朗读练习作业

Sell stocks after gains of 10% to 20%
Interview: Laszlo Birinyi --- President --- Birinyi

> laszlo birinyi says investors must be prepared to sell stocks after gains of 15% to 20%. the president of birinyi and associates and one of the most watched investors on wall street explained his thinking to brian sullivan on why it's a different market now.

>> what you're seeing the last couple of years is a compression of moves, and people ask us about how long we hold stocks, and my answer in this market is 15% to 20%. and if you can get those kind of gains, don't be scared to take them. most people shy away because of taxes, but i think the market where information is instantaneous and people act so quickly, that you've got to recognize that the the landscape has changed. >

> if you got to go in and out of stocks relatively quickly, does that mean that you are negative or bearish on the market as a whole? for the next year or so.

>> no, no, i think, again, you have to play a different game, if you will, under these conditions than you did in the 1990's where corrections were few and far between. this is a very choppy market , but there are opportunities to make money, significant amounts of money, but you've got to recognize that the whole environment is different than it was 10, 15 years ago.

>> all right. let's talk about a few of those opportunities as you see them. yesterday on our program, we chatted with michael price, pretty well known, pretty widely followed investor, invests mostly all of his own money. he said ebay, good company, brian. he thinks it's way overvalued. you like the stock. tell us why it's not overvalued.

>> there's a real disconnect, you think, between the market and the outside world. john cane's famous economist, actually a very good investor, once suggested that the reality of the stock market is that it's not based on fundamentals, it's based on psychology. and right now, the psychology continues to be very positive on ebay, and people have made a lot of money. but we've always got to be aware the psychology can change. but the important thing is not what people are saying, what's they're doing, and they've been buying ebay.

>> have they been buying it a lot. in fact, ebay shares have gone from 30 to 90 in just about a year's time. doesn't that kind of gain scare you off?

>> you know, again, i think it's kinds of a market where there are so few opportunities so that everybody jumps on the few opportunities that does exist, and that's why you have some of these stocks move 10%, 20% in a week or so. it seems to be that most stocks are doing nothing, but stocks can doing something, and they're doing a lot of that something.

>> so do you like ebay for the fundamentals? it sounds like you like it more for the momentum.

>> absolutely. the fundamentals, i've never personally found it that enticing business. but there's a new book out called "the wisdom of the crowd," and the crowd has liked ebay for a long time, and i respect the opinion of the majority.

>> well, the crowd has not necessarily like amazon.com. in fact, amazon shares went from about 15 to 60, but since then, come back down to about 40. so you can't argue amazon is a momentum play here. why do you like it?

>> you go back to the first quarter this year, and we did the same thing. i traded under 40, went back over 50, and did the same thing last quarter. so i still think that the pattern will repeat itself, take a little longer this time. but amazon is one of those unique situations. and then make sure everybody understands it. i'm not sure i do. but the crowd doesn't always act that quickly. but i think amazon is a significant long-term hold. >> well, again, this may not be a fundamental story for you, because the way amazon used to grow in the market , it would announce, we're getting into a new business, sell electric accident, garden tools, equipment, etc. the company is maturing, so dupe care about the long-term growth rate, laszlo? do you care about the p/e rash yo, or is this purely another momentum call behind amazon?

>> it's not so much momentum. you know, we have a tool called the announcement of order flow, and this is the old ticker tape reading, and what we tried to do is be ahead of the curve. i don't wait for the fundamentals. i wait-i look at what the market is saying, and the market has been saying from amazon, it's a company that people are buying, again, for a longer term situation. this is a took that belongs in most people's growth portfolio.

>> all right, folks, just one house keeping note on that interview, laszlo better than why i owns the stocks he recommended, including google, ebay and amazon. as they say, he eats his own cooking. u.a.l. is seeking $500 million more in annual cost cuts to help it exit bankruptcy and attract new financing. the parent company of united airlines earlier this month announced plans to trim expenses by $655 million. u.a.l. hasn't identified where this additional half billion in cost cuts will come from. it does-it says, however, that the cuts are required in part by rising fuel costs and "an unforgiving pricing environment." united filed for bankruptcy protection in december of 2002 and was forced to revamp its business plan after the government refused to guarantee a loss. well, ford cutting costs and cutting out of the formula one racing. that and many more topics in our "money and sports" segment, next.  
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Listen Market briefing --- Matt (slow)
Tokyo bureau --- Gene (fast)
>> welcome back to the "world financial report." i am matt nesto. well, it was semis and energy, folks, that pushed the s&p 500 higher here today. the dow also up .4%. similar gains for the s&p 500. the s&p 500, for the record, six consecutive weeks of gains with a total market return of 6% over that period of time. you see the intraday chart, pretty much similar, kinds of a slow open, a gap up, and a sideways trend to the finish for all three benchmark equity indexes. the nasdaq finishing just about .3% of a higher today. if you look at the bond market , bond prices were weaker. we saw the biggest one-day jump in treasury yields yesterday, so a bit of a giveback today. this following consumer confidence numbers that were little changed month on month. for september, suggesting to bond traders that prices fell. as you see the 10, five, and two all moving in the same direction. 2.47% on a two-year note. well, for a preview of what's going to be moving markets in the asia pacific region next week, gene otani has this report from our tokyo bureau.

>> in the new week here in asia pacific region, more than 153 million indonesians vote monday to choose a president. the current president is expected to be beaten. yudhoyono is seen tougher on terrorism in a country where three car bombs have killed people. japan's trade surplus probably narrowed in august as world demand for semiconductors and flat panel displays fell to seasonally adjusted surplus probably shrank to 878 billion from 974 billion yen in july. figures are out wednesday. new zealand's economy probably expanded .9% in the second quarter, buoyed by home building. the central bank has raised rates five times this year to stop the economy from overheating. g.d.p. rose 2.3% in the first quarter. second quarter figures are released friday. australia's biggest retailer reports four-year earnings. wednesday, coles started selling cheap gas to boost supermarket sales. hong kong's biggest developer by market reports full-year earnings on thursday. first half profit fell 22%. number three developer henderson land is also out with earnings. its first half profit climbed 12%. in japan's financial markets , they're closed monday and thursday for national holidays. indonesian markets are shut monday for the election. that's what's expected in the new week here ahead in the asia pacific region. now back to you.

>> all right, we move on. apache is one of the biggest oil producers in the gulf of mexico. the company says it's restarting production in the wake of hurricane ivan.

>> except for a few platforms that will that we'll still have down in the eastern part of the gulf, we should be about 75% back on by this-by the end of this weekend.

>> now, he also says the producer has been getting stronger over the years and that, along with gains in energy prices, this is why apache raised dividend by a third.

>> we've grown our production over the last four years. we've doubled our production. and in fact, our debt cap is about 24%. and with the current prices, we think it's a fair thing to do to increase our dividend for our shareholders. on the flip side, we're still going to spend about $3.5 billion this year in activities, both in acquisitions and drilling wells.

>> quick market check, 2.3% higher for the day, for friday, and up over 18% so far this year. well, tektronix shares were up today. this after the company said its first quarter profit and revenue at the tsetse quiment maker was better than wall street expected. chief executive richard wills says everything went right.

>> our sales were up 24% on the bookings front. we had a very good balance from around the world, about 1/3 of the business came from the united states, but japan came on very, very strong, about 23% or 24% of our bookings. chin a, korea, that whole pacific area also came on strong on the bookings side. europe came in about 20% with growth.

>> he also says that the company had better balance across industries.

>> we had good orders from the communication, computer, and semiconductor industries, but also we've been stronger in the consumer electronics areas. it's been one of our strengths last six months, as well as government spending on technology.

>> tektronix shares up about 5% today and up about 7% for the year. consumer confidence in the u.s. unexpectedly fell for a second month in september. the university of michigan mesh's preliminary survey shows the index down .10% from the august reading. the survey found that consumers were worrying a bit about weak job growth and high gasoline prices. the stalling confidence may signal a leveling off in spending. it signals to the bond market that the confidence has not gven back any. on tuesday, alan greenspan and other federal reserve officials gathered to discuss interest rates and decide on whether to raise the benchmark interest rate for the third time this year. policy makers are expected to raise by a quarter of a point. that brings us up to-would bring us up to 1.75% based on the median forecasts of economists done by bloomberg, also forecasting that increased oil remains the wild card, though, for inflation, as well as the economy, and will likely dominate the talks. chairman greenspanless the economy has regained some traction. well, some have called him the reigning world champion of stock pickers. that's a pretty good title. well, if you want to hear what laszlo birinyi has to say, and where he's putting his money to work and how he's doing it, you'll want to stand by. >

Interview: Juli Lajdziak --- General Manager --- Saturn
>> auto industry sales is forecast to rise 2% to 3% this year and next. well, is that going to help its saturn division, where total sales have dropped 22% this year? i asked jill lajdziak, general manager of saturn, about the outlook for her division.

>> our august numbers were really driven by our decision quite some time ago to stop producing the l series. so if you’re looking at year-over-year numbers, that was certainly a driver, as well as our proactive decision to exit the fleet business for now. if you actually look at our year-over-year numbers, we are up in our sport utility and holding our own in the small car. we certainly are going to continue to remain very focused on sales momentum as we go into the fourth quarter.

>> you offer five cars right now. it seems in the eyes of many that it’s taken a while for you to get new models to market . why so slow?

>> well, we have a good fortune to be in a small car market with our ion. we also have a sport utility, the vue, that is doing exceptionally well in the marketplace. and this fall, we’ll be introducing a crossover sport van, the relay. this will be our first entry into a vehicle for our lineup that will be more than five passengers, which we’re very excited to be in. then we’re going to grow our portfolio again. in 2006, we’ll be entering the roadster segment, the midster segment, as well as the mid utility segment, as well.

>> but conspicuously not the hybrid segment, because i would think that would play right into your core marketplace.

>> we certainly―certainly it does, when you think about saturn, you think about things like safety, you think about things like environmentally friendly as well. we will be introducing in 2006 a system into the vue for the 2006 model year.

>> i also understand that you’re going to keep your prices―your back to basics, one-price approach for all of 2005. are you concerned about that at all?

>> well, we’re going to remain very focused on making sure that we continue to deliver the marketplace value in our product offerings. we think that’s the right thing for our brand. we will remain very competitive in the segments in which we compete, but we’re also going to make sure that we stay very focused on our no-hassle, no-haggle environment. the consumers tell us that they love about the saturn brand. certainly that has helped us lead to industry leading position of great customer handling.

>> well, you definitely have a loyal customer base. you have the website and fan clubs, and you don’t always see those. but the fact remains that you sold about 150,000 to 300,000 cars this year.

>> we are on track this year, and we’ll be ramping in and just launching the crossover sport van. we’ll feel the impact of that vehicle as we go into calendar year 2005. and then, of course, in doubling the size of our portfolio as we move into 2006, bringing on three additional models in three new segments for us.

>> can we expect some excitement like we saw with your friends over at pontiac giving away 200, almost 300 cars on the oprah show in terms of trying to generate something, enthusiasm or something new, and attention to saturn?

>> certainly everybody within the g.m. family is excited for pontiac and the success that they’ve had with their recent promotion. we are also going to remain very focused on our heritage of our brand. in the consumers brand, this brand has always been about trust and great customer handling. our marketing efforts will continue to capitalize that as we complement it with our growing portfolio in refinements starting here in 2005, as well as we go into calendar year 2006. we’ll all look for ways to cut through the clutter differently in the marketplace from a media standpoint, and we will all be trying different ideas to reach the consumer and to tell our story.

>> we only have about 30 seconds left. one of the things i saw, as you’re coming one new colors, like dragonfly green and summer blue and chili pepper red, but is that going to be enough?

>> we’ll continue to enhance our products. we’ve got a lot of refinement in our products for 2005. as i said, our small car takes on a new front end, lots of refinement to the interior. contractsover sport van again this fall. the colors and the name, that’s just colors, it’s all about how the vehicle looks, how the vehicle is in the interior, and about the performance of the vehicle and the enhancements that we’ve made to the small car and, of course, having the opportunity to jump into a new segment is very exciting for us.

>> of course, the parent company of saturn is none other than general motors, and their shares are down 21% in 2004. cooper tire and rubber selling its automotive parts business to goldman sachs and cypress group for almost $1.2 billion. cooper expects china to be its fastest growing market . part of the proceeds will be used to build a tire factory there. the nation’s second biggest tire maker will also eliminate 2/3 of its workforce, or 15,000 jobs. the unit cooper standard automotive accounted for almost half of its revenue last year. well, the world’s number two maker of cell phone chips says demand is faltering, and that story and a wrap of the day’s trading at the nasdaq when we return.

