and upgrading stores as wal-mart loses customers to target. with a new line of clothing for 25 to 40-year-old women, wal-mart is reaching out to shoppers who avoid buying clothes from them. it’s added more expensive items including $1,000 toshiba notebook computers and flat-screen televisions. some question that strategy.

>> that can be risky. this company owns the low-income price point or the entry level price point. they sell more dry dog food than anybody.

>> wal-mart shares have fallen 7% this year compared with a 12% gain for target, the second largest u.s. discount retailer. of 26 analysts tracked by bloomberg, 15 recommend buying wal-mart shares, 10 suggest holding and one says sell. still ahead, third-quarter earnings season is coming to an end. we’ll get an outlook for 2006 with chief market strategist at river forest investment.

Interview: Miller Tabak---Boockvar, Peter---Equity Strategist

>> stocks are having akedgood week, fueling hopes for a strong year-end rally. peter boockvar with miller tabak is joining us live to tell us why he thinks investors should be cautious on stocks heading into 2006. market sentiment shifted with the start of this month. many are dawlg for a fourth-quarter rally but you’re a little cautious. tell me why, fundamentally?

>> i respect the seasonality of november-december where 65% of novembers are up and almost 75% of decembers are up so with that in hand, you still have to focus on the fundamentals. you can’t buy just because the market typically goes up because september is typically a down month and we were up this year. we have to look towards how the beginning of next year going to be. how will the fed rate hikes play out? the economy has weathered it so far, but we’re seeing cracks in the housing market and that, i think, is the main determinant on where the economy and the stock market will go next year.

>> so you’re not more encouraged by the pull back in oil prices this week, the drop in bond yields?

>> well, the drop in oil certainly is a positive but even at $70 a barrel of oil, even at $3 a gallon at the pump, the u.s. economy weathered that, it proved that it weathered that. but the big basis of the entire economic recovery over the last couple of years has been low interest rates feeding a credit explosion. so i’m more concerned about the impact that higher interest rates will have on the housing market . its impact on cash-outs that consumers have taken advantage of more so than higher energy prices and i think that’s what people should worry about.

>> interest rates have been low for one of the longest periods in recent history, historically.

>> right and that’s helped create the dependency on credit and long-term interest rates have remains relatively low but it’s begun to respond to the rise in short-term interest rates.

>> do you see a housing bubble?

>> i think the question is, there is excesses in certain areas. but you don’t need a decline in the housing market to have an impact. if prices just stabilize, that will have an impact and even if prices don’t go down, as long as rates continue to head higher, individuals will be taking less money out of their homes.

>> you sound a little speculative, like, do you really see a softening or bursting with the housing market ?

>> i see a dramatic decrease in the amount of money people will take out of their homes. that has been the key thing in buffering the individual against higher energy prices.

>> let’s switch gears and look toward next week. many investors are talking about the inflation data with consumer prices and producer prices. you must be expecting those numbers to be inflationary?

>> it will be important. the headline number may come in a little bit because of the decline in energy. the key is at the consumer level, are companies able to pass on the price pressures. the fed will not necessarily respond to one c.p.i. or one p.p.i. because they see the trend in inflation, they’re trying to stop the inflationary pressures from becoming too rampant and showing up in consumer prices so with the volatility and long-term interest rates right now, it’s going to be huge for the market .

>> since you are skeptical about the market , where would you advise investors to invest right now? how would you make money in this market .

>> i believe in the long-term story, the basic material commodity long-term bull market . even in the last couple of day, copper is reaching new highs even with the decline in energy so i would focus on basic commodities but on pull backs. if there were pull backs, then i would look at consumer nondurables which would provide a defense against a decline in the economy next year but i would stay away from consumer discretionary, financials and technology.

>> let me ask you whether or not you think gold is in a good place.

>> i’m very bullish on gold also not because i think the world is falling apart. i think there is a supply-demand story with gold also. for 20 years, these companies have been underigating and the demand out of india and china will be enough on the margin to create an upward tick in gold prices and i think the distect, gold staying strong even with the strength in the dollar being at a high against the euro is testament to the bull market that gold is in and will continue on the up side.

>> i want to ask you about microsoft, cisco, evolving into value stocks. what do you think of this evolution?

>> it’s typical for companies of these size. the law of large numbers take over for these guys and i think they will do shareholders a service by continuing the strategy they’ve employed, which is buying back more stock and paying a dividend. i expect cisco to initiate one at some point.

>> thank you very much, peter boockvar with miller tabak joining us. professional hockey is back after last year’s disaster when the season was cancelled. the nhl is winning fans all over again. details in “money & sports.”
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Listen Market briefing --- Lori (medium)
Interview: Greece---alogoskoufis, george---Greek Minister of Economy and Fin

“after the bell,” i’m lori rothman. recapping the day on wall street, all three major averages closed higher with the dow up 45 points -- indexes led higher by banks, energy stocks and crude oil lower today. things are looking up in greece. gross domestic product rose more than expected in the third quarter, part of it had to do with the olympic games in august, since government and business spending accelerated. joining us with a closer look at the state of the greece economy is george alogoskoufis, finance minister of greece, joining us live from the new york stock exchange where he rang the closing bell. welcome.

>> thank you very much for having me.

>> it’s our pleasure. the greek statistics agency today announced that greek g.d.p. grew at an annual pace of 3.7%, better than most economists expected. what’s driving your growth?

>> i think a lot of it is driven by the private sector now because we are in the post-olympic year and public investment has been reduced but private investment is doing very well. private consumption is doing well. experts and tourism, of course. and tourism did very well this year on the back of the successful olympic games last year.

>> when you say private investment, can you give me more detail?

>> in housing, there is a lot of private investment going on and also business investment. the greek government has embarked on a three-year program of cutting corporate taxes and this has helped corporations step up their investments.

>> to what extent will these investments offset the gains you had leading up to the olympics?

>> some of it has do with the olympics but the olympics are over now so essentially we are looking at other sectors. we are looking at, as i said, private housing and corporate investment in various sectors which are related to tourism mainly.

>> right now, your full-year growth target is 3.6% with today’s figure coming in higher, again, 3.7%. will you upgrade that figure?

>> no. our forecast for the whole year is 3.6% and we have a slightly higher estimate for 2006, we expect growth to go up to 3.8%. but, of course, for next year, we have to wait and see.

>> with the growing european economy, let me ask you, do you have concerns as we do in the u.s., of rising inflation?

>> there is concern with rising inflation throughout europe and greece has had higher inflation than the euro zone average so there are concerns about inflation but the greek economy has been doing very well partly also on the basis of very high growth in the region, in the balkans, in southeastern europe in general, economists are emerging and have very high growth rates and very good growth potential and this certainly helps greece.

>> do you believe the e.c.b. should raise its benchmark?

>> well, i cannot tell. i hope they exercise caution but of course it’s up to them to decide what is the best course for interest rates.

>> if they do indeed decide to raise interest rates, do you have an outlook?

