Market briefing---Matt (slow)
Alan Greenspan
Interview: Bank of America Corp---Levy, Mickey---Economist
>> quarterly profit rose 9% at the world’s biggest manufacturer of pacemakers, medtronic earned 38 cents a share in its third quarter, up from 35 cents a year ago. sales also up 15% with big gains coming from the sale of defibrillators, which residence store a heart’s normal beat with an electric shock. shares of yum brandses are rising in after-hours trading. the company owns taco bell, kentucky frifed chicken and pizza hut and reports that fourth quarter earnings grew 24% to 70 cents a share. the company cites overseas sales as well as stronger performance at taco bell. and speaking of eating, applebees says earnings per share rose 14%, 41 cents a share was the final tally there. revenue matched expectations, coming in at $248 million. the company forecasting 2004 earnings will be in line with analyst expectations. apple bee shares are down 3% for the year. goodyear tire and rubber lost almost .1% of its market value today. the company says the s.e.c is formally investigating it for ref stated financial results and goodyear says its own inquiry may delay its 2003 annual report to the federal agency. back in october, good year said it would restate earnings from 1998 through mid 2003. the tire maker says there were problems with planning software and errors in internal billing. and that in december, it said there was improper accounting at its european unit, which would delay the 2 2002 report. changing gears now, the federal reserve chairman alan greenspan testified today, of course, that the economy may grow as much as 5% this year, leading to faster job gains. our next guest will give us the reaction of today’s testimony and tell us what he expects from tomorrow’s senate testimony. mickey levy, chief economist at bank of america joins us now from his firm here in new york city. mr. levy, thanks first and foremost. if i can get right into it, what was the surprise? i understand you were surprised by some of greenspan’s commence and tals overall markets, both stock and bond market’s reaction to them.
>> well, greenspan paint add rosie picture of current economic activity and the outlook for sustained growth. what surprised me is the federal reserve central tendency forecasts of economic growth for this year. and that is compiled from the outlooks of all the federal reserve members, not just alan greenspan. 4.5% to 5% real growth measured fourth quarter to fourth quarter and 5.25% to 6.25% on nominal g.d.p. while they also forecast inflation to remain low. and this is quite an upward revision in their expectations about growth. meanwhile, the fact that they expect inflation to stay low tells me that the fed certainly has a higher comfort level about the stronger growth without it generating higher inflation and reading between the lines. they clearly believe that the productivity gains we’ve seen will remain very, very healthy and potential growth is probably higher than we had earlier though they were thinking of.
>> i understand that he also said that it’s not out of the realm of possibility that the u.s. economy could add 2 postpartum depression 6 million job this is year? that would work out to about 200,000 new jobs a month for the balance of the year is. that accurate? is that possible?
>> he said that in responses to a question, refering to the administration’s forecast. yes, it is possible, given the strength in the economy and now that businesses are expecting sustained productivety gains and they’re very lean on the employment side. now have is the time when you should expect businesses to start expanding hours worked of existing employees and increasing employment. and on a percentage basis, those types of numbers are higher than i would expect. but they are doable.
>> so are―what are you forecasting in terms of job growth for the year?
>> oh, something modestly lower than that. maybe 150,000, 160,000 per month. but that is still a healthy number.
>> ok. he also said today that the fed was, quote, not overly concerned about consumer debt. i’ll just point out to our viewers that last week, total nonmortgage debt, consumer credit reached an all-time high, through the $2 trillion level. never done that before is. that something we should be concerned with? your reaction to that.
>> no. i concur with his assessment. yes,out standing level of debt is high. but interest rates have come down quite a bit and if you look at, for example, a ratio of consumer debt service to income, it’s not onerous at this point. householdseses have dramatically improved their balance sheets. and so i generally concur with his assessment.
>> final 15 seconds. he said again he is going to be patient. how patient will the feds be in your estimation before raising rates?
>> well, i think they will be patient and it’s going to take a stabilization of inflation. it’s going to take some employment gains and i think they will be on hold maybe for the rest of this year or maybe just toward year end will think about tightening.
>> mickey levy, thank you for joining us tonight t. he ises the chief economist at bank of america. u.s. leaders have voiced their opinions about china pegging its currency to the dollar. now a report suggests china may consider changes. we’ll have the details on that when we go to tokyo.