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Listen Market briefing --- Matt (slow)
Ford --- Bob (fast)
NYSE --- Julie (slow)
>> welcome to “world financial report.” i’m matt nesto. we said it―ford shares higher today after the company raised that third quarter earnings forecast by a dime, 10 cents a share. bob bowdon is here with details of the ford story. bob?

>> thank you, matt. if you’re expecting that better car and truck sales compeled that higher forecast from ford, you’d be incorrect. but first, the headline numbers. ford now forecasting third quarter earnings in a range between 10 and 15 cents a share, and that entire range is above the old forecast of break even to five cents a share. the company cited two reasons, continued strong performance in financial services and cost cutting in the automotive sector. you will not find increased sales among the reasons. ford said it would eliminate -- also said it would eliminate over 1,100 jobs and cut production at an unprofitable jaguar plant in coventry, england. it will ship the final operations done in that plant now to another jaguar plant in the u.k. the company said last month it would cut jaguar production by 15,000 units this year to trim inventories of unsold cars, particularly in the u.s., its largest market . jaguar sales in the u.s. this year through august have declined 12% compared to last year. together, the pretax costs of cutting the u.k. jobs and pulling out of formula one racing will be $450 million, according to ford, $375 million of those charges will occur in 2004. daniel poole is the vice president of equity research at national city bank.

>> if you look at this company over the past couple of years, they’ve done a great job with the cost cuts. the fact that they’re a little bit ahead of schedule this quarter, you know, is not a big surprise. we’re glad to see it. but i think to get really excited about ford, you’d like to see some better sales numbers.

>> he’d like to see better sales numbers, but that was not part of today’s news. on friday’s trade, we see ford shares up almost 2%, closing at $14.22 a share. checking other auto-related stocks, g.m. mostly unchanged, daimlerchrysler up .4%. and a couple of auto parts makers rallied, as well. johnson controls and delphi up 1.2% on friday. matt nesto, back to you.

>> bob, thanks very much. appreciate it. and, you know, we’re also going to continue to take a look at ford shares as only i do it, as we say here. so let’s take a look, and we’ll use the bloomberg terminal. i putting to a chart that’s about 15 years. interestingly, sunday, the the 19th of september, would mark the exact 15th anniversary when ford made its first initial offer to buy 15% of jaguar. so 15 years of ford we’re looking at. over that 15-year period, they’ve really reinvented themselves to become the multibranded global company that we know today. you’re looking at 15 years of, well, less than market performance. some would say lackluster. the stock finishing today below at $14.22, so below $15 a share, and it was adjusted around $10 a share back at that point in the fall. also just worth pointing out about jaguar in 1989, it bought astin martin, 75% of that two years before. but then in 1999, it bought volvo. then in 2000, it bought land rover. of those premium brands, only volvo has been the one to consently make the profits for ford. so if we take a look at the market reaction today, bob had mentioned that at one point 9% increase in ford, you can see kind of a mixed, really not any notable move for the auto group here today. i think it had a broader effect on the markets as a whole. if we look at the broader global auto industry, it’s worth looking at some of the year to dathe numbers here, because you see fleetwood, they make campers and r.v., pugh goat among the outperformers year to date. if we look at the bottom of the list, some names you might here, at least our u.s.a. audience know them well, and that is going to be g.m. and ford, they’re close to the bottom of the pack, only being underperformed by shares of volkswagen. and last but not least, if you compare the regional indexes, the regional auto indexes, u.s. versus europe versus asia over a 12-month period of time, what you see is the white line, the u.s. automakers, the best performer, up almost 16% in 12 months. and it’s pretty close between the orange line, that’s the european, the bloomberg european auto index, and the yellow line, which is the asia pac auto index, and they’re up 5% and 6.5% respectively over a 12-month period of time. so that’s my little automotive soliloquy, and that’s where we leave it. well, ford’s optimistic forecast and an analyst bullish call on g.e. earnings fueled that stock rally today on a friday. let’s check it out. four cents higher for the dow, similar gains for the s&p 500 in terms of percentages. and the nasdaq up about .3%, as up see. the volume, well, at 1.4 billion shares, better than we’ve seen for most of this week at least. if you take a look at the volume over at the nasdaq, 1.6 billion shares there. and a quick check on some of the broader indexes, the composite up. amex little changed. russell down about a quarter of a point. and those 5,000 shares in the dow jones wilshire 5000 up .3%. speculation that the federal reserve will raise its benchmark rates next week is helping to cap demand for treasuries or pushing them down. 4.11% for a 10-year yield right now, the bond giving back there. there’s similar retreats in the price of the five-year. the yield there up at 3.33%. and the two at 2.47%. and if we take a look, are we doing bonds? ok. we’ll leave it there. well, the down and the s&p went in different directions this week. for more on today’s trading action and a look at the week that was, we have julie lieman with this report from the big board. law a a mixed week for stocks. the dow jones industrial average did finish the week lower by about .3%. the s&p 500 finished the week higher by .4%. by the way, that was the sixth straight weekly gain for the s&p. hasn’t had a streak like that since the nine weeks that ended january 23. the biggest gainer this week in terms of groups, energy stocks, up about 2.6% on the week as the price of oil gained. and on the down side, we had food and beverage stocks, down about 1.9%. also just wanted to note, in today’s session, we had quite a bit of volatility. we also had a late-day surge in volume. that’s all linked to quadruple witching, which is the expiration of four types of futures and options contract. we had the highest volume today since we had back on august 6. also, in today’s session, we had shares of general electric quite active after some comments by an analyst over at prudential saying that they’re attractive, the shares are attractive because they expect to return to double-digit earnings per share growth in 2005 compared to slowing growth in the economy. also, energy stocks gaining in today’s session, the biggest gainers in terms of groups, we had a number of stocks reaching record highs in today’s session. exxonmobil, apache, and occidental petroleum. also, earlier this week, we had thomson financial coming out with its earnings forecasts for these energy companies. they’re expected to grow 39% in the third quarter. that is versus 15% growth for s&p 500 companies generally. and finally, just wanted to note, texas instruments rising after it boosted its dividend for the first time in nine years and announced a $1 billion stock buyback. i’m julie hyman, bloomberg news, at the new york stock exchange.

>> all right, well, oil, another huge story today, surging almost $3, or 6.5% for the week, to a four-week high. that on concern that shutdowns caused by hurricane ivan will further reduce u.s. inventories. let’s take a look at the charts, if we will. you can see just about 4% higher for the day at $45.59. that’s about 6.5% higher than friday a week ago. prices are also almost 70% up over the past 12 months. and b.p. chief executive john browne says the era of cheap oil may have ended. he says the tension in the middle east and persisting growth in demand may make it unlikely that prices of the 90’s will ever return. let’s look at some other energy movers here today, 3.5% higher for gasoline futures, heating oil up 2.5%. and the big mover of the day, 8% higher, natural gas futures. deloitte and teach and ernings and young have dropped at least eight small u.s. audit clients in the past seven weeks. that’s raising the concern of the s.e.c.’s chief accounts. the big four firms say they’re overworked as they help their biggest and most profitable clients meet a november 15 deadline to improve financial reporting that’s required under the new sarbanes-oxley law. the s.e.c. is worried the you’d tords may be using the law as an excuse to abandon smaller jobs. no comment from those firms. saturn rolling out new models next year. will that help revive sales? we’re going to hear from the g.m. of saturn, next.

The economy has regained some traction

>> manufacturing accelerated last month, confirming federal reserve chairman alan greenspan's view that the economy has, quote, regained some traction. production at the nation's factories, mines, annuals was up .1% in august. that was, however, less than economists were looking for. they were looking for about half a percent rise. july's figure at the same time was revised higher. inventories, as you see there, up again .9% higher after a 1.1% increase in june. it was the biggest back-to-back gain in almost five years. the reason? fedex's chief economist jean long says that factory sales had been so strong, there is a genuine need for replenishing and rebuilding inventories. other signs of strength in manufacturing coming today from the state of new york. the federal bank of reserves -- or the federal bank of new york, rather,'s empire state manufacturing increased 28.3 in september. that was the biggest rise in 15 months. readings above zero indicate expansion. these gains in manufacturing and production send treasuries lower. check it out. 4.16% is the yield there. the bond down 11/32. on the shorter end of the yields, the two-year treasury down 3/32 at 2.47% there. the data is signs of a struggle economy and may indicate that the fed may raise rates when it meets next week. in fact, they may raise rates two more times this year. the dollar gained the most in more than a week against the euro and yen. after the numbers came out, you see the latest trades, you're buying less yen so the yen is back up again and the euro is trying to fight back and the pound unchanged. all three down against the dollar in new york trades. oil prices slip for the first time this week. crude oil futures finish the day, emphasis on "finish," down 1.8%, turning around 3% in the final 60 minutes. they had been up almost 2% intraday. opec says it will boost its output quotas for the third time this year, after past agreements failed to stop a surge in prices. oil futures had been higher earlier after a report from the u.s. government showed that supplies here, inventories plunge for the seventh straight week. also, of course, hurricane ivan, and probably most importantly a factor affecting oil today. the storms move through the gulf of mexico, forced companies to cut production. among the other energy movers today, all lower. gas, heating oil, natural gas. treasury secretary john snow spoke at a conference today in new york city on safeguardsing the u.s. financial system against potential terrorist attacks. bob bowdon attended that event and joins us now with the latest. bob?

>> thank you, matt. secretary snow came to thank the financial community for its progress in building technical redone den sis in computer and communication systems that would help keep markets functioning in the event of another terrorist attack. as an example of the progress, he cited the blackout from last summer, which he said provided a test of the american financial system that had not been possible in simulations.

>> the real test is due to markets stay open, can you go to our a.t.m. machine, trades your stock, can you trades your bonds, can you get the loan processed, can you make payments? and, by gosh, we saw that the financial system of the united states is awfully darn resilient.

>> secretary snow also discussed the economy with respect to the u.s. job picture. he expressed optimism about third quarter job growth and added that companies would be even more likely to hire if frivolous lawsuits were not driving up their health insurance costs.

>> one thing that's holding back job creation, of course, is frivolous lawsuits. it's driving up health care costs. and higher health care costs make employers more reluctant to hire because the employees are more expensive. legislation, important legislation is pending in the senate now. it's time to pass it.

>> on the matter of currencies, secretary snow also commented on the chinese won in an effort to get the chinese government to allow its currency to trades freely and no longer peg it to the dollar.

>> we're in continuous dialogue with the chinese on that subject. we're not satisfied with the pace of the forms on the currency. we want to see faster movement there.

>> finally on a day when august industrial production figures shows growth of .1% in july to an all-time high on that index overall, secretary snow expressed optimism about the manufacturing sector.

>> our manufacturing sector, to put it in perspective, is larger by about 50% than the entire economy of china. and is continuing to grow. and i spend a lot of time in our manufacturing states talking to people who run manufacturing enterprises. they're pretty confident. that's it. matt nesto, back to you.

>> interesting to point out on the i.p. index at an all-time high. good stuff. another police force has agreed to let its officers use stun guns. we're going to tell you where taizer international won the latest approval and taizer says there are more governments looking at adopting those weapons. that and more coming up.  
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Listen Market briefing --- Matt (slow)
Martha Stewart --- Alan (slow)
NYSE --- Julie (slow)
Coke beat --- Su (fast)
>> welcome to "world financial report." i'm matt nesto. we'll begin with martha stewart. she had a press conference today and says she wants to begin her prison term as soon as possible. she spoke to reporters at the manhattan offices of the company she founded. martha stewart living omni media. bloomberg's alan dodd frank was there for a tearful presentation and joins us now with details.

>> matt, martha stewart says she wants finality on her two-year, seven-month-long nightmare and says the only way to get closure quickly is to begin serving her five-month prison term. she told reporters her lawyers have asked the judge to send her to federal prison camp in danbury, right now.

>> the only way to reclaim my life and the quality of life for all those related to me, with certainty, now, is to serve my sentence, surrender to the authorities, so that i can quickly return as soon as possible to the life and the work that i love.

>> speaking at the offices of the company she took public five years ago, martha stewart living omni media, the 63-year-old stewart took note of the sacrifices that will be required of her.

>> i am very sad knowing that i will miss the holiday season, halloween, thanksgiving, christmas, new year's, always an opportunity to celebrate family, friends and religious traditions that mean so much to many of us. and i will miss all of my pets, my two beloved fun-loving dogs, my seven lively cats, my canaries, my horses and even my chickens.