>> there is a worry throughout the european union and the euro zone that this may make the recovery slower or less robust than it would have been otherwise but forinous greece, rising interest rates are mainly a concern because we have a relatively high public debt to g.d.p. ratio and this will affect our servicing the debt.

>> the bird flu pandemic is a threat to the global economy but greece is taking a proactive approach. can you tell me about that?

>> we are very vigilant and we take all measures to make sure that there will be no spread out of the disease but of course no matter how much you take, you take precautions, sometimes things may strike you. but we haven’t had any problems really so up to now, so far, so good, i would have to say.

>> i appreciate that. the euro, may i ask you a little bit about the currency valuations, down 13.7% versus the dollar in the last year. does that concern you?

>> well, i mean, the euro has been very, very strong in the last few years. no, we’re being weaker a little bit will not be very bad for the european economy. what worries us mostly is oil prices and global imbalances and those global imbalances are what will determine the cost of exchange rates in years to come.

>> a news item for you, greek civil servants went on a 24-hour strike yesterday demanding better wages and more benefits. you said the government will cut spending to reduce the budget deficit below 3% next year as required by the e.u. how will you manage to do both?

>> this is what we are trying to do, reduce the deficit in the runup to the olympics, the deficit went above 6% of g.d.p. we have to reduce it below 3% by 2006 and this requires some measures to cut expenditures and some of those measures provoke responses and strikes. i’m afraid we have to go the course and make sure that the deficit is below 3% by 2006.

>> we’ll have to leave it there. thank you very much for joining us. >> thank you very much.

>> that was george alogoskoufis, finance minister of greece. there’s still much more ahead tonight on “after the bell.” he appears to be in the minority, at least, if you look at the sentiment gauges. peter boockvar of miller tabak and company not looking for a big fourth-quarter rally and is concerned about next year. we’ll look at the potential market headwinds coming up.

Interview: Contravisory Research---Noonan, William---Analyst

>> welcome back to “after the bell.” the bond market was closed today in observance of veterans day. things return to normal monday but the currency market was up and running. the dollar took a pause, falling against the yen and euro. pound, also in the plus column. the dollar has been on a tear lately reaching a two-year high against the euro. most of that has to do with interest rate differentials. the fed continues to raise rates while the european central bank remains on hold. u.b.s. and goldman sachs raised their forecast for the dollar versus euro and yen and lehman brothers said investors should add to their bet that the dollar will rise against the european currency. the dollar has been gaining after federal reserve officials raised rates seven times while their european, japanese counterparts left rates unchanged. wal-mart, world’s largest retailer, reports earnings ahead of theble00onday. our next guest says if market technicals are an indication, the company will likely show improvement in the bottom line. he is bill noonan, strategist and analyst with contravisory research. wal-mart’s trading range is between $45 and $60 a share for the last five years or so. what signs are we looking for to break out of the doldrums?

>> we typically look at how the stock is performing relative to the market over time so we basically have been looking at resistance right now at around the $47 or $48 level for wal-mart. and it has broken above that, actually, interestingly, in the past week or so so coming out of a long-term decline by our definition has been negative for us for a couple of years. recent improvement suggests it could surprise to the upside on monday.

>> monday, we do have earnings. you told us you had been shorting wal-mart shares the last year and a half or so and have recently covered those shorts. today’s wal-mart’s relative strength index chart shows it will probably drop sooner rather than later. tell me about your current strategy with wal-mart?

>> it has had a little bit of a run here and could be a little overbought in the short term and technically the trend is still down, and it’s been down for a long time, a couple of years, a normal negative cycle for us. once you get to that point, you are look for improvement over successive months. wal-mart has been improving the last couple of months and as long as it stays over the 200-day moving average for us, i would be willing to look at it to buy.

>> if we look at a wal-mart chart dating back through january 2004, we see a succession of lower highs up until this week. is this a possible break of trend of lower highs?

>> absolutely. and while we don’t anticipate that, we’re basically chickens. we wait for evidence to accumulate. we want to see the breaks confirmed. which, to us, it’s very close to that right now. so, yeah, i think that is constructive, that it has broken above previous highs and we’ll see, i would expect that on monday it―or investors it appears are looking for a positive surprise, notwithstanding a short-term pullback, we might consider the stock in the months ahead.

>> wal-mart is reporting earnings ahead of the bell on monday. what aspect of the earnings release will move the stock?

>> we don’t look at the underlying fundamentals, our philosophy being that observing the relative price, the underlying fundamentals are reflected in the trends. recent performance suggests that those numbers, earnings, could surprise on the positive side.

>> could you be more details on that? could we get above $49, if we hit $50, would that be significant in terms of breaking resistance?

>> yes, absolutely. at $50, if we were to update our signal, at that point it would go from a down trend to an up trend. within an up trend, you might have various pullbacks along the way but once we do turn positive, we generally get 18 to 20 months of outperformance so if we turn positive on the stock which is $50 is possible, it’s the expectation that it could be an outperformer the next 12 to 24 months.

>> who is the better long-term trend, wal-mart or target?

>> if from our perspective, we’ve been recommending target. it’s still in an up trend and a stronger stock than wal-mart from a technical perspective and we would continue to favor target at this point. if wal-mart does improve fundamentally which would be reflected in relative price trends, maybe in the future we might look at wal-mart to add but at the moment target is the stronger of the two stocks.

>> you described retail overall as a divergent sector. could you explain that for me? >> definitely. the retail sector―i should say first of all that over the past six to nine months we’ve had negative change for the retail sector, consumer discretionaries specifically. having said that, within the retail space, there are opportunities to buy and potholes, too, so you have to be very selective in there. the target versus wal-mart is a case in point. in the same industry group we favor target over wal-mart and that could change.

>> thanks a lot. bill noonan, analyst with contravisory research. a fund manager met with more than 3,000 shareholders. we’ll tell you who it is.
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Listen Market briefing --- Lori (medium)
NYSE --- Deb (fast)
Oil price --- Bob (fast)
Nasdaq --- Robert (slow)

>> and a poll of analysts shows more than half of those surveyed predict prices will fall next week. back on wall street, the dow and s&p 500 were higher for the third week. general motors led automakers higher and basic materials stocks also had a good day. for more on today’s trading action, here’s a areort from deborah kostroun at the big board.

>> even with the bond market closed because of verns day, there was a rally but below average volume. general motors hit a 13-year low yesterday and was the worst performer this week in the dow jones industrial average but a turnaround in today’s session. looking at the gainers in the s&p 500, auto stocks at the top of the list along with materials and real estate. general motors, biggest leader on the dow jones industrial average on the day after united auto workers members voted to approve a plan to help g.m. trim healthcare costs. materials performing well after copper rising for the fourth straight week after inventories of the metal used in things like homes, cars and appliances, increasing less than forecast in china. china is the world’s largest buyer of copper. that helps out the material stocks, especially phelps dodge, helped out by the record high copper prices. monsanto boosting fiscal 2007 profit forecast, helping out monsanto in the materials index. the philadelphia gold and silver index as we are talking about copper, looking at gold, up almost 3%, gold rising for the fifth straight day on signs of increased demand for gold as an alternative currency and helping many of those stocks. as we’re talking about commodities, looking at crude oil, for the week, it was down 5%. in friday’s session, closing below $58 a barrel. gasoline for the week down 8% and the energy stocks, the worst performers this week of the 24 industry groups in the s&p 500, it was down 4%, but what we did see in friday’s session, the energy stocks have been down most of the week but you saw many of the oil services up on the day. so closing out the week on an upnote. i’m deborah kostroun at the new york stock exchange.

