Interview: BP Capital
>> transportation stocks led a late-day rally to help push the nasdaq higher. robert gray has details with this report from the nasdaq marketsite.
>> the nasdaq composite rallying in the afternoon as crude oil came off their highs, settling below $56 a barrel and also with the 2:00 p.m. new york time release of the fed’s beige book showing the economy is expanding in all areas with only modest consumer price increases, borne out by this morning’s consumer price index which unexpectedly declined. i want to look at the groups within the trading, transports the strongest group, counter-intuitive with crude oil prices rising but the fed beige book helping with the economy expanding, transports will be transporting member goods. computer-related shares the weakest group throughout much of the session but turning around and adding to the gains. biotech, the only industry group weaker on the nasdaq. within reportorts, u.t.i. worldwide rising. elaine becker of benchmark company saying the company indicated margins would improve during the year and the company has little long-term debt and should be paid down by the end of the year. tech stocks moving, apple computer rising on a morgan stanley note saying inventory concerns from the past few months are overblown and the buildup was for expansion of the retail partnership with wal-mart, now stocking ipod minis, shuffles and classic versions. we saw intel shares turning around midday and silicon shares, w.r. hambrecht saying we’ll probably see rising third-quarter sales as demand for consumer electronics increases. also, looking at retailers, quickly, american eagle outfitters, urban outfitters and o’reilly auto motive moving to record highs in the session. sears holding also one of the strongest stocks on the nasdaq 100. at the nasdaq, i’m robert gray.
>> earlier this half hour, we showed you a snippet of energy investor boone pickens talking about opec’s decision to raise production levels. brian sullivan spoke at length with boone pickens today. here’s more of what he said about the outlook for energy.
>> the refineries are taking everything they can use and it’s―the available oil, about 84 million barrels a day worldwide, is all the refineries can use. and in the fourth quarter, your demand will be up to 86 million barrels a day and now you’re going to try to take care of 86 million barrels a day with 84 million production. you can’t raise that supply. your supplies―they’re doing everything they can and you’re barely making refinery requirements. on the other hand, that’s all the refineries can do. the whole thing, brian, is just tight everywhere.
>> is your hedge fund long oil or is it easier maybe to be a seller because there are a lot of willing buyers out there?
>> the last thing i would be in this market would be short. no, we are long. our hedge fund has performance of 60% this year. that’s the facts. it’s 60%.
>> didn’t get hurt at all when oil fell last month?
>> it went off. we dropped from 44 to 32 and we’ve come back up to 60% on our performance.
>> is heating oil a better play in distillates than just crude oil right now?
>> no kidding. heating oil has been very, very strong and―if i had the same money on oil and if i could go back and put it on heating oil, i’d make more than i did on oil but i never complain about a profit or where it came from. we have the market fundamentally analyzed and i think we’re doing good on it. there’s no question, our performance, up 400% in four years.
>> i want to ask you about the energy bill before congress, your position on it, and would you change your strategy on investing in oil however the energy bill comes out?
>> i don’t think so. what we’ve seen, it’s going to be constructive, it should be passed. all alternatives should be looked at now. the economics will drive a market one way or the other unless you have mandates or the government gives some kind of incentive and i think incentives should be given to the development of the shale oil on the western slope out in colorado, wyoming and utah. i think that would be important. people say, what about wind? wind’s fine. i think that wind will be used. solar’s ok. hydrogen, i think’s 30 years away and i think you’ll see natural gas probably pulled off at some point from power generation and will be used for transportation fuel.
>> that was boone pickens, chairman of b.t. capital. shares of autonation rose to a record before falling earlier today. coming up, we’ll hear from the chief executive. .
在线播报
Listen Market briefing --- Ellen (slow)
Market today --- Deirdre (slow)
NYSE --- Deb (fast)
Energy policy --- Bob (fast)
because of higher oil prices. in terms of trading volume today on the new york stock exchange -- what we saw for bonds maturing in five years or less, they declined after an index of manufacturing rose. also, the report showed foreigners bought less u.s. debt in april than the prior two months. that report definitely weighing on the currency market where the dollar fell against the euro, the first drop for the dollar in six days on the heels of that report showing foreign purchases of u.s. assets came in weaker than anticipated. stocks rebounded late in the session, finishing the session higher. deirdre bolton was tracking the activity throughout the day and joins us with the wrap-up.
>> optimism about the outlook for corporate earnings trumped concerns about oil prices. some money managers say the key components are there for the markets to move higher.
>> what we’d want to look at, again, is the three-legged stool, interest rates, corporate earnings and economic growth and right now those look pretty solid.
>> oil above $56 a barrel helped energy stocks. exxon, chevron and conoco advanced, sending the s&p energy index to close higher by 1%. this group has posted the largest gain than any other on the s&p 500 this year, jumping nearly 20%. financials rose on better than expected earnings from bear stearns, lehman brothers’ yesterday.