>> the chairman says officials are heartened by stewart's move.

>> this is a difficult day. but there is some consolidation, consolation in knowing that her decision brings this matter much closer to the time when she and all of us can truly get back to business as usual.

>> the c.e.o. of martha stewart living omni media, sharon patrick, noted the company still has nearly $160 million in cash and she refused to put a price tag on the damage done to the company by stewart's legal woes.

>> martha really is the-i mean, you call her the diva of domesticity. there is a reason for that. martha is the gold standard of domestic art and that remains fully and completely in tact.

>> stewart says she hopes to begin the five months home confinement portion of her sentence at her mansion in bedford, new york next march in time for the planning season and she departed, she got a standing ovation from her staff.

>> thanks again for atending today's meeting and i'll see you next year. [applause] >> on the news, shares of stewart's company rose to as high as $12.50 before closing 12 cents higher than yesterday, matt.

>> nothing more to be said there. alan dodds frank, use've been on that story for months. thank you very much. let's give you the closing numbers on wall street today. stocks were down, bonds were down, the dollar was up. if you look at the dow, the s&p and the nasdaq, fay finished close to their worst level of the day. .8, .7 and we'll call it 1%, my friends, to the nasdaq. the volume, kind of light, 1.2 billion at the big board. over at the nasdaq, how did they do? 1.5, not too bad. better than average of late. stocks closed lower after a handful of companies cut their earnings forecast, notably coca-cola and julie hyman has a wrapup on today's trading board and has this report from the big board.

>> stocks closed near the lows of today's session by the close today. it was not necessarily a good sign for tomorrow's open. the session really characterized by two main factors, one a number of companies cutting earnings forecasts and, two, the declines that we were seeing in technology. let's start with those earnings forecasts. coca-cola coming out and saying second half earnings will be below analyst estimates and really we saw that effect throughout this industry. we saw some of their competitors. pepsico, for instance, pepsi bottling, cadbury schweppes and coca-cola enterprises all falling in today's session. and tribune, the publishing company, saying its third quarter earnings forecast was coming in below analyst estimates. they're seeing below estimates. so those shares taking a hit. they touched an earlier 52-week low, but did not close at that level. the semiconductors really leading the way downward. we saw xilinks coming out and saying second quarter sales will miss estimates. they led the way lower. teradyne, l.s.i. and national semiconductor also declining. technology hardware taking a big hit in today's session. goldman sachs downgrading that industry, based on the fact that they think profit growth will slow next year among tech hardware companies. e.m.c., hewlett-packard, lexmark and storage technology were the individual stocks that were downgraded by goldman. also in technology, celestica cutting its third quarter profit and sales forecast. it's seeing some customers cutting back on orders and their rival fell in today's session as well. i'm julie hyman, bloomberg news at the new york stock exchange.

>> well, more now on why coca-cola's sales are so slow. it can no longer meet its earlier profit forecasts. shares of the world's largest soft drink maker fell toll the lowest price in a year and a half. leaving the dow and s&p lower along the way. it's part of a bigger trend that the company has been facing as they're cutting their year-end outlook. su keenan is on the coke beat today and joins us now with details.

>> got a loft of attention here, matt. there are serious questions about where the company is going and how it is going to get there. that's the view of tom perco, president of bev mark and says the company's business model is outdated. new c.e.o. neville isdell who came out of retirement in june, says the company is seeing sluggish sales in north america and europe. fewer cases of soda are shipped to this area and rainy weather abroad is hurting demand. second half profit is between 77 and 82 cents a share, roughly 20 cents below analyst expectation of 99 cents a share according to a survey by thomson financial. and coca-cola shares down 90 % year to date, fell to their lowest price in a year and a half. dave cliggott says coke is part of a bigger trend. he is predicting 0% earnings growth for the s&p 500 companies and says the market is overly optimistic.

>> we have a different view. we might be late in this earnings cycle. in fact, we think we're very much maybe in the first inning of the earnings disappointment so that i think there's a real tug-of-war in the market right now, saying the bad news is behind us, just wait, we're going to reaccelerate. earnings are going to look great.

>> well, while analysts expect profit growth to decelerate in the third quarter, the director of research at market street takes a more bearish view.

>> we're in the position where the market is rolling over in terms of earnings momentum, that we've seen the peak, that rising earnings will no longer be supportive of p/e multiple. as a p/e multiple of 20 on the s&p, for example, that makes it rich.

>> now in the case of coca-cola, merrill lynch analyst christine farcas cut her rating from neutral to buy saying challenges at the company may take longer than expected to resolve.

>> all right, su, thanks very much. well, speaking of long standing challenges, democrats have agreed to a republican proposal limiting a trust fund for asbestos victims to $140 billion. limiting it to $140 billion. u.s. senate majority leader tom daschle accepted the compromise, which he hopes will break the deadlock that has stalled the legislation in congress. the democrats previously insisted the fund would be $145 billion. the plan would end lawsuits that have bankrupted more than 90 u.s. companies. asbestos-related shares such as u.s.g., owens-corning and mcdermott international were mixed today. owens-illinois as you see down .10%. u.s. treasury secretary john snow in new york today, ensuring executives at the nation's banks and brokerages and capital markets are prepared, should terrorists succeed at trying to attack america's financial system. we'll bring you that report next.

Interview: Terry Lund Grun --- Macy
The holiday shopping season

>> the head of federated department stores is optimistic about the holiday shopping season and federated is changing the names of 184 of its stores to macy's. suzy assaad spoke with terry lund grun about the outlook and name change.

>> we changed the name in atlanta to rich's, macy's 10 months ago and also in ohio and tennessee. and now we've had about a year in seattle and we've changed burdines in florida to burdines macy's. so we've had 18 months of the experience and have researched with the customer and the customered voted. we've had the best spring season that we've had in several years while we've had the name change going on. clearly there's a simplification in the name of macy's and we had this great asset we weren't using. why not.

>> it's certainly a brand that's well recognized across the country. we wanted to ask you here today, also, to give us insight as to what you're seeing in terms of the consumer, in terms of the upcoming trends over the next six months or so. we've been hearing a lot about how the consumer may pull back. we've been hearing terrible retail sales numbers across the sector in general, if not specifically you, but certainly it looks like there's a cyclical downtrend in retail sales ever since the second quarter. what are your comments on that?

>> first of all, we did have a very good spring season so in our case we broke out of the pack a little bit and felt good about our performance. third quarter is more sluggish. clearly, august was weaker than we expected and we know that there was a shift in the labor day period that threw us off a little bit and certainly back to school was not what we hoped it would be but i'm still optimistic about the fourth quarter. this month, of course, we have the hurricanes and we have a big business in florida but i try to look past those to get real trends in terms of the business and where it's going and there is a trend toward the dress-up business. we've been seeing that all season long and clearly see that in the fourth quarter and that's where our store benefits in men's clothing and women's career apparel. that's where we're strong and we're optimistic about the fourth quarter.% l

>> what do you hear from your customers in terms of confidence and their ability to continue to spend in the same patterns they have been?

>> so far our sense is that the trends have been working for us reasonably and if the west coast has been unaffected by hurricanes and unaffected by conventions and where we have stores in both boston and in new york. so there's been no interruptions. business continues to be strong and it's continued to be at the higher end and more unique parts of the business in this trade-up career-aimed apparel so that all those things we're looking at that we believe will benefit the rest of our stores across the country as things normalize. so our sense is that there isn't any reason for us to say that it will be substantially different than what we've already guided wall street for the fourth quarter, which is 1.5% to 3%.

>> speaking of wall street. there is an uncharitable analyst who says the recent hurricane activity in florida has given you the mother of all excuses to lower your sales numbers and basically give an impact to lowered retail sales numbers for your stores. any comment on that?

>> well, we're a big retailer in florida and we were closed for 70% of our stores were closed for three days so that impacts your business. and certainly even when ivan, which looks like it will miss most of our stores, there was such a scare that the state had a lot of evacuations. i don't want to use it as an excuse, but it is a fact that we do a lot of business in florida and when three hurricanes hit in six weeks, that impacts business.

>> is it one of your biggest states in terms of sales?

>> yes.

>> also, the other thing is, in terms of your inventory, unlike a lot of other retailers, it seems you've increased in the last year your inventories. are you worried about an economy that's slowing down? are you worried, is that a new trend of inventory management?

>> our inventories have been managed very well. we've reduced our inventory by 10% over the last two years and we still believe there's an opportunity to tighten further. and this is definitely a trend that we'll continue to focus on. we think we can spin and turn our inventories faster, get deliveries closer in hand and vendors to hold inventories longer for us so we've learned to address the inventory turn and it's benefited us and we'll take it into the future.

>> all right, well, also in the retail front today in a different area, kroger says its second-quarter profit was down 27% after it cut prices to compete with discounters. the shares had its biggest drop in six months after kroger said sales may not meet the annual forecasts, as well. net income coming in at 19 cents a share, sales up 5% to $13 billion. kroger's gross margin narrowed as it made cuts to close the price gap with wallmart and costco and sales in california also hurt at its ralph's chain as it failed to regain customers lost during a strike. retail sales data suggests that consumer spending may be emerging from a soft patch. that story up next.  
在线播报
Listen Market briefing --- Matt (slow)
Oracle --- Su (fast)
NYSE --- Julie (slow)
welcome back to the "world financial report." i'm matt nesto. well, the world's third largest software maker reporting i 16% gain in first-quarter profit. this on a surge in database software sales or licenses. shares closed lower, ahead of the report. they were up as much as 5%. they're now up not quite 4% in extended hours' trading and su keenan has been tracking the oracle story all day and through the press release and joins us with the latest.

>> stock performance indicates investors like what they're hearing. the bulk of oracle's revenues come from database sales so when they do well, the company does well. new database sales rose 19%, well above the range of estimates by analysts. software license you revenue, a key measure of new business, rose to $563 million. to overall sales, they rose to 2 $2.2 billion. that's essentially in line with analysts' estimates of $2.23 billion. net income rose to 10 cents a share, compared to analysts' estimates of nine cents a share. oracle's main database software business generates 80% of its sales. an analyst with principle global investors said just before the report that investors needed to see strong performance in oracle's core business. he says it's the main money make er, irrespective of a deal with peoplesoft.

>> there's importance around database. peoplesoft is an applications vendor and augments the applications business at oracle, which has struggled even more so than the database. recall that oracle has pointed in the past to applications as one of their growth drivers and it really hasn't come about the way they expected so peoplesoft is an attempt to do market consolidation and reinvigorate growth.

>> the conference call is expected to shed light on the strategy behind chief executive larry ellison's $7.7 billion hostile takeover bid for peoplesoft. analysts say oracle needs to woo peoplesoft's clients to boost sales. david hilal, analyst with friedman, billings, ramsey, says the deal makes strategic sense for the company's future.

>> oracle accomplishes a couple of things by buying peoplesoft. they eliminate one of their top competitors. two, they gain about 12,000 customers that pay an annual maintenance fee of over $1 billion, a high profit business. oracle gets that maintenance stream. and oracle also helps to shore up some of their own application products to go after new business.

>> more about how oracle expects to go after new business will probably be a big part of the conference call just getting underway. shares of oracle up at this hour, but down 20% year to date.

>> up 4% right now at last check. su, thank you very much. let's give you a closer look at oracle and we'll go into our trusty trend, the bloomberg terminal for this. if you will, i've put together a chart here. this is, guess what, peoplesoft versus oracle. we'll call it deal to date or bid to date, going back from the beginning of june 2003, so about 15 months. peoplesoft is the orange line and oracle is the white line. this is simply a percentage comparison. a couple of things are going to stand out. first and foremost is obviously the gap up in the shares of peoplesoft on the initial bid when the news first came out. then, secondly, is, if we go back to this end, is the recent rally in shares of peoplesoft. and that is, again, after the latest ruling from the judge that said that the justice department's argument that it would lead to antitrust issues was unfounded. so big win in the eyes of investors who think that peoplesoft-we've heard at least two people on this program in the last two days saying they see at least 70% chance that this deal will go through. another one that i think is interesting is to look at the effect. you saw the percentage decrease on shares of oracle and the gain for peoplesoft. well, deal to date, it's cost oracle about $14 billion in lost market cap. this on a $7 billion, seven-odd billion dollar deal. for larry ellison personally, that's a $3 billion bite out of his net worth and he owns about 20% of oracle. looking at the intraday, extended-hours' trade. try to goess where the results came out? that's about 4% higher, the stock up to about $11 a share. if you were to look at $11 a share, when was the last time we were at $11? is that would take us back to just about the middle of july was the last time oracle shares saw $11. healthcare companies led stock gains today as investors went looking for companies less affected by rising energy prices and slowing economy. let's give you the numbers on wall street as they closed today. stocks were up. the dow up for the third day. the s&p up for the fourth straight day. and the nasdaq also up further fourth straight day, .26% higher. a rally in 10-year notes slowed today after retail sales data reassured investors about the strength of the consumer. looking at the bond market -- oil stocks rose in today's session. office depot and l.s.i. logic fell on lowered earnings forecasts. for more on today's trading action, julie hyman has this report from the big board.