>> thank you. transportation stocks powered the nasdaq higher for a fourth straight week. robert gray has details on the nasdaq trading from the market site in times square.

>> -- we’ll get to that in a moment. first, the drop in oil prices helped boost the market but there were other catalysts and bob bowden has the story.

>> it was a week where, if oil prices were the dog, stock prices looked like the tail. looking at the oil price moves this week, crude prices down every day except tuesday. if you look at the s&p 500 index, it’s a mirror image, up every day except tuesday, the one day oil rose. that’s the day-to-day view with the inverse correlation every day this week. crude oil overall down 5% and oil stocks moving down in tandem. seven of the worse―worst 10 all in the oil sector. foreign investors showing renewed interest in the u.s., whether measured by dollar strength as the euro feld to a―fell to a two-year low against the resurgent dollar yesterday, the euro down $1.16 on thursday. the euro, by contrast, worth as much as $1.35 as recently as january. another indication of foreign investor interest, treasuries. 10-year yields fell as foreign investors bought a record amount of 10-year notes in yesterday’s auction. stocks reacted to third-quarter earnings reports. stuart freeman is chief equity strategist with a.g. edwards and attributed the rally in stocks to lower oil prices and third-quarter corporate profits.

>> the numbers in the third quarter, 64% of them were better than expected and we’re just about through earnings season and i think analysts are liking what they’re hearing about fourth quarter and next year and i think all those things are allowing the valuations, which are very attractive in the market , allowing investors to buy these stocks here.

>> turning to tech for a moment, while some stocks fell this week, some tech stocks fell like cisco systems after reporting revenue last quarter slightly below analysts’ estimates. down over 2% on the week. overall, tech stocks rallied, in particular, chip stocks, large cap names like intel and applied materials, weeks with better than 4% gains for beth of those games and freescale semiconductor hitting an all-time high today.

>> as promised, let’s check with the nasdaq and robert gray.

>> lori, energy prices helping boost stocks again on friday. the nasdaq rising for the ninth day of the past 11 sessions, closing above the 2200 level for the first time since august 3. august 3, the nasdaq touching 4 1/2-year highs. for the week, the nasdaq up 1.5%. the nasdaq 100 also rising on the session, as well, and rising to its highest level since january of 2002. volume was below average as it was veterans day on friday. the bond market was closed. we did see advancers outpacing decliners in the session. in friday’s trading, we saw the transports rising, nasdaq transportation index, to another record during the session. the internet stocks also rising, in fact, reaching their highest level since february 15 of 2001 for that goldman sachs internet index and the biotech index pacing gains, as well. the biotech index up some 10% from the october 12 lows. transports helping lead the gains on the week, including internets and biotech stocks higher for the week, as well. dell was rising during friday’s session after reporting earnings thursday after the close, said they were going to buy back at least $1.7 billion worth of their own shares and see fourth-quarter earnings as much as 42 cents a share, matching the average estimate. the prior week, dell disappointed investors saying they would not meet their own revenue forecast for the second straight quarter and shares falling two weeks ahead of the report so giving back some of the losses in friday’s session. other movers include portalplayer, maker of components for apple. gilead sciences rated new buy at deutsche bank and microsoft at its highest level since late august. at the nasdaq, i’m robert gray.

>> thank you. new developments at six flags, the theme park company urging shareholders to reject an offer by daniel snyder to boost its stake in six flags. snyder is offering $6.50 a share to triple his stake in the company to about 35%. management says snyder is trying to take control of six flags without paying full value. the stock was little changed. shares of wal-mart are near a three-month high. we’ll find out if investors should sell the rally or hold on for a while. we’ll be right back.

Interview: Fund manager with Independence Investments

>> major benchmark indicesgating the day higher. investors are gaining more confidence about a fourth-quarter rally on strong earnings reports and data showing economic strength. joining us to talk about whether the market is poised to rally is john forelli, fund manager with independence investments. welcome. earlier, you told us you expect to see stocks trading in a range through the end of the year but a big part of today’s rally is that investors are thinking, hey, maybe we’ll see a rally. what’s your take on the move?

>> today’s moves are positive. people focused on positive economic growth and earnings from companies. on the other hand, interest rates will continue to be ratcheted up by the fed and will be a pullback to keep us in a range.

>> where do you expect to see the s&p by year’s end?

>> we think plus or minus 5% around where we have been the last few weeks.

>> what about earnings season? we had goods reports today, especially from time warner. did anything from the overall last couple of weeks surprise you?
>> as much as anything it surprised me that, one, the hurricanes didn’t hurt people as badly in the third quarter as we might have expected. and there were not as many warnings about fourth-quarter earnings using the hurricanes as an excuse. so all in all, we think it was a pretty positive earnings season.

>> and as far as market headwinds, do you see anything besides inflation and rising rates?

>> it’s really the inflation outlook is really the key. the bond market will be the best indicators to investors’ expectations about future interest rates. if the bond market continues to sell off as it did today a little bit, it will be hard to see the multiple expansion we’ll need to propel the market forward in the coming months.

>> any analysts we haven’t seen yet?

>> i don’t think so. i think most of the news is good, the earnings news is good, the g.d.p. news is good, employment is positive. inflation would probably be the catalyst that we want to see as that investors really getting confidence that inflation isn’t picking up. >> how would you describe current inflationary pressures?

>> i think we’re in an inflation scare right now, people looking at the numbers closely, looking for excuses as to why they think inflation is going up rather than down. eventually, we think the bulls will win out in the sense that we do not think inflation will be an issue but we think it might take about two or three months for investors to realize that.

>> energy, commodity prices down by and large this last month? could this be indicative that perhaps inflation’s peaked?

>> i think so. i think that’s one of the first things that will get investors believing that inflation is not a big issue, seeing oil prices going down and realizing that consumers are going to have extra money to spend for christmas presents.

>> we have the october jobs report coming out tomorrow. what if it comes in weaker than expected?

>> i think in a sense that could be a good sign, that the economy is slowing. one of the things that’s going to need to get this market going is for us to see that the economy is slowing down a little bit so that people get confidence that inflation is slowing down, the bond market will start rallying and the fed will stop raising rates and we’ll be off to the races for the market .

>> you told us earlier you’re defensive. you like classic noncyclicals, beverages and healthcare stocks. anything more to add to that?