>> if you look at the manner in which bear stearns beat consensus estimates this quarter, it was in a rising, competitive environment. so even though there’s pressure on fees, they beat their numbers so that tells us that we’re seeing corporations with very strong balance sheets, a lot of cash on hand, looking pretty solid in this environment. so the earnings expectations of 8% to 10% currently, we think, is a reasonable one to hit.
>> goldman sachs reports earnings tomorrow and the world’s biggest investment bank, morgan stanley, out next week. among other financials, 28 companies in the s&p 500 banking index, almost 5% higher over the past year, still behind the s&p 500’s almost 6.5% gain during that time. ellen, back to you.
>> in terms of the day ending higher, certainly it took several attempts to get there. for more on the trading action, here’s a from the deborah kostroun.
>> the last hour of trading helping out stocks. stocks closed at a three-month high, the highest since march 8, as measured by the wilshire 5000. crude oil at the top of everyone’s mind on the day. we saw integrated oil performing well on a couple of things. crude oil, at one point, up 3%, but closed up only 1%. opec will increase production beginning july 1 and that couldn’t tumble not only crude oil but also integrated oil or oil services and other energy stocks performing well in today’s session. we’ve been talking about brokers all week mainly because lehman brothers reported earnings yesterday and bear stearns releasing better-than-expected earnings. lazard, although better than expected, however, that stock a little lower. and tomorrow we have goldman sachs releasing their earnings. something else that many stock traders talking about, treasury yields at the highest yield in five weeks at 4.11% and the dollar falling against the euro, the first day in six, after the dollar, which is actually trading near a nine-month high against the euro, and it looks like the moves in currency cutting zimmer holdings, their sales growth by 2/3. they see full-year sales of $20 million with growth of only 7%. only two months ago, they said sales would grow 2.3% to $69 million. one of the things they cited was the change in currency. dow gainers on the day, boeing at the top of the list and airbus and boeing have won half as many orders at the paris air show this week as they have all year, confirming a rise in demand, combined orders of $32 billion at that show. i’m deborah kostroun at the new york stock exchange for bloomberg news.
>> and certainly it was oil that was the backdrop for much of the trading action today in addition to the inventories report and opec. we also heard from president bush, a speech on energy policy. let’s find out what all of this news means from bob bowden. bob?
>> a big day for oil, ellen, yes, innerdeed. the u.s. is using up oil inventories faster than analysts thought. the energy department said oil supplies fell 1.8 million barrels last week, almost double the 1-million-barrel drop analysts expected. part of the reason for lower inventories, u.s. refineries operated last week at 96.7% capacity, using up the oil, the highest capacity since july of last year.
>> it would appear to me that we have refineries running 24/7 and the import system strained at 24/7 and we still have to grow output by maybe a million, a million and a half barrels and that calls for a stock draw.
>> president bush talked about refinery capacity today, pointing out that the u.s. has not opened a new refinery since 1976 and that now the country’s importing over 10% of its gasoline needs.
>> i’ve directed federal agencies to work with states to encourage the construction of new refineries on closed military facilities and to simplify the permitting process for these new refineries.
>> there was also news from opec. opec announcing it would raise output quotas by half a million barrels a day to 28 million a day, an increase of 2%, 1.8%. many, like boon pickens said the new opec quotas will not lower prices because the highest quality crude oil is already being pumped out of the ground and the added increment is the least desirable oil.
>> that is low gravity, high sulfur, undesirable oil that the refineries don’t want so it’s unlikely that oil will even go into the market . does it bring the price of oil down? no. the oil fluctuates daily but the trend is up and you’ll see $60 oil in the next three, four months.
>> today we saw $56 oil and change before it fell back off the highs, closing floor trading at $55.57. 28% year to date. oil had been up 3% intraday, finishing up 1% for the day.
>> certainly this has had a major effect in terms of the inflation data because crude rose to the highest in more than two months today. energy prices, if you recall, declined last month and government reports out today show the u.s. economy is growing without creating inflation. june grasso is here with that part of the story. june, specifically, right, the possible effect on the fed interest rate policy?
>> absolutely, ellen. lower energy costs drove down the prices consumers paid for goods and services last month. prices paid by consumers fell .1% in may, the first decline in almost a year led by a drop in energy prices, a sign inflation is not an immediate threat to the economy.
>> they’re right in line. every month there’s a little up tick or down tick and energy is the volatile number so i think what the bond markets care about is that inflation is contained and that we don’t get huge surprises so basically, very good number for the bond market long term and short term.
>> the cost of all goods, including apparel, cars and food, fell .4% last month. core consumer prices, which are less volatile as they exclude energy and food, rose .1% in may. there were surprises in industrial production and manufacturing reports. industrial production at factories, mines and utilities rose .4% last month, twice as much as expected. an index of new york state manufacturing rose to 11.7 this month from minus 11.1 in may, the biggest increase in two years so inflation is still tame, but some economists warn it will accelerate. 65 of 67 economists surveyed by bloomberg news expect the central bank to raise the rate to 3.25% at its next meeting in two weeks.
>> thanks so much for that report. we mentioned boone pickens and his views on energy. coming up, we’ll hear how high he thinks oil prices will go.