>> stocks were little changed in today's session. we had relatively low volume, as well, lower than we have seen over the past week or so. we did see oil stocks rising in today's session, though not as much as may did yesterday. exxon-mobil coming down off a record high it touched earlier in the session to close lower but energy stocks generally helping lead the market higher, up .2%. we also had a number of companies out today with either a changed earnings forecast or earnings themselves. a couple of retailers among them. office depot cutting its forecast for the third quarter and full year saying it was hurt by the hurricanes that hit florida where 10% of its north american stores are located. also by sluggish back-to-school sales. on the other hand, pier 1 rising today. second-quarter earnings were down 31% but the company's third quarter and fourth-quarter forecasts left room to beat analysts' estimates. later in the week, we'll have best buy, which is out with earnings tomorrow. and circuit city coming on friday. that will give more of an indication as to what's going on in the retail industry. a couple of more companies cutting forecasts today, l.s.i. logic, cutting its forecast for the third quarter, saying the loss will be wider than previously expected. they are seeing "a broad-based buildup of inventory." not new news from a semiconductor company. and allied waste cutting its profit forecast for the second time in two months' time seeing higher cost due to truck maintenance. drug stocks and media stocks also gained today. i'm julie hyman, bloomberg news at the new york stock exchange.

>> crude oil rose for a second day on concern that hurricane ivan. slash u.s. offshore production. citigroup analyst says that oil platforms are designed to withstand hurricanes but something will break. looking at the price of oil, up over 1% today. more noticeable was the rise in gasoline, up over 3% today. natural gas also about 1.6% higher. anti-depressants such as effexor and zoloft and paxil may increase the risk of suicide in children and teenagers. advisers to the food and drug administration say behavior ranges from talking about wanting to die to attempting suicide. the f.d.a. will take the panel's recommendation into account as it decides whether to put more precautions on the labels of anti-depressants. u.s. doctors wrote almost 11 prescriptions for children and teenagers for those drugs in 2002. there will be no more burdines or rich's, some of those department store names will be changed to macy's. we'll hear from the c.e.o. of federated stores about the name change and about his company heading into the busy shopping season.

Interview: Bill Gross --- Pimco's Chief Investment Officer and Manager
About the economy, the Fed and where bond yields are headed

>> as the fourth quarter approaches, we're learning what top market watchers anticipate the rest of the year. bill gross is pimco's chief investment officer and manager of the world's biggest bond fund. suzy assaad asked him about the economy, the fed and where bond yields are headed.

>> the 10-year at 4.15 is pretty fully priced in my opinion, suzy. and that emanates from a view that the fed goes to 1.75 and maybe 2%, stops for a period of time based upon a mediocre economy and takes a look from that point forward. with fud funds at 1.75 to 2, the two-year at 2.45, it seems to me the 10-year is fully priced at 4.15 and stands a chance in moving higher in yield and down in price from that point.

>> so the fed goes in september and they go again once more throughout this year?

>> that's debatable. certainly they go in september to 1.75. whether they go to 2 depends on an employment report or so. un, the fed is in the prose of taking back that emergency rate cut that was predicated upon deflationary scare of 2003. and that was a 75-basis. l point cut in two steps from 1.75 down to 1. so officially, if they raise the rate to 1.75, we would be even, so suppose. so 1.75 or 2, depending on the strength of the economy.

>> what about the impact of the election. many said the fed wouldn't move as they didn't want to be seen as influencing elections. we've heard from susan bies over the weekend saying there's no urgency for the fed to act. is this maybe the beginnings that action by them will slow?

>> i think it will slow down. the question, of course, is september. the november meeting occurs after the election so supposedly that politics-free. i think the signals from the fed suggest that september is made in the shade, slam dunk, and so politics aside, we'll wait until november and be on to see exactly what happens from that point forward.

>> what does what you're telling us, what does it reflect in terms of what assumptions are you making about the health of the u.s. economy right now, bill?

>> well, we just had our economics forum last week at pimco. we do that once every three months. we suspect that the u.s. economy is doing ok, which means 2% to 3% growth for the next quarter or so. much depends, of course, on the consumer and on investment spending. we sort of have a sense here that the consumer has one last gasp in terms of mortgage re-fi and ecitization of housing based upon the drop in the last few months in interest rates and yields but from that point forward the consumer is tapped out in terms of debt, low real wages if not negative based upon the c.p.i. and is comes down on whether the handoff from the government in terms of their stimulation to the private sector actually take place. and at the moment it appears like it will be a dropped baton and we're looking at 2% to 3% growth rates which is a growth rate that the fed probably sits on in terms of its fed funds rate.

>> does that mean this is more than a soft patch we're going through?

>> it means it's a soft patch. and an extended soft patch and much depends, again, on that handoff and whether the private sector can take the baton. your previous guest talked about business and investment spending. we have a sense there are better investment opportunities, higher returns on investment overseas in asia and the like and that's one of the reasons why businesses are so afraid, i suppose, to make a commitment. you see the most obvious equipment with microsoft in terms of their high cash balances and dividends, et cetera, referring to give the money back as opposed to invest it and we think that's typical of u.s. corporations so that the investment handoff probably is going to be a shaky one.

>> that was bill gross, pimco's bill gross, speaking with our suzy assaad. we have breaking news from kerr-mcgee, the crude oil producer says it is evacuating 100 workers from the gulf of mexico as hurricane ivan nears. also kerr-mcgee says it's shutting down 17 gulf facilities because of the hurricane and that includes its neptune and red hawk platforms. so once again, kerr-mcgee evacuating 100 workers from the gulf of mexico as a result of the hurricane. p.a.e. capital and two affiliates agreed to pay $50 million to settle s.e.c. allegations that they allowed a hedge fund to makement from trades-to make frequent trades at the expense of other investors. p.e.a. capital is a new york-based firm that manages seven mutual funds. alliance's bond fund unit led by bill gross was not implicated. and the yield of the 10-year note has stayed low. that is our "chart of the day" up next.  
在线播报
Listen Market briefing --- Bob (fast)
Hurricane Ivan --- Su (fast)
NYSE --- Julie (slow)
welcome to "world financial report." i'm bob bowden. crude oil prices rose and natural gas soared in new york on the approach of hurricane ivan. checking oil prices right now, we see $43.87 a barrel. that's up 2.5% on the day, or $1.06. moving on, among the other energy movers, include unleaded gasoline there, up 3% -- the growing threat from% l hurricane ivan is where we turn to now p.oil and natural gas companies are shutting down oil platforms in the gulf of mexico and evacuating workers. su keenan takes a closer look at investor concerns that the storm will disrupt production, refining and possibly the arrival of shipments.

>> as we've been hosgating, a quarter of the nation's oil and natural gas production comes from the gulf of mexico. by all accounts, concern about potential damage is real. ivan is already responsible for 60 deaths across the caribbean, sweeping through grenada and jamaica over the weekend. with maximum winds close to 160 miles per hour, it qualifies as one of the strongest storms on record. fema's michael says the storm is moving westward.

>> we are preposgating right now equipment, manpower, supplies, throughout the atlanta region into alabama, also. the national hurricane center tells us this storm could hit anywhere, frankly, from louisiana all the way over to the florida panhandle so we're getting ready in all of those areas.

>> and so are the oil companies. evacuations on the gulf's oil platforms have already begun. royal dutch-shell planned to complete removal of workers today, idling 272,000 barrels of daily owl output and 880 million cubic feet of natural gas production opinion the louisiana offshore oil terminal said today it was stopping off-loading tankers. british petroleum, exxon-mobil and anadarko have evacuated non-essential workers over the weekend. anadarko says it is difficult to predict the impact on pricing.

>> i think when you start talking about priceing, certainly the gulf provides a big part of the production for the u.s., 25% of the production. so how much impact it has on prices is a function of how many platforms are impacted in the gulf of mexico. when frances came through, about, i think, 3% of the gulf of mexico was shut in. so the impact hasn't been minimal but has upward pressure.

>> meanwhile, shares of several oil and gas companies rallied to new highs. exxon-mobil stock closed at an all-time record high. reskco's marshall steve says the uncertainty of the impact rather than serious supply concerns drove today's speculative trading.

>> we've rebuilt to historically normal levels and there isn't the severe tightness that $45 oil might suggest. it's the fear of potential disruptions.

>> let's talk about the potential. ivan predicted to hit the mainland u.s. on thursday and planalytics analyst and meteorologist paul walsh says there are still 90 days left in the storm season.

>> obviously it's a very, very active season. there are additional disturbances out that the weather service is looking at. in fact, there could be another drod identified within the next 24 hours. too early to say.

>> another factor driving oil higher is wednesday. some analysts say opec is pumping so much oil now, it doesn't have the capacity to increase.

>> appreciate that. moving on, time warner withdrew its bid for metro-goldwyn-mayer after it could not reach an agreement on price. the decision may clear the way for sony to take control of m.g.m.'s library of more than 4,000 movies. the purchase would double the size of sony's film library and help the company boost d.v.d. d.v.d. sales. sony raised the offer by 75 cents a share to $12. this is the third time owner kirk kerkorian has sold the studio. the treasury department said today august's budget deficit was $31.1 billion, down from $76.6 billion in august of last year. through the first 11 months of the fiscal year, the deficit was $436.9 billion, through the first 11 months. $436.9, compared to $374 for all of last year. u.s. treasury notes rose after federal governor susan bys says there is no urgency to boost interest rates until there are more signs of steady economic growth. and the treasuries -- the dow essentially unchanged on the day. for more on todayr's trading action, we bring in julie hyman at the big board.

>> stocks pared gains towards the end of the session. the dow and s&p managing to finish the day higher. the dow, just slightly. concerns in the market that have been in the market concern earnings in the third and fourth quarter, expected to be slowing. this is reflected in comments we had today was edward keon, new chief investment strategist at prudential securities. he is replacing ed yardeni. he gave out his asset allocations and recommends that investors hold 55% stocks, 40% bonds and 5% cash. he said the fairly low stock allocation is because he expects earnings to slow down perhaps more quickly than the market anticipates. we did see semiconductors rallying today, extending gains we had last week. we want to note these are the worst performers for the year to date. that group is down 30% and have been rebounding in the past couple of weeks as investors have been looking for bargains. national semiconductor in particular doing well today after it was upgraded at sanford c. bernstien. walking-talking about the impact of hurricane ivan approaching the gulf of mexico. insurers rising today as it approaches. we have seen insurers do well in the past in advance of hurricanes as analysts estimate they will raise premiums. other stocks active today on that news, an apartment management company falling in today's session. that's after the company said that funds from operations in the third quarter will be cut by five cents due to hurricane frances, not even accounting for the damage from hurricane ivan. also talking about campbell's soup saying fourth-quarter earnings fell 20% because of restructuring charges and higher costs. i'm julie hyman, bloomberg news, at the new york stock exchange.

>> thank you, julie hyman. companies' profit forecasts are falling short of estimates at the highest rate in three years. lower estimates from companies including alcoa and coca-cola enterprises may be a sign that earnings expectations are too high. still, analysts have yet to cut their profit estimates. they expect that third-quarter earnings will increase 14.8% according to the last surveys from thomson financial and that is unchanged from a month ago. for some perspective on earnings expectations and the gulf between performance and recommendations, we turn to stocks editor matt nesto with more.

>> check it out, if you look at the estimated earnings per share for the s&p, the actual earnings for the s&p 500, 10 years' worth, you'll notice there is a gulf between the two which says typically that estimates historically have vastly exceeded actual results. what stands out in this chart is the fact that when the going got tough, the analysts really missed it. i'm out of time. back to you.

>> well, brevity is the soul of wit. thank you. we'll hear from pimco's chief investment officer, bill gross, when we come back.

Tokyo bureau --- Gene (slow)
Market action in Europe --- Mark (slow)

>> citrus growers in florida say hurricane frances caused more than $2 million in damage to the state's crops. combined with damage from hurricane charley last month, losses for the state's sit riis stru exceeds $485 million, according to one trade group. the chief executive of the group is worried about longterm damage to the crop.

