Interview: Money & Sports (slow)
>> with the college football bowl season underway and the national football league playoff race heating up, fans in cities from atlanta to chicago are preparing to party and spend money. in this week’s “money & sports,” bloomberg news reporter mike buteau has all the details out of our atlanta newsroom. mike?
>> as most college football fans remain focus said on the january 4 matchup between number one southern california and number two texas in the rose bowl, city officials in atlanta are bracing for gridiron gridlock of their own. there will be three major football games played in the georgia dome starting with the peach peachbowl between l.s.u. and miami and on new year’s day, the falcons hosting the panthers and the next day, the sugar bowl, georgia and west virginia in a b.c.s. matchup. this game and these events are looking at bringing over $200 million of economic impact to atlanta. interestingly, to welcome all of the fans that have moved to the area from the gulf coast, new orleans being a major city where the sugar bowl was relocated from, they’ll have a marta graparade―mardi gras parade on the streets of downtown. you’re looking at possibly the biggest sports weekend in atlanta since the 1996 olympics. as one city official told me, this is not overwhelming but something they’ve prepared a long time for. during all these football games, you’ll have about 12,000 hot dogs sold and 20,000 orders of nachos which might increase antacid sales in atlanta. the bears have a chance to wrap up a playoff spot this week with a game against the green bay packers. the bears haven’t won a playoff game since 1985, with an eight-game winning streak going on. merchandise is flying off the shelf and bar and restaurant owners say business has tripled. if the bears get to the playoffs, this will be about a $7 million to $10 million economic impact on the city. with the bears’ suggest success, once in a while you get to see the super bowl shuffle video come on the air. mayor richard daley wants a second team in the national football league and has floated the idea, saying they want to build a dome stadium that would cost about $600 million to $1 billion, tied to getting the 2016 olympics. if the new orleans saints are going to relocate, they won’t go to chicago but stay in new orleans or go to los angeles so the idea might not go over so well. it’s cold and snow on the ground throughout most of the u.s., but a golf story to talk about. morgan pressel, 17-year-old teenager from florida, signed with callaway golf company. he will like likely be as competitive as michelle wie who signed with nike inc. who signed for $10 million. on and off the course, this will be a rivalry fans will watch closely. pressel is brash and said about michelle wie, michelle is more concerned about promoting michelle wie than women’s golf so this is a rivalry that callaway is looking forward to, nike might be interested in, and all in all, golf fans are looking for the next annika sorenstam. for “money & sports” this week, i’m mike buteau in the atlanta newsroom. back to you.
>> our thanks to bloomberg’s mike buteau. a seat on the new york stock exchange sold for $3.7 million today, up $100,000 from the previous seat sale as the exchange gets ready to suspend the sale of memberships in preparation for its merger with archipelago holdings. the deal will transform the 213-year-old institution into a for-profit publicly traded company. the last record seat sale on the new york stock exchange was $4 million. we are heading into santa claus territory for the u.s. stock market . the so-called santa claus rally usually gains momentum during the last five trading days of the year and continues through the first two days of january. according to stock trader’s almanac, the rally has been good for an average 1.7% gain since 1969. last year was the first time the s&p 500 index fell during the period. the average return over the four years before 2004 was above the historical average, 2.8%. the almanac continues to say that santa’s failure to show tends to precede bear markets , or times stocks could be purchased later in the year at lower prices. another factoid to keep in mind, the s&p 500 has fallen in january in four of the past six years, including a 2.5% loss in the first months of 2005. declines followed a string of seven straight january gains from 1993 through 1999. as we head into the last week of the year, we are all aware of where the markets are headed and what does that mean? our next guest, andrew sisht with―siebert.
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Listen Market briefing --- Lori (slow)
NYSE --- Deb (fast)
Chart of the day --- Tom (slow)
a quiet session on wall street, stocks little changed on relatively light volume. dow jones industrials down six points, closing at 10,883. some of the weaker sectors today, homebuilders and energy. s&p gained half a point, 1268 the closing price on the broad market average. the nasdaq composite up nearly three points on close at 2249 today. deborah kostroun standing by at an empty new york stock exchange. not much movement in the major market averages and it looks like people took off early for the holidays.