>> we’re in a typical defensive slowdown so we think large cap might do better. they have lagged so far this year. you might see people going into financial stocks less interest rate sensitive but in general, we think short term we’re in a defensive market . we think once we’re through the trading range period, you want exposure to industrials and cyclicals again.

>> what’s your time frame there?

>> three months plus.

>> ok. you say you’re cautious about consumer spending stocks. usual christmas shopping whoas, we have retail sales tomorrow?

>> we think they’ve been fierce in september about retail sales. we think october sales have come back nicely. the indications of the last two weeks of october were strong are for retailers. we expect once the stocks trade up, peopleville thanksgiving blues about the consumer and people will corp.y about consumer spending for the christmas season.

>> you’re cautious on homebuilders, some home building stocks have pulled back ahead of the housing market but maybe we’ve seen a softening in housing. are you still cautious on home building and what’s your time frame there?

>> sure. we think in short term we’re cautious on homebuilders because people expect interest rates to go up and investors are fearful that home prices are starting to level off as far as pricing goes. we actually think the stocks are very cheap. if you look out to a six- to 12-month time frame, we would own homebuilders today but now through the end of the year, we would be cautious on those stocks.

>> what about global opportunities? do you see anything there? infrastructure building in china?

>> the place where growth is right now if you look globally is in china and if you see companies with excellent growth prospects in china, we have g.d.p. growth rates there triple, quadruple from the rest of the world so we like chinese global infrastructure plays.

>> before i let you go, do you expect an extension of today’s rally?

>> not in the short term.

>> we’ll leave it there. john forelli, thank you very much for joining us this afternoon.

>> you’re welcome.

>> stay with us. interest rates rising, commodities falling. what is the link between the fed and commodities prices? we’ll ask managing principal at patronus capital in new york.

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Listen Market briefing --- Lori (medium)
Strong economic data --- Bob (fast)
October sales figure --- Suzanne (slow)

“after the bell.” i’m lori rothman. recapping the day on wall street. all three benchmark averages closed higher, steady climb, in fact, most of the day’s session with the dow closing at 10,472, a gain of almost 66 points. the s&p 500 gained 12 points at 1214 and the nasdaq rises 30 points to close at 2144. u.s. treasuries were lower for a third day in four on anticipation that economic data later this week will show enough strength in the economy to support future rate increases. now, bob bowden has more. bob?

>> thank you. the bond market weakness continues, pushing the yields ever higher. we begin with showing a six-month chart of the 10-year treasury yield showing how the right side of the chart, the last- two months, pushing up on the right side with yields going from 4.04% to over 4.6%. turn to the two-year, a similar trend although not as much because the yield curve has become less steep but the last two months you see what’s happened there. the yields going from 3.78% around the beginning of september to what the close is today, 4.41%. the main reason cited by investors, fed aggressiveness. we have this comment from the bond manager with prudential investment manager in newark who said, “the fed is tightening and will continue on a path of measured increases.” a similar sentiment from the other side of the world in tokyo said, “as long as the fed keeps on raising interest rates, that will put pressure on yields to move higher.” also spooking investors, the uncertainty of what economic data out later this week might say about economic strength. tomorrow, the i.s.m. services index number. economists expect it will rise for the month of october reading and friday, the labor department’s payroll number will be out. economists expecting 115,000 workers were added to the economy in october. another factor hurting bonds, more supply. the treasury department said today it will auction $44 billion of new notes next week to finance the budget deficit, dumping supply on to the market . specifically, next week’s sale will offer $18 billion of threerns and―three-year notss. the white line, there, that’s today’s yield curve. the difference in yield between the two-year and 10-year, the white line’s steepness, that difference fell to only 13 basis points today, the narrowest or least steep since august 30. by comparison, the yellow line shares a yield curve of a year ago when the three-month t-bill yielded less than 2%. the bond market will be watching tomorrow when alan greenspan will speak before the joint economic committee on capitol hill at 10:00 a.m. eastern time, perhaps his last public appearance. back to you.

>> thank you, bob. american eagle just reported same-store sales for october. those rose more than 22% which is much stronger than the 10% analysts were forecasting. most u.s. retailers will report october sales figures tomorrow and suzanne o’halloran has the story on what analysts are expecting and what it may mean for the crucial holiday shopping season. suzanne?

>> forecasts for october have been rising as the temperatures got colder for much of the country. a drop in gasoline prices and late demand for halloween items helped. sales may rise 4%, the prediction of the international council of shopping centers. we’ve heard from wal-mart about october. on saturday, the world’s largest retailer said sales would probably rise 4.3%. food sales outpacing general merchandise. gas sales also helping. stands outs may include specialty retailers according to analysts surveyed. sales at abercrombie & fitch may rise 15% and american eagle sales jumped and is 6% higher in after hours. analysts say discount chains should do well. sales at costco may rise 8%, b.j.’s 5% and target more than 4%. analysts at merrill lynch expect more modest gains from stores who serve more moderate to low-income customers. sales may rise 2% at dollar general and family dollar and nearly 4% at kohl’s. despite higher energy prices, investor ed peters at panagora asset management says the holiday season should be a good one.

>> we like j.c. penney because we think consumers will not be tapped out because energy prices will fall back and gas prices have already fallen back. consumers will feel they have enough money for a good holiday season and we’ll see a good holiday season, as well.

>> although october numbers are important, the next three months, november through january, are the most critical. the holiday shopping season, the international council of shopping centers predicts total sales could rise as much as 3.5% and the group expects heavy discounting and, lori, an example of how nervous retailers are about the holiday season comes from wal-mart. they started their holiday ad campaign yesterday, the earliest ever and for the first time, they are calling on celebs such as garth brooks and queen latifah to entice shoppers into stores.

>> we’ve seen this pattern before, stocks go down most of october only to rally into the christmas holidays. john forelli of independence investments will tell us if that will happen this year and why he likes healthcare and beverage stocks.

Focus: Median salary

>> health and human services secretary michael leavitt is on capitol hill discussing details of the bush administration’s plan for combating avian flu.

>> we don’t know whether the h5n1 virus will be the spark that will set off a global pandemic. we do know that at some point in time a pandemic is likely to happen. history makes that very clear. there may be those, if h5n1 does not become the spark, that look back and say we overericked or there may be some who would say we cried wolf but this is about long-term pandemic readiness.

>> in an announcement at the national institute of health yesterday, president bush called for $7.1 billion in funds dedicated to flu vaccines, research and training for public health officials. a global flu epidemic may, are rise―arise if the virus circulating among birds transmits to a version transmitted to people. more than 121 people in asia have been infected with bird flu as a result of contact with the birds. chief executives at u.s. companies pocketed a 30% average pay increase last year. a survey by the corporate library revealed the median salary was $2.4 million in 2004. margaret popper has more on the story.