>> estimates are about 20% of the crop was hit by hurricane charley. hurricane frances was still, as you saw from the picture, having a difficult time getting into groves. got to move some water out first, so we're not sure what hurricane frances is going to do to us. but that 20% in this crop is probably pretty accurate and may move upward ads we move into the next couple of weeks.

>> citrus is a $9 billion annual industry in florida. now the state is bracing for ivan. florida has not endured three hurricanes in one season in 40 years. well, for a preview of next week's market action in the pacific rim, here's gene otani from our tokyo bureau.

>> in the new week here in asia pacific region, a series of economic releases from china will show how effective measures to cool the economy have been. the country's inflation rate probably accelerated to a seven-year high last month, putting pressure on the central bank to raise interest rates for the first time in nine years. economists surveyed by bloomberg say consumer prices likely jumped 5.4%. china may report inflation figures monday, along with export data. overseas sales growth likely slowed last month, rising 30% after a 34% gain in july. china may also say retail sales jumped 13.3% in august as rising incomes enable workers to buy more homes, cars, and computers. more clues about the state of china's economy may be revealed thursday when the government is expected to release fixed assets investment figures. investment in factories rose and other assets rose 31% in the first seven months of the year, suggesting government lending curbs failed to cool industrial capacity in july. in australia, business confidence probably rose in august after reaching a six-month high in the previous month amid signs economic growth is picking up pace. the data may add to expectations the central bank will raise interest rates this year. more than half of the 23 economists surveyed by bloomberg news say the bank will raise rates a quarter possibly by december. national australia bank releases its survey of 400 businesses on tuesday. and that's what's expected in the week ahead in the asia pacific region. now back to you.

>> and for a look at next week's market action in europe, let's bring in mark barton in our london bureau.

>> monday in europe, central bankers from the world's 10 richest countries meet in bass you will as investors await further signs on how the global economy is weathering high oil prices. european central bank president jean-claude trichet will attend, and he's expected to tell reporters surging oil prices won't derail the global recovery and that inflation risks may be rising. the g-10 bankers summit proceeds opec's vienna meeting on wednesday when ministers will discuss whether to boost oil output after oil prices dropped 11% from their record in august. the producer group's supply flow is already currently at a 25-year high. among economic reports on monday will be the u.k.'s producer price index for august, which may have risen amid those higher energy costs. also in britain, the office of the deputy prime minister releases its index of house sales for july. economists say it will probably show weakening price growth as five rate hikes by the bank of england take effect. in france, the july reading of industrial production in the euro zone, second biggest economy. and germany reports wholesale prices for august may show an increase from july. the corporate earnings, italy's likely to be busiest market on monday. bull gather expected to report a 20% gain in profit on higher sales of the world's third biggest jewelry. analysts say the rome-based company is benefiting from new product ranges, such as its diamond bracelets. italy's biggest defense company is expected to report a 91% drop in the first half earnings. and earnings are also anticipated from edison, the company's number two power company in britain. investors await fergs half earnings on monday in tullow.

>> mark barton, thanks very much. the judge overseeing a shareholder accounting fraud suit against halliburton has refused to approve a $6 million settlement. the u.s. district judge wrote in a 19-page opinion she has concerns the amount is not enough. she also said she was concerned that not all shareholders had been kept informed of settlement negotiations. the lawsuit deals with accounting practices in 1998 and 1999 when vice president dick cheney was c.e.o. of halliburton. well, reynolds america may have a tough time halting its loss of market share to philip morris u.s.a. and discount cigarette makers. the chief executive says reynolds is planning new marketing . it hopes to boost sales of its priority brands like cam and he will salem as sales of lesser known brands decline. but david dreman is skeptical. he says philip morris has a lot more money to spend on marketing than reynolds. can't seem to get enough sports? there may soon be another 24-power sports channel. that's the idea behind espnu. we'll have more.  
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Listen A winner for investors over the coming months
Interview: Edward Ludwig --- Chief executive
>> welcome back to "world financial report." i'm peter cook. becton dickinson and company, the stock is already up over 22% for the year, so hrbeck ton dickinson prove a winner for investors over the coming months? earlier, suzy assaad spoke with chief executive edward ludwig about the outlook for his company.

>> bottom line, ex charges, will be over 15%. and we've been telling the street that, you know, the top line ex foreign exchange should be about a 7%, 8% grower. bottom line, double digit. good cash flow, expanding gross profit margins, and reinvesting in innovation. so good, steady performance, steady as she goes.

>> well, they say that really this is not a company that's necessarily one of those huge r&d spenders, and they see that your core business, that's one analyst that we spoke to, anyway, said that the core business, which is your syringes, they feel it's certainly doing very well, but it may be starting to tap out and they wonder how are you going to continue to generate these double-digit growth.

>> well, the business in safety products is one i'd like to focus on a little bit. you know, our medical business and in our diagnostics business, we have introduced over the last seven years a family of safety engineered devices, which is really redefining the whole sharp area, the whole syringe, catheter, blood collection area. that business is now running at a rate of $800 million a year, and we've said that business will continue to grow at about 10% a year. as we introduce new products and as we move off shore with this concept, we believe there's still good, solid, double-digit growth available in that business, and that's about $800 million piece of business for us.

>> what about the core business, the syringes?

>> well, that has basically become the core business. it is really traded out all of the basic products have now been upgraded or are being upgraded to these devices. also in diagnostics, we have two new instrument platforms, the pro tech and the phoenix, which are going to add to revenue growth, and our bioscience business, which last year in 2003 was not a big grower. this year we're going to do high single digits, and with our new aria and new systems in bioscience, we expect that could be a high single digit grower.

>> also in terms of expending your r&d budget, is that something that you feel needs to be expanded right now?

>> yes, very much. we have told our investors that we should expect r&d will grow at a rate that exceeds the sales growth rate, so we now spend about 5.5% in r&d. we expect that will pick up over time. growth in r&d, you know, 10% plus, we're going to pay for that by continuing to expand our gross profit margins and managing our ssg&a very carefully.

>> we want to move on to legal issues. your company was recently subpoenaed by federal prosecutors coming out of dallas. do you believe that the company is involved and is the focus of this probe?

>> no, in fact, we know that we are not. we are cooperating completely. we're providing basically a routine document request. we're complying, and we're very confident that all of our business practices are well within all acceptable standards and norms.

>> what kind of documents have they asked for, what kind of documents have you turned over so far?

>> well, i really am not at liberty to talk about that at this point, but, you know, these are fairly standard documents about, you know, business transactions. it's a very voluminous kind of thing. i'm not that involved with the day-to-day document production. but whatever they've basically asked for, we're providing, we're fully cooperating.

>> does it involve other companies?

>> i can't comment on that. i don't know if it does or not.

>> well, let's take to you something you can comment about, and that is, we'd like to get some more details on your inhaled vaccine, the one that is potentially could be a protection, for example, against anthrax. could you talk to us about that?

>> well, that's a very exciting development. you know, it's been a fundamentally sound company in drug delivery, and now we're coming up with new ways of delivering drugs. one is microneedles, which may be applicable, even in areas like insulin, which make the injection virtually painless and makes the drug work better. another thing that we've done is we've worked with new formulations of things like anthrax vaccine to do this in an inhaled fashion. it creates a stronger immunological response, and we think it's going to make the vaccines work better. that's still a couple of years, a good number of years away.

>> edward ludwig, chief executive of becton, dicken son, speaking with bloomberg's suzy assaad. public health advisors may recommend that all americans get flu shots every year. experts say that could cut the annual u.s. death toll from flu complications in half to 18,000, and it would establish a system that could be used for inoculations against bioterrorist agents and emerging diseases like sars. national vaccination campaign would also expand the potential market for vaccine makers like chiron and sanofi by almost 2/3. the current guidelines call for flu shots for 180 million americans, including health care workers, infants, and everyone over the age of 50. fewer than half of them get the vaccine. frank quattrone's friends and former clients are among 500 people who sent letters seeking leniency for the former credit suisse first boston banker. the chairman of cisco systems and adobe systems are among quattrone's supporters. letters were made public by the judge over quattrone's objections, and they illustrate his influence in silicon valley during the 1990's technology boom. the effort failed to sway the judge, who gave quattrone 18 months in prison for obstructing probes into how csfb allocated shares in public offerings. the sentence was longer than the 10 to 16 months called for by federal guidelines. citrus growing is a $9 billion annual industry in florida. losses from the two previous hurricanes are approaching half a billion dollars. that's before ivan. that story up next.

The resilience of the consumer
Robert Nardelli---Chief Executive
>> home depot is the third largest retamer in the world, and it’s now taking on manhattan. the company is opening a special high-end store geared to upscale urban clients as it looks for ways to expand. ellen braitman spoke with the chief executive, robert nardelli work his new strategy, the resilience of the consumer.

>> we’re feeling pretty good about the consumer. obviously, as most retailers felt a little blip in june, but we’ve come out of that, as we said, at the end of our second quarter, second quarter earnings announcement, and we’re feeling pretty good about the second half. as you know, we raised our estimates for the year on earnings per share for the full year, and we wouldn’t have done that at the earnings call if we weren’t feeling pretty good about the consumer and the second half.

>> some analysts said you raised because of the strength. first half, that it’s not really a positive outlook for the second half.

>> there’s no question the first half, we closed the second quarter with earnings up 25%. if you look at the paris half, it was about 20%, revenue was up 11% in the second quarter, it was up 13% for the first half. so we felt brett pretty good about first half performance. again, we’re going against some pretty aggressive comps over last year. we’re going against 7.7%, 7.8% comp sales, so we’re going to have to do fairly well to be able to generate the sales and the revenue to hold the year.

>> given that you’re positive, one thing i hadn’t realized until half an hour ago, you’re the eighth biggest employer here in the u.s. so how is this optimism translating into how many people you plan to hire this year?

>> well, good question. we feel good about this year, but last year, last year we hired 30,000 net new associates. this year we’ll do about another 25%. we’re still opening a new store every 48 hours. even during the economic down turn, we stayed on strategy. by the end of this year, over the last four years, we will have invested $14 billion back into our company. while at the same time, we just completed $6 billion of stock repurchase. the board approved another billion --

>> i want to break down some of these issues, but while we’re still on the consumer, producer prices came out this morning. they unexpectedly fell. in terms of consumer strength, what are you seeing? how much are you actually able to pass on prices, commod i had prices, for example really have been soaring.

>> well, what we do by policy, again, home depot is everyday low prices, and i certainly want to compliment our suppliers who have been working with us seamlessly to hold prices down. now, what we have seen in the commodity side is probably the biggest increase has been in lumber as they’re rationalizing that industry. it’s a supply-based capacity issue, and we’ve seen higher prices than we would have liked to have seen in lumber that we’ve had to pass on to our consumer, but we have been very responsible and so have our suppliers. we saw a little spike in steel, steel studs. we saw a little increase in copper for a while, particularly as we relate to those commodities like ceiling fans and motors. but again, overall, we’re feeling pretty good about consumer prices.

>> so consumers can tolerate is what you’re saying, a little bit?

>> i think they can, absolutely. if you look at our second quarter, our transactions were up 2.6% year over year. our average ticket is the highest in the history of the company at about $55. so i think the consumer is responding very well, and i think we’re responding in kind to consumer buying preferences.

>> in terms of the consumers, certainly florida a very big focus these days. i know you guys have been shipping from all over the country to get supplies there. is it actually going to translate into higher sales, higher earnings for you in terms of what’s happening there?

>> i think overall it tends to balance out. there’s no question that prehurricane, there’s a frenzy of buying activity for plywood and flashlights and batteries and all of what you might expect as prehurricane kind of protection kits. post-hurricane, of course, you move into generators, you move into chainsaws, you move into tarps and those things that help protect damaged facilities. but remember, during that period, you have no sales. and again, there’s some additional costs related, first time in the history of the company we actually started on the west coast with consolidating trailers to bring chainsaws, to bring generators to the affected area.

>> so overall, it sounds like the bottom line from the store?

>> it’s stable. yeah, i don’t think the goes ins and goes outs pretty consistent with the forecast that we’ve put in place.

>> robert nardelli, chairman and c.e.o. of home depot, speaking with bloomberg’s ellen braitman. shares of home depot ended the day higher. well, trying it avoid a second bankruptcy in two years, u.s. airways gave its pilots’ union a new proposal three days after the group rejected a prior offer. the plan calls for nearly $300 million in pay and benefit cuts. the “new york times” said the airline may seek bankruptcy protection this sunday if unions fail to agree on further benefit cuts. u.s. air may also be forced to violate terms of a $1 billion loan if it’s unable to pay the $110 million in pension payments it owes by wednesday. well, shares in peoplesoft rallied today, suggesting investors are more open to accepting an offer from oracle. that story when we return.