>> they certainly did and with commodity markets closing early, the bond market closing early, we didn’t see a lot of interest. we didn’t even break a billion shares here at the new york stock exchange. that actually, our lightest volume since the day after thanksgiving. very little changed with the below average volume but we did have economic reports that many traders are watching. that was new home sales falling more than expected. we did see this as we’ve been seeing mortgage rates rising up a little bit. also, some of the higher prices for homes leaving a record number of homes out on the market . so what you did see with the laggards, grocery chains, they were lower. albertson’s, that was the biggest laggard in the s&p 500 and that really the culprit there. they ended negotiations to sell itself but the homebuilders sharply lower on the new home sales report. leaders in the session, retail, ahead of the holiday weekend, performing well. the consumer confidence number helping out retail names. commercial services and real estate performing well. looking at retail names, kohl’s was added to csfb’s focus list, one of the reasons that kohl’s was an outperformer there. the dow transportation average has had a really great week. in fact, once again, closing at a record in today’s session. something that we’ve been seeing this week, fedex has been a very good performer after their earnings, hitting a record. also, we did see many railroad stocks coming in at a record, once again in today’s session. we saw that yesterday. airlines performing quite l.you saw the morgan stanley cyclical index hitting a record in today’s session so a lot of the cyclical stocks performing well today. affiliated computer services gaining quite a bit. the “new york times” reported the company may be sold to a private equity firm for $8 billion. the “times” saying that a group, including texas pacific group, bain capital and blackstone group is in talks to buy a.c.s. and selectron expect profit to be two to four cents a share in the fiscal second quarter and that, actually, a little lighter than expected so selectron was lower today. back to you in the studio.
>> thank you very much for that. the difference between the two-year and 10-year yields near zero. a flat curve. what would an inversion signal? merrill lynch economists disagree with what that would mean with regard to inversion. time for a look at “chart of the day” with tom keene.
>> it was a dead friday, we got through the day, stock market didn’t do much so the recreation today was watching the difference between the two-year yield and 10-year yield and if we go to the chart, you can see, today’s a historic day. here we have a good 25 years of the difference between those yields and it’s real simple. we’re back down to zero, not quite zero, one or two basis points, .01 or .02% the difference between the yields. when you get negative, it usually means recession and the two red rectangles are before the recessions. there is a raging debate among economists about, is this time the same? david rosenberg at merrill lynch says we should respect history and he’s looking not for recession but a sharp slowdown in the american economy in late 2006. bank of america just simply disagrees, they look for above-trend growth, maybe not the boom we saw this year, but they say don’t believe in a flat curve or an inversion this time around.
>> we’ve seen the yields on the three’s and five’s below the two here for a little while.
>> they’ve already inverted.
>> so two basis points away today.
>> and i got a message today from a bloomberg user on this, which spread matters? the conventional spread is the two-year, 10-year spread, the one that’s now just above flat. but the news among sophist cats this week is some of those differences in yield short term actually inverted, so that was something that occurred in the last week or two.
>> with the shorter term falling, the interest rate rises and the longer end of the curve is monitoring the inflation side, what are we learning about the economy?
>> what we’re learning about the economy is we’ve become data dependent. we’re learning, just like the fed, we’ll go week by week, month by month. goldman sachs came out two hours ago and called this a squishy end of the year. that’s not an economic term. i don’t think that’s in rain loomberg dictionary but they call it a squishy economy so going into the traditional slow week next week, there’s a lot going on here in among the holiday doldrums.
>> what are you hearing from economists about when we could see a true inversion?
>> it’s a mixed picture. cantor fitzgerald john herrmann says you’ll see it before the end of the year. some say you won’t see it.
>> does a flatter yield curve influence the fed either way?
>> i don’t know. it’s a very interesting question and they got to pay attention to it.
>> tom keene, thank you very much for coming in, bloomberg news editor-at-large. january 1 just around the corner. how will you be ringing it in? atlanta seems to have its calendar and stadium full. the playoff race heats up and fans pour into the city. can atlanta handle the new year’s crowd?