>> the corporate library, a corporate governance research organization, surveyed more than 1,800 companies and found median c.e.o. pay rose by 1/3 last year. c.e.o. pay rose faster than earnings and faster than the pay of average americans. jom chamber―john chambers at cisco led the list, getting the biggest raise in the survey because he went without pay in 2002 and 2003. he made money on options that bested. the survey notes cisco shareholder underperformed its―shares underperformed peers but company spokeswoman points out that cisco’s market cap has risen from $10 billion to more than $110 billion in the past decade. the second biggest raise went to rich fairbank who made almost 83,000% more. mac crawford got the third biggest raise, more than 4,000 percent. crawford got $70 million from exercising stock options. paul hodgson says options figure heavily in the top 10 pay increases.

>> many of the largest increases were driven by stock option profits with c.e.o.’s exercising stock options they’ve held for the last four or five years and these are left overs from sort of the prenew age in corporate governance and economicative compensation. however, i’m not predicting a slowdown yet.

>> that may surprise some given how much money the highest paid c.e.o.’s took home last year. yahoo’s c.e.o. socked away almost $231 million, more than any other s&p 500 c.e.o. unitedhealth group’s william mcguire got the second fattest paycheck, $125 million. the median base salary of c.e.o.’s rose 4.1% among the survey group, that’s double the pace of u.s. wages overall. back to you, lori.

>> thank you, margaret. someone somewhere had a big pay day, too. they are sharing it with yale university school of music. the school says an anonymous donor has given it
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Listen Focus: Holiday shopping season

>> welcome back. imclone lost a fifth of its market value today after competitor to the company’s cancer drug erbitux showed promise in laboratory testing. imclone tried to downplay the news saying just 9% of erbitux sales would be lost to the new drug. take a look at a six-month chart of imclone to see how steep today’s drop is. the stock fell to a 1 1/2-year low. the erbitux competitor made by amgen and abgenix who say it showed promise in late stage testing. abgenix shares were up 38% today. october sales came in better than analysts expected for many of the major u.s. retailers. suzanne o’halloran has more on the numbers and what it means for the holiday shopping season. suzanne?

>> thanks very much, lori. october was the best month for u.s. retailers since june. a drop in gas prices combined with colder weather boosted demand for clothes. that helped lift sales by 4.4% according to the international council of shopping centers. that’s better than a year ago and better than what analysts were predicting.

>> the analysts had expectations too low. everyone was too busy planning the consumer’s funeral to realize they were out spending and not dead. and beyond that you had the fact that there have been a lot more home refinancings. than anyone expected. and gas prices have dropped significantly.

>> wal-mart, target, jcpenney and nordstrom, all beat expectations. retailers catering to teens such as abercrombie, have blowout numbers, up 31%. ditto for american eagle sales. up 17%. saks and costco posted strong results. retail investors were pleased today. they were looking for a report like this. shares of jcpenney, abercrombie and nordstrom all gaining 2%. jcpenney also listed its third quarter profit forecast eight cents. october was not a good month for everyone, however. federated, owner of bloogedails and macy’s, said―of bloomingdale’s and macy’s, said sales dropped. sales at dollartree and dollar general were weak as well.

>> some of the discounters that are not great discounters, some of the dollar type stores, are especially weak. they don’t have quite the allure that like target and wal-mart would have. in terms of selection.

>> and it may seem early but many retailers have already started rolling out the holiday items. wal-mart has already unveiled its holiday campaign. the earliest ever. sales this season, which represents a fifth of their annual sales are expected to rise by as much as 3.5%. and industry watchers say it should be a promotional one for consumers. lori, analysts say the retailers will have to work hard to get those sales numbers and inflation is the wild card. just today, fed chairman alan greenspan saying he’s even uncertain about where inflation is heading. back to you.

>> suzanne, thank you. wile we’re on the subject of retail, c.v.s. had a big day. shares of the drugstore chain were up 8%. after c.v.s. reassured investors with its forecast. the stock had taken a hit over the last month or so. c.v.s. expects revenue to rise 22 -- 20% to 22% this year and some of that top-line growth will come from its existing locations. same store sales could rise as much as 8%. thanks to stronger demand for generic drugs. c.v.s. also maintained its 2005 earnings estimates. analysts have a median forecast calling for profits of $1.37 a share. so if c.v.s. makes those numbers, profit would rise 33% from last year. talk about crashing in and the rise in oil prices, we’ll tell you about one stock market that rose nearly 4% today. the world’s biggest mover. and plus world and national news. all when we come back.

Interview: Professor os economics at Princeton University
The Chief economist with the Clinton Administration labor department


>> do you think that today’s economic data, which of course is better than expected, nonfarm productivity or services, restrained labor costs, basically evidence of a healthy economy, but do you believe under this interest rate tightening cycle that we can continue absorbing higher costs?

>> i suspect so. i think part of the reason for increasing interest rates is the fed still believes―is worried about an overheated economy and the risk of inflation.

>> where do you see the risk of inflation at this point?

>> well, i think there is a great deal of uncertainty. there is always uncertainty going forward but particularly now with some of the shots we have with the hurricanes and the oil shocks that we’ve seen, i suspect oil prices will continue to fall back to their historical levels. but one doesn’t know.

>> how much of a threat as you told our producer earlier runaway inflation?

>> well, it’s a risk. and i think it’s a risk that the fed is very worried about ask that’s why it’s very likely it will continue on as a trajectory of raising interest rates. i think it’s less of a risk than was the case in the 1970’s. because i think labor unions are much weaker. labor unions represent less than 10% of the private work force. so i think the risk of a wage price spiral is a lot lower than it was in the 1970’s. but there are costs that could continue to grow and put pressure on inflation.

>> i would like to ask you more about energy. in greenspan’s comments this morning he expressed concern about the vulnerability of natural gas prices. because of uncertain winter demands. yet he also said he was encouraged by recent declines in crude oil since katrina highs. how concerned should we be about energy continuing to be a driving force behind inflation?

>> well, i think it certainly is a risk when you look at how much prices have gone up over the last couple of years. quite dramatic. also we don’t foe what kind of weather we will have this winter which is part of the risk which i think the chairman mentioned. on the other hand the historical pattern has been when oil prices they tend to fall back down again. price increases don’t seem to be persistent. so i would think that the most likely scenario is that oil prices fall back down to the 50’s, to―closer to the historical range rather than continuing to explode but one doesn’t know.

>> quickly previewing tomorrow’s october jobs report, what if we do get evidence of wage pressures?

>> well, i suspect that one report will not matter very much. you have to have a pattern of reports. given the productivity numbers that came out today, pressure from the labor market i think is probably not going to be the main source of inflation. even if we do see strong wage growth. which is not what i would expect. even if we do see it, you’re not going to see panic about inflation.

>> ok. so we should accept a tame jobs report by way of market reaction?