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Listen Market briefing --- Peter (medium)
Walt Disney --- Greg (slow)
NYSE --- Bob (fast)
Nasdaq --- June (slow)
>> welcome to “world financial report.” i’m peter cook coming to you from our washington bureau. well, michael eisner says his decision to step down as head of the world’s number two media company has nothing to do with mounting pressure from dissident investors. greg miles is here with that story. greg?

>> that’s right, still a lot of unanswered questions when it comes to walt disney company. well, c.e.o. michael eisner’s announcement may not satisfy investors who want him to step down immediately instead of two years from now. the major issue is the company’s lagging share price. disney’s stock has risen only 65% in the past decade. that’s less than half of the 138% gain of the s&p 500 during the same period. fund manager anthony gifford says eisner’s announcement is good news. disney without eisner, he says, is much better than disney with eisner. what is disappointing is he’s not going for another two years. a former company director told bloomberg news that eisner is doing an awful job. disney added he will definitely continue our battle, we have already devised the next moves, which i cannot disclose. dissident investors plan to nominate their own slate of directors at next year’s annual meeting. c.e.o. eisner and walt disney company face other challenges during the next two years.

>> is the growth of disney truly sustainable? remember, 2005 earnings are right now on track to get back to 1997 earnings. so how much growth can this company drive beyond 2005?

>> rising sales at disney’s theme parks and cable tv networks will help boost profits by an estimated 60% this year and slow to 10% growth in 2005, according to analysts’ forecasts. the performance of disney’s movies has been erratic at the box office. eisner’s inability to renew contracts with pixar could hurt disney’s animated film projects, and also, abc tv networks is suffering from lagging audience ratings and advertising sales. disney’s board of directors, led by chairman george mitchell, also must find a new c.e.o. possible successors include newscorp president peter churnin, the chairman of time warner of time warner, and also disney president bob iger, a favert of michael eisner’s.

>> i think the job bob iger has done has been, perhaps, unappreciated. there’s been a lot of focus on abc, but the other assets in the broadcasting and cable that have also been under his leadership have performed far better than is generally anticipated.

>> well, several investors said it’s unlikely that eisner will step down before 2006 because he has the full support of the board of directors. and in a statement out this afternoon, disney’s board says it is grateful for eisner’s remarkable 20 years at disney, but the last 10 years not quite so remarkable as far as the stock perform abc. back to you, peter.

>> all right, greg miles in new york, thanks very much for that. well, in economic news, producer prices unexpectedly fell last month, a sign inflation remains tame. producer prices declined .1% last month. economists were looking for a gain of .2%. the drop reflects cheaper cars, computers, and gasoline. if you take out volatile food and energy prices, the so-called core rate of inflation at the wholesale level also fell .1%, the first drop since february. separately, the trade deficit narrowed in july to $50 billion as exports rose 3% and oil imports fell. it’s still the second largest on record behind the june reading on the deficit. treasuries rose today, a sign that investors are betting the federal reserve will slow interest rate increases. the benchmark 10-year note had its biggest weekly gain in five. fed chairman alan greenspan, of course, said wednesday expectations for inflation have eased. inflation erodes the value of bond interest payments. technology shares led stocks highser after texas instruments’ chief executive said he’s optimistic about demand for chips, plus the decline in oil prices made investors more bullish about earnings and economic growth. let’s get to the numbers. alcoa said earnings will trail analyst estimates, limiting the gain in the dow jones industrial average. the dow average advanced .2% to 10,313. the s&p 500 gained half a percent, closing at 1124, its highest close since july 2. and the nasdaq composite index added about 1.3%, closing at 1894, that’s a level not seen since july 20. although major indexes rose on friday, little biggest move he on the dow fell strongly on the day. bob bowdon has a wrapup from the new york stock exchange.

>> alcoa shares were lower strongly on friday with the worst performing stock in the dow industrials after the company said third quarter profit might only come in between 30 and 35 cents a share. analysts had been looking for 52 cents a share. also, delta airlines down on the day after the company said a deadline that would have given the company more flexibility to purchase or hold ownership in the equipment that it uses has expired, and so we saw on the day delta shares down over 2%. although in checking some of the―by the way, delta down for the third consecutive session. but checking some of the other airline stocks, they were up strongly, particularly air tran, up 5%. a.m.r. up 4.5% on the day, as we saw oil prices come down a bit, and that helped some of the other carriers. moving on, there was a war of the analysts in coca-cola shares. caroline levy of u.b.s., an analyst who downgraded coke, saying third quarter sales could be flat, and that stock could be headed down to $36 a share. meanwhile, mark schwartzberg, a legg mason analyst, upgraded shares of coke to a buy, saying he says the stock is cheap, he says the stock could rally to $52 a share. nevertheless, coke was down about 1% on friday. auto parts stocks were hit after visteon said it will have almost $900 million in third quarter costs to write down tax benefits. the company says the problem comes from planned production cuts by former parent, ford motor. on the day, we saw visteon shares down around 11%. also, pointing out disney shares, up over 1% on the day. this coming after the news from michael eisner that he gave two years’ notice, you might say. he said he’d resign from the company after the company picks a successor as chief executive around september 2006. and continuing to follow chip stocks, they were up strongly today, and this is after thursday when texas instruments was up 10%. national semi up 12% on thursday. today, it followed. on friday’s session, texas instruments and national semi both up between 5% and 6%. micron up over 6%. and a.m.d. shares up 5.26% on the day. that he wants the latest from the new york stock exchange. i’m bob bowdon, bloomberg news.

>> well, the nasdaq closed higher for the third week in four. june grasso has more from the nasdaq market site in times square.

>> tech shares rose after the ruling that oracle can go forward with its hostile bid for peoplesoft. now, bank of america securities analyst robert stimson says he sees a wave of software mergers in the next two to three years now that this court case has been won, and he named some potential takeover targets, three of them b.e.a. systems, siebel systems, and veritas are among the top five performing members of the nasdaq 100 today. semiconductors built on yesterday’s momentum were the philadelphia semiconductor index yesterday rose 5.4%, the largest gain all year. again today, all 18 members of the philadelphia semiconductor index were higher, led by xilinx, maxim, and novellus. today, texas instruments’ c.e.o. rich templeton said he’s optimistic about demand for semiconductors, and that echos remarks by nokia and motorola that there has been an increase in orders for phones that allow users to take photos and surf the net. i want to talk a little bit about airlines. u.s. airways is struggling to avoid a second bankrupt. it has given its pilots union a new plan for $295 million in pay and benefit cuts, just three days after the group rejected a prior offer. the airline has said it may seek bankruptcy protection if it doesn’t win agreement for $800 million in worker givebacks by the end of the month. now, world airways, the carrier of cargo for the military and passengers for tour operators, is part of a team that won a contract from the u.s. air force valued as much as $988 million. republic airways holding was cut to market perform from outperform by raymond james. i’m june grasso, bloomberg news at the nasdaq market site.

>> oil prices fell 4% to $42.81 a barrel, the biggest decline in three months. the expectation is that hurricane ivan will miss oil production platforms in the gulf of mexico, and the price of crude may fall furthered next week as opec meets to discuss boosting production. we spoke with 37 traders and analysts. just over half of them say oil prices will fall next week. 11 of them see oil rising, and seven say prices would be little changed. a week ago, about 40% of them predicted a gain. home depot’s chief executive says the company’s hiring 25,000 workers this year. we’ll hear from him, up next.

The economy is picking up
ECRI---BANERJI, ANIRVAN---Chief Economist

>> lackluster retail sales in those months and cooling in manufacturing sales. manufacturing improved. they didn't report inflation. prices were described as generally flat or up modestly even though companies are paying more for raw material, particularly oil. alan greenspan says the economy is picking up after hitting a soft patch earlier this year. the next guest says it's not a soft patch-it's a persistent slowdown. according to the data, there will be no improvement this year. we welcome anirvan banerji head of research at the economic cycle of research institute and co-author of "beating the business cycle." welcome. thank you for being here.

>> thank you.

>> why do you say this is not a soft patch here?

>> because if you look at the leading indexes, they anticipated the soft patch. it was not as much a surprise to students of the business cycle as it was to many other people. and the classic picture that you can see by the index growth rate which you have up here, and you can see that from the spring onwards, there was a very clear pronounced, persistent decline in the growth rate and it is still very much intact and no leading in the index. just telling you that a return to robust growth is nowhere in sight.

>> let's take it back a step. explain the leading index on the chart.

>> this is a combination nation of the leading indicators of the economy and this is designed to anticipate turning points in economic growth. and that's exactly what it's done. i think what the chairman has done today is to recognize reality in a backward looking way and recognize in it a forward-looking way which is to say that he's not acknowledging yet that this slow down is by no means over.

>> do you think that interpretation was the chairman's intention?

>> well, let me put it this way. if you do say that return to robust growth is nowhere in sight, it makes ate little more inconvenient to raise rates.

>> that will say it. let's take a look at the chart. taking you back to the beginning of 1999. you have something very clear here and explain what we're looking at.

>> if you look at the left half of the chart which shows the decline into recession t recessionary decline is very intense and it clearly predicted the recession. >> that's what we're looking at here is 2001.

>> exactly.

>> and the shock of september 11.

>> then we have seen the recovery and the slow down in 2002, 2003, and the pick up back again and the most recent slow down. this preceded the oil price spike, so it is not the oil price spike alone that is explaining it. a

>> somebody might look at the start and say perhaps the initial recovery was exaggerated.

>> well, if it was, it was. we did have a 20-year high in g.d.p. growth in reality.

>> sure.

>> but if i my mix my metaphors here, i think what's going on here is if you actually move the walrus and stick your head in the stand, it's hard to see the forest through the trees.

>> that said, will the fed raise rates here?

>> do you think they should?

>> the chart we saw is nowhere near being recessionary. and rates are still-not near neutral yet, so you could say that.

>> when do you see the economy turning around. do you take a look at the charts and your sense of what's happening here.

>> not this year. what we have seen essentially is a return to slightly stronger growth from very weak growth in june. but it is much slower than what we had earlier in the year. and return to that kind of robust growth is nowhere in sight. certainly not this year.

>> you mentioned that slowdown predates the oil price surge.

>> exactly.

>> we have the oil price surge as it's backing off. what do you think it's going to do to the economy? that what's going to keep it from turning around by the end of the year?

>> no, i think oil prices do have an impact ton economy, no doubt about it. but to the extent that mr. greenspan thinks that if oil prices backed off, he would be very optimisting about the economy and we would respectfully disagree. in other words, even if oil prices continue to ease off, you'd still see a continuing period of slow growth, at least for the rest of the year.

>> with the trend we see on this chart, though, if we have some sort of sudden shock that's unexpected, could this push it into very easily a recessionary tract?

>> the answer is no. and thank you for asking that question because even if we did have a major shock, oil-related or otherwise, this is still a resilient economy. this is not the kind of movement you saw before the 2001 recession. so at least that's a bright point.

>> and there is a certain amount of, for lack of a better term, plicing in expectation of something and that-of pricing in expectation of something if it happens will not be as much as a shock as at the bottom of the chart.

>> i think that was a very vulnerable spot. we are not that vulnerable now and that's the good news.

>> anirvan banerji, thank you very much. co-author of "beating the business cycle." frank quattrone earned $120 million in 2000 as a top wall street banker. today he is facing an 18-month prison term. that story is coming up next.  
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Listen Market briefing --- Lane (medium)
Texas Instruments --- Bob (fast)
Greenspan's testimony --- Su (fast)
>> welcome to "world financial report." i'm lane bajardi. thanks for joining us. texas instruments released the much-anticipated mid quarter update today, and bob bowdon joins me now with a summary. bob, some key news here.

>> indeed. thank you, lane. two stories. the midpoint of the earnings forecast goes up, but the midpoint of the revenue forecast goes down. the company now repredicting nernings a range between 27 and 29 cents a share. the previous forecast had the low end of the range one penny a share lower starting at 26 cents a share. it's particularly relevant because if you look where analysts were expecting, they were down there at the low end of the previous forecast at 26 cents a share, so it's clear now that earnings will surpass analysts estimates. now we turn to the revenue news where it was a set of-instead of bullish, it was bearish. revenue coming in at $3.1 to $3.24 billion. a previous forecast was $3.2 billion to $3.44 billion. and analysts were looking for $3.3 billion towards the top of the previous range. in other words, a new revenue range makes it clear that t.i. will miss analysts forecasts for revenue. the mirror image of the fact they will exceed analysts forecasts for earnings. an analyst who followed shares of texas instruments from raymond james attributed the revenue miss to ongoing inventory problems.

>> this is an ongoing inventory shift in china and an ongoing inventory component correction going on elsewhere. and the overall handset market we see that cycle similar to the p.c. market maturing as well. and growth rates from 20% this year to the low teens next year. i think t.i., given their exposure in that segment will feel the impact.

>> checking texas instruments shares in the after hours trading, it's clear investors focus more ton good earnings news than the bad revenue news. t.i. shares are up 33 cents and now 34 cent at $19.17. want to look at other chip makers and see how they're doing. intel up by cents. xilinx up 14 cents and micron up six cents a share. qualcomm, motorola, and nokia up in the extended hours trading. also wanted to bring you chip equipment stocks and show you applied materials is up six cents. k.l.a.-tencor is down six cents in the after hours. once again, that's what this is. the reason i'm bringing you in particular the chip equipment stock is because of a late breaking news ton bloomberg terminal. t.i. says that capital spending down 30% in the second half of the year. also, t.i. sees capital spending l t.i. says capital spending was above $750 million in the first half of the year, but it sees that spending down 30% in the second half of the year. well, moving on, i also want to show you the bloomberg terminal in the after hours chart and where t.i. shares are trading. it closed in the regular session at $18.83. thats a right here. right now since the news broke of the mid quarter update, we have seen shares in the $19 to $19.20 range up here. certainly a positive move of this mixed message. people are taking the-seeing the glass half full, you might say, on t.i. news. lane, back to you.

>> sko, bob, all this comes ton heels of what we heard from intel last week, so this is key following that. thank you very much, bob bowdon. federal reserve chairman alan greenspan says the u.s. economy is picking up and the spike in oil prices is not causing inflation to accelerate. that is the other big story this hour and bloomberg's su keenan has more on greenspan's testimony before the house budget committee. s snurks.

>> all right, lane. some economists say that the fed may not raise rates at as fast a pace as expected for late they are year.

>> the message he's trying to send to the financial markets is look out for another rate hike. the fed is very slikely to hike rates on september 21. and he wants to make that clear to the markets .

>> greenspan said the economy has regained traction and despite the summer surge in oil prices "inflation and inflation expectations have eased." he also says that it's difficult to gauge the impact of record energy prices ton consumer and the economy.

>> i don't think anybody has got a number which i would feel comfortable with. in other words, i know it has an effect. i know it's there. but i'm almost certain that at $30 oil, we would be doing better than we are today. but by how much, i think that's extraordinarily difficult to judge.

>> some aspects of greenspan's testimony, including the quote that enumerable areas of the economy are doing poorly were interpreted as signaling g.d.p. will slow to his projections of 3.9%.

>> seems like we're on track and greenspan is suggesting we're on track nor that as well and it doesn't seem he was nearly as optimisting at the hum humphrey hawkens testimony.

>> others say there were few surprises.

>> he said what we knew already and mainly that july and august were better months than june and the economy is basically on the pretty sound footing. we've got still some soft areas to go. i'm not sure that he was declaring the soft patch over yet.

>> in response to questions about the deficit, greenspan did express concern.

>> the prospects for the federal budget over the longer term remain troubling. with the baby boomerers starting to retire in a few years and health spending continuing to soar, our budget position will almost surely deteriorate substantialfully coming years if current policies remain in place.

>> a lot of reaction coming in today from billionaire financier carl icon had this reaction. we all have to real ties economy can go either way, he said. lane back to you.

>> all right, su keenan. still to come here, stocks fell as lower profit forecasts from companies such mckesson, dean foods, and coca-cola enterprises overshadowed fed chairman's alan greenspan's comments. the dow jones industrial average down on the day 29 points, 10,313. the s&p 500 and the nasdaq down nearly half a percent. nasdaq lower by eight point. s&p down five. volume at the new york stock exchange almost identical to the previous session. 1.25 billion shares. take a look at nasdaq volume and 1.44 billion shares changing hands there. take a look at other ind kaytors of the market . you see the nyse composite down a third of a percent. the amex down fractionally and the russell 2000 lower by nearly 1%. small caps underperformed.

>> and the dow jones wilshire 5000 showing a loss of 52 points or a half a percent. treasuries gained after the greenspan comments sounded less optimistic than some investors had expected if 10-year treasury yielding 4.16%. the five-year up 13/32 yielding 3.36%. and the two year up 5/32 on the day. u.s. consumers more than doubled the pace of borrowing through charge cards and installment loans in july. the federal reserve reported consumers added nearly $11 billion to nonmortgage debt. measured at an annual rate, borrowing rose 6.4% in july after rising 2.6% in june. the level of outstanding credit stands at over $2 trillion. news from the airline industry, delta airlines cutting as many as 7,000 jobs as part of a plan to avoid bankruptcy. the nation's number three carrier also outlined plans to restructure half of delta's network by january and will boost by a third the number of planes operate bid the low cost song unit. all this is part of a drive to save $5 billion annually. without those lower costs, chief executive says that delta may have to file for chapter 11 bankruptcy protection. the airline has been trying for more than a year now to get the pilots to accept a 1/3 pay cut and pension changes worth $1 billion annually. verizon is selling the canadian phone directory unit for $1.5 billion. the buyer is boston-based bain capital. it's subject to regulatory approval sand expected to be completed by the end of the year. verizon plans on using the money to invest in high-speed internet internet access and the fiber line. they may increase spending four fold next year. the stock has gained 15% so far this year, well outpacing the major market averages. alan greenspan says the economy is gaining traction. not so says our next guest. we'll hear from the economic center for research institute coming up next.

What effect may a drop in home prices have on the economy --- Peter (slow)
>> with all the debate about the real strength of the u.s. economy, the strength of one part of it needs no debating, the housing market , helping to keep the recovery on track. with many economists forecasting a slowdown in home sales, peter cook looks at what effect a drop in home prices may have on the economy.

>> fannie mae and freddie mac, nation’s two biggest purchasers of mortgage loans, expect home price gains to slow next year. fannie mae forecast that last year’s home price growth will slow this year to 6.1% and 3.7% next year, below the 20-year average of 4.4%. others agree the slowdown is underway.

>> it would appear that prices have hit a top in terms of the general overall. you’ll still have differentiation among markets where supply is tight but overall, i would expect that prices begin to come in from this point.

>> through mortgage refinancing, homeowners last year turned a record $138 billion of home equity into cash. that extra cash for spending helped keep the u.s. economy on track. some economists are worried about the impact of any slowdown.

>> this is going to be a really big hit to the economy and i don’t think there’s any way around it. i think it’s better that it happen sooner rather than be delayed a couple of years when it will be a bigger hit and more people persony, at the individual level, more people out on a limb by having bought a home at too high a price.

>> other economists are not as worried about a potential housing bubble and believe the housing price slowdown will be gradual and the economy will benefit in the long run.

>> best case scenario is the housing market cools, the economy stays reasonably strong on a recovery track, prices stop going up but don’t fall sharply and the volume declines are modest. i think that’s a great scenario and i think it’s got an even odds chance of being the true one.

>> another wild card is interest rates, which of course have been on the rise. freddie mac, second largest buyer of u.s. home mortgages, however, is not worried.

>> stronger economy will likely push up mortgage rates which will weaken housing demand but the offset is the fact that family incomes will rise, families will feel more financially secure, supplementing housing demand.

>> perspective for you, the median price for a home in san francisco rose 20% over the last year to $650,000. that’s 11 times the median household income. in washington, peter cook, bloomberg news.

>> doug duncan is chief economist at the mortgage bankers association and his group forecasts housing prices will slow but by how much depends on where the federal reserve sends interest rates.

>> a lot of it will depend upon the pace of interest rates and the degree to which they rise. as rates rise, that will cut back slightly on demand for housing and we expect prices to slow moderately.

>> how inelastic is the relationship between mortgage rates and prices? on a basic level, taking out all the complications of principle, on an interest-only loan, a 1% jump in a mortgage rate will mean about $5,000 a year in increase in just interest payments. that seems like a lot of money and it seems like even a 1% gain in overall rates would have a significant impact on prices and demand.

>> the interesting thing is that house holds act on the nominal value of their house, that is the dollar price of their house. if interest rates rise enough to cut back on the demand for housing, such that there’s any threat that house prices will fall, people simply don’t put the house on the market . in the long run, there’s not a close correlation between rising interest rates and house prices falling. since world war ii and probably before that, there’s never been a nationwide decline in average house price. that doesn’t mean local markets haven’t from time to time seen a drop. but nationally, irrespective of whether rates are rising or falling, we’ve not seen on a year-long basis, a decline in house prices.

>> in six months, where’s the average 30-year mortgage, doug?

>> between 6.25 to 6.5.

>> what will keep it that low? the 10-year bond yield staying down or new ways of financing to keep it that low?

>> actually, you can get a good grasp on where the 30-year fixed rate mortgage will be by adding 1.5 5% or 150 basis points to the 10-year treasury yield. right now that’s at about 4.3. if you add 1.5, that puts you at 5.8, where about a 30-year fixed rate mortgage is on the street today. that’s a good measure over time.

>> that was brian sullivan speaking with doug duncan. shares of u.s. airways fell as much as 23% today, ending down 12.75%, 30 cents at $2.05. pilots have turned down the carrier’s proposal to cut pay and benefits, possibly putting it at risk for a second bankruptcy filing. the concessions were part of the airline’s plan to trim expenses. the seventh largest u.s. airline has said it may have to file for chapter 11 if it can’t reach agreements with the unions. fed that i chairman alan greenspan testifies on the economy tomorrow two weeks ahead of the next fed interest rate meeting. is he still committed to raising rates in a measured pace? we’ll look at this with briefing.com’s chief executive economist.

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Listen Market briefing --- Lane (medium)
Testifying on the economy and the outlook for the deficit --- kathleen (slow)
Oil price --- Su (fast)
NYSE --- Julie (slow)
Storm --- Bob (fast)
　
welcome to “world financial report.” i’m lane bajardi in new york. fed chairman alan greenspan will be back on capitol hill tomorrow testifying before the house budget committee on the economy and the outlook for the deficit. most economists expect greenspan will raise interest rates at the fed’s september 21 meeting but kathleen camilli tells us why there’s a chance this may not happen.

>> this is the meeting in advance of the presidential election and we have had a soft patch. of economic numbers and perhaps the fed may stay on hold. they have been moving gradually and will continue to move gradually and it won’t make a tremendous amount of difference to the bond market .

>> let’s get a look at the bond market ahead of greenspan’s testimony. the 10-year note on the day up 13/32. dean foods is cutting its earnings forecast. we’ll look at that right now on the bloomberg as i type it in and i can tell you this about it. dean foods is cutting its forecast for the year. it sees 2004 adjusted earnings per share between $2 and $2.05. for the third quarter, that breaks down to 44 to 46 cents, for the fourth quarter, 63 to 66 cents. dean foods citing weaker-than-expected performance% -in all areas and the company is increasing its share of purchasing authorization, as well, by $200 million. to see how that compares to what earnings estimates were available from thomson, they were looking for 56 cents a share in the third quarter compared to 44 to 46 which is what they’re saying now. 75 cents in the fourth quarter, compared to this 63 to 66 cents that dean foods is now saying they see in their range ahead. dean foods, after hours trading, we’re not sure if that particular trade took place at a time commensurate with the news. we’ll let you know if there’s a change. the price of crude oil fell today after hurricane frances missed u.s. production facilities in the gulf of% mexico. easing concern that supplies would be disrupted there. crude ended the regular session in new york down 1.5%, $43.31, 68 cents lower. prices, of course, down from the record of $49.40 a barrel reached last month. oil may have come down as the busy summer driving season ends. and saudi arabia’s move to cut oil prices may have affected trading. su keenan has been looking at what’s happening with oil prices and has the report.

>> you could call it an almost perfect storm of events driving the price of oil lower. starting with the most powerful storm in 55 years to ravage central florida, missing the gulf coast oil rigs. one analyst with citigroup says hurricane frances, which caused an estimated $6 billion of damage, was not as bad as expected for the oil industry. today, workers who had been evacuated, were back on the gulf offshore platforms which account for about a quarter of u.s. oil output. other factors driving the trade today, saudi arabia, which cut its prices to europe and the u.s., a sign it may be struggling to find buyers after a boost in output. jim steel, director of refco’s commodity research, says the supply situation will improve.