>> that’s what i would guess
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Listen NYSE --- Deb (fast)
Earnings report --- Ellen (slow)

>> thanks a lot, lori. everyone really kind of talking about merck today. but can you imagine that it was not the biggest gainer of the 24 industry groups in the s&p 500? actually what we did see, semiconductors, the biggest gainers and also energy stocks. gaining for a fifth straight day. in fact, four of the past five days, energy stocks up 7.6%. however, remember, they had a really tough october. down almost 10%. tech hardware also performing well. but to be fair the pharmaceuticals weren’t too far behind. the semiconductors, energy and tech hardware. and merck the biggest gainer in the dow jones industrial average. what we saw with volume, four times the average daily volume. we typically trade about nine million shares in merck today, trading 36 million shares. and you have to remember a lot of that volume coming in the moments right after that verdict did come out. but all today day―but all day today, a lot of interest in merck. oil and natural gas coming off their three-month lows that we saw yesterday. and natural gas was up, crude oil gaining over $2 a barrel. $61.78 a barrel. and even with the increase that we saw in the gasoline and also crude oil, we even saw the transports hitting that record high. we talked about the transports yesterday. hitting the record high. seeing that once again in today’s session. you saw it from the shippers, the railers and also many of the trucking companies. retail, also performing well because you saw many of the october sales from the retailers performing better than expected. some notables, it was jcpenney, nordstrom, also dillard’s and wal-mart. all saying that they had better-than-expected sales, laggards on the day, telecom, media and also real estate. back to you in the studio, lori.

>> we have earnings reports that crossed after the bell. san minutae is one of them.  sanmina is one of them. expedia is another. for details we check in with ellen braitman.

>> let’s kick off with sanmina. the contract manufacturer. what sanmina is reporting for its fourth quarter if you exclude items is six cents a share. analysts had been looking for a nickel. those shares are up 6.6% in the extended trade. sales also coming in a little stronger than had been -- $2.77 billion. analysts had been looking for $2.73 billion. as you just saw on the chart, those shares are down 57% so far this year. we also have gemstar out. the company saying that if you exclude items, it was about break even for the quarter. the third quarter that it is reporting. analysts had been looking for a loss of five cents a share. as you see, year to date those shares have also slumped, down 56%. and we’ve got some numbers from starbucks in terms of october net revenue. boosted 21% and the comparable store sales, closely watched, up 7%. so news after the bell from several companies. and with that, sending it back over―let me get―forgot expedia. third quarter earnings, 35 cents a share. analysts had been looking for 31 cents. so four cents better. and those shares are up 8.2% in the extended trade. back over to you.

>> all right, ellen. thanks a lot for that. alan greenspan testified before congress and bonds took another hit. when we come back, we will break down greenspan’s speech and get some clues about the future of the economy. and we will also talk about the nasdaq. it’s risen to a one-month high. “bloomberg’s after the bell” continues.

Interview: Head of equities at Moubt Eden Investment

>> stocks rose for the fourth day in the last five on the back of some positive economic data. worker productivity rose more than expected in the third quarter. and the service economy rose more than forecast last month. so setting up for a strong fourth quarter rally, richard slinn is the head of equities at moubt eden investment and joins us―at mount eden investment and joins us from san francisco with his market outlook. he helps oversee $500 million for the firm. welcome.

>> thank you.

>> so what is the driving force behind these recent gains?

>> well, remember, we were very oversold for the first couple of weeks of october. i think that was in part due to the concern that q-3 earnings were going to disappoint. people were looking at the hurricanes, at higher energy prices and became somewhat apprehensive that earnings results were going to be below plan. in the second half of that month, and so far in november, we’ve actually seen that q-3 earnings have been by and large pretty good. and that q-4 guidance, although soft, has not been as bad as some people feared.

>> what is your outlook for a fourth quarter rally, are we setting up for one?

>> we think stocks will trade higher in the fourth quarter. it may not be a big rally like last year’s but think stocks will trade higher from here.

>> energy stocks led the market . do you see energy stocks continuing to be a market driver? energy stocks right now are driven by two things. one is certainly the price of crude. and stock prices for the major oil companies are discounting much cheaper crude than we’re seeing prevailing today. the other driver is more sentiment. and that doesn’t look like it will change. the very tight supply-demand equation in the u.s. and around the world for energy means that the risks will be toward higher prices. not toward oversupply. and that means we think energy stocks will continue to do well with some volatility. over the next year or so.

>> let’s look at the other side of that. rising energy has been a driver of inflation. what’s your outlook on inflation?

>> well, inflation had been ticking up. q-3, c.p.i., the largest in 23 years. and that worried a lot of people including i think the chairman of the federal reserve, alan greenspan. and in his testimony today, once again he highlighted that he doesn’t think growth is a problem. he thinks that any impact from higher energy and the hurricanes will be temporary. he thinks inflation is the big uncertainty in the economy right now.

>> do you see the federal reserve raising interest rates too far, thinking inflation is more of a problem than it perhaps is?

>> you know, overshooting is a big worry of the equity market right now. a lot of stock people are looking at that. and over the last 30 years, there has been eight tightening cycles. and in five of them, the yield curve has inverted. and we’ve seen a recession. the fed usually doesn’t stop raising rates until they’ve seen flat retail sales contracting, manufacturing activity. none of which we’ve seen. and the economic data we got today was all pretty positive for the economy. one thing the market will look closely for, the stock market i should say, is signs in the next one or two federal reserve open market committee meetings that they’ve moved from this sense that they are being accommodative to a more neutral or balanced view of where interest rates are today.

>> i would like to pick up on the retailers. we’re coming into the all-important holiday sales season. judging from today’s overall solid retail sales numbers, are you more optimistic or pessimistic coming into this time?

>> you know, today’s retail sales figures i think took at that lot of people by surprise. the stocks acted really well. we in fact are slightly underweight many of the consumer discretionary names. not because we think in the short term data will get terrible but over the longer run we do think the consumer is on a little shaky ground in the terms of higher interest rates and high energy prices.

>> so then are you changing your―will you continue to be underweight in consumer discretionary?

>> we are. we tend to take a longer-term view. our investment horizon is usually multiyear. and we’re looking at a consumer sector that has done great over the last several years. that has been very profitable for investors. and we’re believing that its best days may perhaps be behind it in this cycle.

>> and if could you tell me what you like and what you might be overweight in.

>> unlike consumer discretionary, we are overweight consumer staples, particularly the ones exposed to international markets . to the rise of consumer activity in the less developed world. we are a little bit overweight in health care. we like that for both valuation reasons. today we’ve been talking is a lot about merck, of course. but there’s a lot of big pharmaceutical companies out there that are trading at very attractive prices. in what is a relatively speaking rapid growth sector. we are a little overweight in information technology. and we are still slightly overweight in energy.

>> all right. let me get you to give me your s&p outlook by the end of the year.

>> our s&p outlook for the end of the year, we think that this year will be net-net a mid to high single digit total return. and that could be perhaps 5% up from here. so a decent end to the year. we don’t expect that 2006 will be much different than that.