>> it wasn’t long ago that everybody was looking for oil to stay around $20 and it shows you that we could come down considerably if this point, say into the mid or early 30’s and if you look at five years ago, that’s historically a high price.

>> we could go lower than that. opec’s president says oil prices may fall more than 30% by year’s end after elections in the u.s. and iraq are over. the price of nymex crude oil futures have fallen 13% from the record lane mentioned, $49.40, reached on august 20. oppenheimer and company’s fadel gheit sees oil at $25 to $28 this time next year.

>> oil has done its best to at least keep the appearance that they have additional production. the fact of the matter, opec is producing as much as they can produce and what they are likely to say right now is that there is plenty of supply on the market and it is the perception of supply disruption that kept oil prices at the current unsustainable level.

>> for this week, traders are keeping an eye on the latest storm to threaten u.s. oil production, hurricane ivan, expected to pass the gulf of mexico this weekend, although many say it’s too early to tell.

>> coming up at 5:47 new york time, we will speak with michael brown, director of fema, about the situation with the hurricane and helping people out on that situation, coming up. mark crumpton will speak with the fema director in just about 40 minutes from now. stocks gained today as the price of oil declined led by auto-related stocks and homebuilders. for more on the trading action, julie hyman is at the new york stock exchange.

>> the dow and s&p both gaining today as we saw the price of oil come down off of its highs. we had unlikely suspects in terms of groups leading gains today, groups that had not led gains in some time. for instance, we saw automakers doing well today. that index leading gains today. we saw automakers like ford and g.m. within that group and also auto-related stocks like delphi and cooper tire. major indices pulling back from earlier gains as we saw oil pull back from earlier losses, however, still ending the day higher. also saw consumer durables doing well today, led in part by some of the homebuilders which belong to this index. hovnanian enterprises leading the gains after the company raid their full-year profit forecast and said home supply is exceeding demand. after some of the individual movers today, parker hanison, one of the gainers there, the world’s biggest maker of motion control equipment, a benchmark as their products are used in a number of different types of industrial equipment. a couple of things to look forward to tomorrow, alan greenspan testifying before congress and we will have the mid quarter update from texas instruments. we will watch for both of those events tomorrow. i’m julie hyman, bloomberg news at the new york stock exchange.

>> hurricane frances now over and despite initial estimates of $5 to $10 billion in damage, the storm will cost insurers less than feared. bob bowden has more.

>> risk management solutions does damage modeling for the insurance industry and now predicts frances will cost insurers just $3 to $6 billion. the price tag to insurers can be as little as half the storm’s total damage because of uninsured properties, deductibles and the like. risk management’s c.e.o. previously said the cost could be as much as $35 billion. hurricane frances came three weeks after hurricane charley cost insurers about $6.8 billion but even combined, the two storms from 2004 together do not approach the price tag of 1992’s hurricane andrew which cost over $20 billion. property and casualty insurers have limited losses from florida hurricanes by letting a state chartered company insure the riskiest entities. the industry is also limiting losses by tapping into a cot sfee―catastrophe fund created in 1993. checking shares of property casualty insurer, gains for 17 of the 20 biggest firms including st. paul, progressive, chubb and ace, on the optmirk -- optimism. a.i.g., allstate, hartford and loews also up. chris wine an, insurance analyst at lehman brothers, says barring new losses from hurricane ivan, the previous storms will have little effect on insurance prices. lane, back to you.

>> thank you. some economists say slow home sales will hurt the economy but others disagree. coming up, we’ll get the pros and cons on falling home prices and get the viewpoint on the issue from the chief economist.

Preview of market action
>> welcome back, everyone, to the special edition of television. i’m carol massar in new york. picking. our discussion, talking about the economy and corporate spending. we’ve heard from a lot of corporate executives about the impact oil specifically is having on the economy. john chambers of cisco said it last week. how much are you concerned or how worried are you about oil in terms of where it goes over the next few month?

>> i think right now there certainly is a risk premium priced into the oil, meaning the current level is not what the current supply and demand dictate. the problem is, as we go out, there’s not a lot of supply coming online or that supply is unreliable. it’s harder to get out. the quality of the oil being pumped now is lower, meaning higher sulfur, more difficult to process. we don’t have enough refining capacity in the u.s. to even process the incremental oil that’s coming out of the ground. so we’ll find ourselves in very much a supply-demand imbalance. prices will stay high, and go higher. we think in general the market is really pricing in $25, $26 oil into the price of oil shares but we think oil will be sustained at $30 30 to $35 going forward. the current price won’t last but $30 to $35 is a floor.

>> mike, do you expect oil to stay at these levels?

>> i wouldn’t be surprised that over the long haul we stay at these levels or higher. it’s still relatively inexpensive compared to where it was in the 1980’s on an inflation-adjusted basis and our use of oil is less per unit output so we think at the end of the day, i’ve seen estimates that this has taken about $600 a year out of consumers’ pockets for filling up their gas tanks more on average and that hurts folks dependent on the consumer at the margin, like wal-mart. you saw weakness in retail. we expect to see that continue. on the other hand, it’s simply a bubble, a one-time bubble that will work its way through the economy over time and as long as we stabilize here, we’ll find other ways to power things.

>> i actually think we might see a hit in the coming months. we were talking to our fuel company the other day, heating oil is 50 cents a gallon more than it was last year. you use a couple of thousand gallons, that’s a thousand dollars from your pocket. that’s an impact.

>> it is a drag on the consumer but it’s most pronounced on the lower end, the lower half. and you see that in the retail results and things like that. the other thing that you addressed earlier as a measure of risk, and that is a concern. because it is a measure of the risk aversion in the market , that you can look on both sides. if it comes down, that. help the market and suggest better things ahead for the market if it did come down.

>> i want to bring the chart into the discussion, a chart of crude oil versus g.d.p. the white line is oil and g.d.p. growth is the orange line. if you go back to the 1970’s, every recession has been preceded by a spike in oil prices and we see a spike there, the white line, and how economic growth has fallen off. are you concerned at all at this point that we could see the economy fall into recession because of the higher energy prices, pret?

>> at the current level, i don’t think it’s enough to take us into recession. as mike said earlier, we’re not as dependent. the economy itself does not use as much oil per unit of production as it did in the past. the real demand drivers right now are coming from the emerging markets of the world―china has become the second largest user of oil in the world, passing japan. 40% of the demand growth over the last five years came from china. so at the margin, much of the demand will be how fast china is growing, not necessarily how fast the u.s. is growing. at current levels, though, it’s not muff to take us into .

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Listen Special edition
>> this is a special edition of television. we’ll be discussing some of the key elements driving or hindering the financial markets , speaking about the jobs, earnings, investment strategies and global unrest. joining me are chip dickson, chief u.s. strategist for lehman brothers, also michael vogelzang, chief investment officer with boston advisers and brett gallagher, head of u.s. equities at julius baer investment management. thank you for being with us. a lot going on this year and here we are, it’s september. is this where you expected us to be in terms of financial markets , michael?

>> we’ve been talking for a while about 2004 being a lot like 1994 with strong earnings growth, slowing down a little bit. a little bit of deceleration. but not a big surprise in the stock market in terms of interest rates, probably a little surprised rates aren’t higher.

>> chip, are you surprised at all?

>> a little surprised. we expected a bumpy year initially. it is a presidential election year. usually the first half is relatively flat. we did expect rates to be a bit higher coming into the year and we didn’t expect oil prices to be as high as they are so putting it altogether, it’s not entirely a surprise.

>> brett, in terms of oil prices and the markets , surprise here? >> maybe the current spot level, but our view has been that over the long run, oil prices are going to go higher and be sustainably higher for years to come so the fact that it’s happening a little bit sooner than we thought really is a mild surprise.

>> and i do want to talk more about oil. but one of the key focal points certainly for the markets last week was the jobs report. i want to bring that up because certainly many investors are watching it. it came in weaker than expected but there was a sigh of relief in the markets . chip, what was your take on the jobs report?

>> well, the markets looking for reenforcement from the macro data to feel like the economic recovery is sustainable so it’s a positive for the market . it give it more conviction that it can sustain this kind of modest level of g.d.p. growth. so it was a positive.

>> mike?

>> couple the somewhat better jobs number than expected, at least from the month prior, with weak retail data and it shows we’ve hit that soft patch, that oil prices have hit the consumer and demand is off a bit and yet corporate america seems to be going along ok.

>> brett, would you stripe it as a―describe it as a soft patch?

>> yeah, we’re not getting blowout reports or terrible reports, but more of the same and i suspect we’ll see that through the rest of the year.

>> we have a chart to bring to your attention to bring perspective in terms of the job market . may 2000, market peak there. you can see the red line indicating all of the job losses we saw, specifically in non-farm payrolls. february 2002, bottoming out there. and of course we’ve seen job creation move up from that point. so, in terms of giving us perspective, we’re certainly not back up to the levels we saw in 2000 but would you say we’re in a better situation than we were?

>> yeah, i’d say absolutely. look at that chart and ask people to remember that that decline in job was coincidence with the tech bubble bursting and also remember there were a tremendous amount of jobs created because of y2k and these jobs went away so we’re dealing with excesses going away and we’re coming back and getting on sounder footing.

>> do you think we should see more strength at this point in terms of the economic cycle and certainly the fed keeping rates as they did and all the stimulus in the economy, should we be further along at this point?

>> if you look at the overall growth rates, we’re probably right about where we should be in a normal economic recovery. what has lagged has been job growth. there are a lot of reasons for that and i think they have to do with more than just the economic stimulus that’s put into place. i think there are a lot more structural reasons. we have the excesses of the bubble, we believe, still to work off. i don’t think we’ve fully gotten through that.

>> yeah, but i think one of the issues with the jobless recovery is, if you look back five or six years ago, frankly, the unemployment rate hovering around 5% would look like nirvana, right? so we’ve really come down a a long way. one of our thesis that has been that the bubble in 2000 really pulled in almost every marginal worker in the u.s., right? really pulled in everybody who needed to work and that’s sort of working off and still dealing with the effects of the bung bubble.

>> does that mean you expect we could still see weakness in job reports to come?

>> it wouldn’t surprise us. we think productivity is the key to what’s going on in the economy. the job rate is effectively a byproduct.

>> you bring up a good point, are we seeing significant productivity gains here?

>> we are seeing good productivity gains, less less less than recently but good historically.

>> brett?

>> i’m just always suspect about when we get about to measuring productivity so --

>> why?

>> i don’t think it’s something that really can be as precisely measured as many of these other things that we usually do and you have alan greenspan harping and focusing on productivity as a justification for the policies he’s followed over the last couple of years. i think? some of these policies will come back to bite us. i think there’s been too much accommodation for too long and we’ll feel the effects a year out.

>> i do think one of the things wore seeing in terms of productivity and other numbers is a harsh reality of a post bubble environment. this recovery is different from most recoveries because it is a post-bubble recovery, making it more fragile, more dependent on the macro reenforcement and things like that and as a result what are corporations doing? they’re holding back in terms of hiring and investment decisions longer than they would and that may be coming through in the productivity numbers.

>> the perfect example of that was the c.e.o. of 3m, probably six months ago, came out with a famous quote “we’re not going to hire until we see the whites of the recovery’s eyes.” these guys have been burned so much in that fall on that chart that it’s really, it’s not a surprise they’re being more cautious now.

>> and we’ve been talking to c.e.o.’s who say their hiring plans are on hold at this point. how problematic being that be for the economy at this point?

>> i don’t know that it’s problematic but it certainly has implications for the rate of growth going forward. we’re also seeing, not just on the hiring side, but on the capital spending side, there are a number of industries―cash flows right now in corporate america are tremendous. the investment rates have not kept up with the cash flows so the capacity to invest is there, we just haven’t necessarily seen the followthrough in relation to the size of the cash flows.

>> what do you think it will take to get the companies to start spending here.

>> in i think it’s just time. i think part of it’s reenforcement, a lot of it’s expectation and confidence. if we get more good numbers, that will help. there will be other issues. it depends on what the executives feel the future environment will look like, right? are they going to be rewarded for making investments or will it be marreder, will there be more economic friction or less? i think we’re past the point of peak stimulus and they’re thinking about that.

>> mike?

>> i think they’re trying but there’s a huge wall of worry, the cliche wall of worry with interest rates and iraq and the election and on and on and on. so i think we’re seeing a fair amount of investment given the fairly uncertain environment.

>> we’ll take a break and be back in a moment.