>> we’ll have to leave it there. thank you for joining us. richard slinn of mount eden investments with us this afternoon. and action certainly speaks louder than words. high energy prices were supposed to take a toll on consumers. but they kept on spending. more details when we return.
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Listen Interview: Analyst with Raymond James in New York

>> merck’s victory helped send other drug stocks higher including pfizer. which had its own pain killer controversy with celebrex and bextra. we’ve got more on merck’s vioxx verdict. what impact will the company’s victory have for future trials and for the future of merck? joining us is michael krensavage, analyst with raymond james in new york. he joins us in studio this afternoon. welcome.

>> thanks for having me.

>> let me first ask you what your outlook is for merck’s liability.

>> my belief with merck all along has been that the street is vastly overstating merck’s liability. because it plans to fight every case. and if you look at some other litigation where the defendants just caved and did a settlement, it enticed a lot of plaintiffs. so merck is going to fight every case. and also it’s going to be very difficult for the plaintiffs to prove that merck actually caused or that vioxx actually caused a heart attack. because heart attacks are relatively common events.

>> ok. how much of merck’s legal liability do you believe is already priced into the stock?

>> well, i think there’s probably 30 to -- $30 billion to $35 billion priced into merck’s stock. but i would guess that the ultimate liability is much less than that.

>> so how much more are they facing?

>> well, they have more than 6,000 lawsuits. so there will be an awful lot  there will be a lot more trials. and they’re going to have to fight one by one and we’ll see what ultimately happens. i will tell you if you look at other companies that have fought cases one by one like the tobacco companies, it typically takes years before they pay any money. and i think that will be the case with merck as well.

>> does today’s verdict set a precedent? some were saying earlier that perhaps merck might face fewer lawsuits now.

>> i think the verdict today probably will discourage plaintiffs from pursuing the company. so i think it is a very significant victory for merck.

>> now, let me ask you, are you sticking by your strong buy rating?

>> yes, i. i believe that merck is one of the best values in pharmaceuticals. and i believe that the street is really wrong about the vioxx liabilities. i don’t think they’re going to be to the significance of $30 billion. you look at this company, and its cash flow, it’s generating about $5 billion a year of cash flow. after capital spending. which is about 10% of its market value. so that’s an extremely rich cash flow. and it’s yielding about 5%. more than 5% for its dividends.

>> and it will hold on to that dividend level?

>> i think the dividend is very safe.

>> what about merck’s pipeline? that’s come under significant pressure. or criticism i guess.

>> that’s true. merck certainly has been among the drug companies that have had a drought in their pipelines. so it’s pretty much universal in the pharmaceutical industry, merck does have a few products, a few vaccines. the most important one is called gardacil, a vaccine or drug for cervical cancer that could be filed at the f.d.a. this month or next month and could come to the market in the middle of next year.

>> getting back to today’s news on merck with the verdict, would you agree or disagree that today’s verdict carries more weight with shareholders than the first case which merck lost?

>> i think so. if you look at the stock price, it didn’t rally as much as it declined in august when they lost the texas case. however, it really does validate what merck is saying. that merck did the right thing. and i think that’s very, very important for the company’s shareholders.

>> and what about the fact that merck’s next case, right after thanksgiving, is going to be held in federal court now? some analysts were looking at that and saying this might actually make it easier for them to state or explain their case.

>> that is correct. typically defendants prefer the federal court system. over the states. and in this case, coming up later this month, i think it’s also a weak case where the plaintiff took vioxx for only a month or so. and there really is no significant evidence indicating that vioxx causes heart attacks if you take it for less than 18 months. i think many of these cases are just going to be thrown out.

>> but if merck has―if the question in the particular case is does vioxx cause heart attack or is it linked to a heart attack versus did merck do a decent job informing the doctors of the risk, isn’t there a difference in the difficulties merck is facing?

>> yes, i think that in each case first the plaintiff would need to prove that vioxx caused the heart attack. and then you would look at merck’s responsibility, did it do the right thing? did it suppress negative data on vioxx? first you have to establish that vioxx caused a heart attack. and that will be difficult to do. because people face so many different risks. obesity. and hypertension. and these factors can all contribute to a heart attack.

>> we’ll have to leave it there. thank you so much for joining us.

>> thanks.

>> that’s michael krensavage, an analyst with raymond james. a lot more ahead on “bloomberg’s after the bell.” so stay with us.

Interview: Alan Greenspan
>> the nasdaq closed the day with a gain of five points. semiconductor stocks paced those gains but oracle was notably weak. robert gray is standing by at the nasdaq marketsite in times square with details.

>> heavy volume of 2.3 billion shares, well above average volume today. the nasdaq gapping up to levels we haven’t seen in a month. you can see the yellow line, the 2150 level, a point of resistance going back several months according to head of nasdaq trading at piper jaffray today, saying the chart looked spectacular with the breakout, the key, does that resistance become support? he said there was momentum chasing in semiconductors. semis helping lead the rally in the past several sessions, up 2% on today alone. s.o.x. up 6% this week, as well. you see the transports continuing to help lead the rally, rising to a new record high for this index here on the nasdaq and biotechs helping lead the way, up 2% in today’s session. oracle shares falling on very heavy volume, above 100 million shares for oracle. shares down better than 2% as people familiar with the matter say chief financial officer may be leaving the company after just five months on the job. they say he’s clashed with top executives at the company and it would mean oracle would be looking for their fourth c.f.o. in two years. qualcomm shares surging 9% today, rising on their forecast, reporting earnings after the close last night. apple computer at a new high today. american technology research saying new video ipods are selling well and boosting estimates. playboy and penthouse may make adult movies for portable videos such as ipod. google rising to a record today as they made thousands of public domain books accessible to the world online today. we had strength in retail, as well, but that’s all the time we have.

>> thank you. treasury yields at their highest level since march after fed chairman alan greenspan said the u.s. economy is poised for continued growth. bloomberg’s bob bowden jones me with more on chairman greenspan’s testimony.

>> 79-year-old alan greenspan took to capitol hill today and said hurricanes katrina and rita will produce inflationary effects not yet felt.

>> with the recovery from the first storm barely underway, hurricane rita hit causing additional destruction especially to the energy production and distribution systems in the gulf. these events are likely to exert a drag on employment and production in the near term and to add to the upward pressure on the general price level.

>> greenspan then said the economy is on solid footing, which by itself would be enough to stoke inflation fears and push bond prices lower but then he specifically addressed inflation uncertainty.

>> the united states economy remains favorable. structural productivity continues to grow at a firm pace and rebuilding activity building the hurricanes should boost real g.d.p. growth for a while. more uncertainty, however, surrounds the outlook for inflation.

>> that’s perhaps one of the key lines right there. later in the q&a portion, the fed chairman was asked about high energy prices.

>> so long as the federal reserve is perceived to be holding inflation expectations in check, which means holding core inflation in check, the pass-through of energy costs into the underlying inflation rate will be subdued.

>> but, still, the lines about inflation and uncertainty drove bond prices lower for the third consecutive session with the 10-year dunn 9/32 -- down 9/32. lori rothman, back to you.

>> thank you. it is a balancing act, the fed wants the economy to grow but at the same time keep inflation in check. policymakers have raised rates at a measured pace. but do central bankers run the risk of slowing things down too much? we’ll talk about that and the fed post-greenspan.

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Listen Market briefing --- Lori (slow)
Merck --- Tom (slow)
NYSE --- Deb (fast)
Hartford ---Ellen (slow)

the stock jumped on the news, rising nearly 4%. first, let’s get you to the closing numbers today. the dow jones industrial average up nearly 50 points to close at 10,522 -- back to our top story. shares of merck rose nearly 4% after a jury reject good liability for merck in a heart attack suffered by a 66-year-old postal worker from idaho.

>> after losing its first trial in texas over vioxx, merck rebounded in a new jersey courtroom with a win, the jury finding merck not liable on all counts that it hid the risks of vioxx from the heart attack victim and his doctors. frederick mike humeston accused the company of failing to warn doctors of the heart attack risk of taking the pain drug. the jury rejected the argument, deciding that merck did warn doctors and that vioxx did not cause humeston’s heart attack. the jury rejected the allegation that merck had committed consumer fraud. one juror said merck’s lawyers successfully pointed out the many infirmities afflicting humeston, who earned two purple hearts in vietnam.

>> here’s a man that has been medicated for over 20 years where his medical records are plummeted with many, many issues, many health things, stress in his life at that particular time in my opinion was over the top.

>> outside the courthouse, humeston said he was disappointed by the verdict.

>> i feel that the system is worked, that’s part of the reason why i went to vietnam. i feel that i had great counsel. and i wish to impart to other plaintiffs do, not let this deter you because vioxx is a bad product.

>> also in the courthouse steps, merck’s lawyers who said the verdict vindicates their courtroom strategy.

>> this confirms our strategy to continue vigorously defending the company based on the science, that’s what we’re going to be doing going forward.

>> some legal experts say today’s victory shows merck can explain its science clearly to a jury and argue that short-term use of vioxx does not increase risks in the same way using the drug for 18 months or more does. investors and analysts betting the win could discourage more lawsuits from short-term vioxx users as well as use the pressure on merck to settle the nearly 6,400 cases already filed.

>> well, you just heard the legal side of things for merck. now we’ll find out what today’s victory means for investors. merck still faces billions of dollars in potential liabilities. analyst with raymond james will tell us why he thinks the risk is already built into the stock. the bullish case for merck coming up in the next half hour. stick around for that. another medical device maker, legal issues to contend with. new york attorney general eliot spitzer filed a lawsuit against guidant, claiming guidant misled doctors about the heart defibrillator. guidant is accused of failing to tell doctors about a mechanical problem which could have led to fatal consequences if the device was implanted. in a statement, spitzer goes on to say that by concealing the information it is the essence of fraud. the suit comes a day after johnson & johnson tuesday may abandon its $25.4 billion acquisition of guidant because the company refused to accept revised terms after recalling faulty defibrillators in june. johnson & johnson down .1% to close at $61.20. shares of sfbc international plunged today in the wake of a bloomberg news report about problems in the u.s. drug testing industry. sfbc operates the largest clinical trial center in north america located in miami.

>> sfbc stock fell more than 26%, the biggest decline since july 2002. a report in the december edition of “bloomberg markets “ magazine says some individuals participating in clinical trials at sfbc broke rules without the company’s knowledge and that the industry is poorly regulated and suffers from conflicts of interest. sfbc’s chairman called bloomberg’s story a “severe distortion of our work” and said the company complies with all regulatory standards. sfbc today said third-quarter profit jumped 74%, beating analysts’ expectations. even though merck was the biggest gainer in the dow jones industrial average, other industry groups led the s&p 500 today. deborah kostroun has more on what moved markets in this report.

>> merck was the headline story on the day and it did lead the dow jones industrial average higher. but if you look at what led the 24 industry groups in the s&p 500 higher on the day, you saw semiconductors at the top of the list and energy stocks rising for a fifth straight day. in fact, over the past five days, that index is up 7.6%, just in the last five trading days but you have to remember that index at a very rough october. energy stocks were down about 10% in the month. tech hardware performing well. pharmaceuticals not too far behind as some of the biggest gainers in the s&p 500 on the day. obviously, led by merck and other drug stocks, as well. also, above-average volume in merck. four times the average daily volume that we saw in merck. merck generally trades at about nine million shares but what we saw in today’s session, about 36 million shares. with energy stocks higher, crude oil, natural gas and gasoline all higher on the day. in fact, oil and natural gas higher after hitting some three-month lows yesterday. crude oil up over $2 a barrel, closing at $61.78 a barrel. even with the gains we saw in crude, gasoline and natural gas, transports, once again, hitting a record high. we talked about the transports yesterday at a record high. once again, hitting that record high in today’s session and what you did see, a lot of the shippers, railroad and even trucking stocks all performing well. retail stocks also a big gainer in today’s session, that after october sales from retailers coming in better than expected. j.c. penney said october revenue increased 2.4% and the company also boosted its third-quarter profit forecast. nordstrom says always growth was up 6.4% last month. also, dillard’s and wal-mart saying sales last month about better than expected. laggards on the day, telecom, media and real estate. i’m deborah kostroun at the new york stock exchange for bloomberg news.

>> thank you. the clock is ticking on the refco auction. companies have until 4:00 p.m. new york time friday to submit bids for the bankrupt futures broker. money managers expect the bidding will drive the price to about $1.2 billion. at least six companies have said they will submit bids. some of the names still involved include interactive brokers group, man group and apollo management. we have earnings reports that have crossed after the bell. hartford financial is one of them. for all the details, we check in with stocks editor ellen braitman.

>> lori, hartford said third-quarter operating earnings were $1.82, higher than analysts were expecting. but the company said that for the year it forecasts operating income as high as $7.60 a share, shy of the previous forecast earnings would reach $7.85. hart hartford says the figure accounts for storms and catastrophe and fourth-quarter catastrophe losses will be up to $170 million on a pre-tax basis. those shares up 17% so far this year. one thing surging in extended trade, shares of expedia. the online travel agency spun off by barry diller in august, said third-quarter profit rose 41%, stronger than analysts were gating for. shares up―looking for. shares up 11% at this hour. the surge in earnings helped by strong hotel and airline bookings. sanmina, contract manufacturer, shows shares up 8.5% in extended trade. earnings coming out at six cents a share excluding items. analysts were looking for five cents. sales also coming in stronger than expected at $2.77 billion. those shares down 57% so far this year. a quick look at fluor, biggest publicly traded construction and engineering company, up 3.4%. net income, $1.51. the company boosting its forecast for 2005 saying it will earn as much as $2.60 a share on average. analysts were expecting only $1.93. back to you.

>> thank you. alan greenspan testified before congress and bonds took another hit. when we come back, we’ll break down greenspan’s speech and get clues about the future of the economy. we’ll also talk about the nasdaq, it’s risen to a one-month high.