NBR Transcripts: 04-25-2006
Tuesday, April 25, 2006The President's proposal for the pump
President Bush today tackled the issue of skyrocketing prices at the pump, even as a new report showed consumer confidence is at its highest level in four years. The president ordered a halt to deliveries of the nation`s strategic petroleum reserve and leading Democrats countered with their own suggestions on how to bring down gas prices. We have two reports tonight, looking at those proposals and why Americans are still so optimistic about the economy. We begin with Stephanie Dhue in Washington.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With some consumers spending $80 to fill the tank, President Bush says he has a plan to help bring prices down. It includes temporarily halting the purchase of oil to fill the nation`s strategic petroleum reserve.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our strategic reserve is sufficiently large enough to guard against any major supply disruption over the next few months. So by deferring deposits until the fall, we`ll leave a little more oil on the market. Every little bit helps.
DHUE: The president`s plan also calls for easing environmental standards on fuel grades, calls on Congress to repeal about $2 billion in energy company tax incentives and calls for the increased use of alternative fuels like ethanol. Democrats blasted the president`s strategy, calling it too little too late.
SEN. CHARLES SCHUMER (D) NEW YORK: There are five words missing from the president`s speech today -- "get tough on big oil." The president refuses to do that.
SEN. HILLARY CLINTON (D) NEW YORK: We need more than a speech. We need more than a line in the state of the union. We need specific legislative recommendations that the White House will get behind and make sure we get enacted as soon as possible.
DHUE: Democrats are proposing a windfall profits tax on oil companies. The president takes a different approach, calling on the energy industry to invest in domestic production and alternative fuels. Advocates for energy efficiency say what`s missing in the political blame game is a serious effort to decrease energy consumption.
BILL PRINDLE, DEPUTY DIRECTOR, AMERICAN COUNCIL FOR AN ENERGY- EFFICIENT ECONOMY: Market conditions are such that we can`t promise people abundant supplies of cheap energy in the short term and maybe not in the long term. So under those conditions, what are our choices? We really have to focus on the demand side.
DHUE: With congressional elections in the fall, there aren`t too many politicians calling on consumers to use less fuel. But with gas prices now over $3 a gallon, there`s certainly many consumers that will start using less on their own. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
Eternal Economic Optimism
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Erika Miller. Gas may be topping $3 a gallon in parts of the country. The housing market may be cooling off and the war in Iraq may be continuing. But none of that seems to be hurting consumer confidence.
ALAN SKRAINKA, CHIEF MARKET STRATEGIST, EDWARD JONES: People feel good about their job, their income, and the prospects for the economy. When they feel good, they spend and invest, and that`s good news for the market and the economy.
MILLER: The Conference Board`s index of consumer confidence rose to 109.6 in April. That`s the highest level in four years. Nearly everyone on Wall Street was expecting a decline. For now, consumers seem to be shrugging off high energy prices. But experts say that could change if gasoline prices keep rising.
LYNN FRANCO, DIRECTOR, CONSUMER RESEARCH CENTER, CONFERENCE BOARD: I think if prices at the pump continue to tick up, we`re going to see it take a little bite out of confidence. It`s still at a strong enough level that it`s not going to have a severely negative impact, but we could see a cooling in confidence and a cooling in spending.
MILLER: There was more good economic news today in the form of the existing home sales report. The National Association of Realtors says sales rose three-tenths of a percent to a 6.92-million-unit annual rate in March. Most experts had expected sales to slow as a result of rising mortgage rates. But there was one troubling sign: inventory of unsold homes hit a record. Experts say, taken together, today`s data suggests the economy is on solid footing.
SKRAINKA: It paints a picture of a relatively strong economy, one that has not shown any signs at all of slowing. And it also tells me that high energy prices are not going to kill this economy.
MILLER: Today`s reports are encouraging, but analysts say the news could be even better on Friday. The first look at gross domestic product in the first quarter is expected to show the economy grew at its fastest pace in two and a half years. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
Commentary: Secrets From The Summit
SUSIE GHARIB: Tonight`s commentator was among the guests at the White House last week during a summit with the president of China. She says, while it may not appear to be the case, a lot was accomplished at that summit. Here`s Barbara Hackman Franklin, president of Barbara Franklin Enterprises and former U.S. Secretary of Commerce.
BARBARA HACKMAN FRANKLIN, FORMER U.S. SECRETARY OF COMMERCE: Last week, I attended the White House luncheon honoring China`s President Hu Jintao. President Hu and President Bush were cordial and comfortable with each other. No breakthroughs were announced, but that isn`t what summits are for. They promote serious talk and relationship-building and there was progress. On the trade front, the heavy lifting was done earlier at the meeting of the U.S.-China joint commission on commerce and trade. Progress was reported in three areas: intellectual property rights protection, market access and transparency in regulation. And the Chinese signed contracts to buy $16 billion worth of U.S. products.
Still, there are political problems. The ballooning trade deficit and China`s undervalued currency concern our Congress. Over time, a better trade balance should occur as China implements its WTO commitments, as the currency appreciates, and as China moves from an export to a consumption economy. This summit covered other issues, too, notably security and human rights. The U.S.-China relationship is far more complex than when President George H.W. Bush sent me there as Commerce secretary to normalize business relations. Today, the commercial relationship is the bedrock, and this enables the leaders to deal more easily with the difficult issues. Summits keep the relationship current, and this one achieved that purpose. I`m Barbara Hackman Franklin.
Paul Kangas' Stocks In The News
PAUL KANGAS: That jump in consumer confidence and the rise in home sales put a damper on stocks this morning on fears that they could keep the Federal Reserve in tightening mode. Stocks did open slightly higher on solid earnings from AT&T and Dupont, but the high price of oil stopped the upturn. At noon, the Dow was off 62 points, NASDAQ down 11. The market trimmed its losses a bit this afternoon, but was hobbled by a poor five- year Treasury note auction which lifted interest rates. Dow Industrial Average closed off 53.07 points at 11,283.25. NASDAQ Composite lost just over three points ending at 2,330.30. Standard & Poor`s 500 Index fell 6.37 to 1,301.74. Over in the bond market, the 10-year note fell 21/32 to 95 20/32, lifting the yield to 5.08 percent.
Big board volume leader on 26.8 million shares, Lucent Tech (LU) down $0.04. Of course the company soon to be acquired by France`s Alcatel Corp., but Lucent reported a 33 percent drop in second quarter earnings, $0.04 versus $0.06 a year ago, although that was a little better than expected.
Ford Motor Co (F) a $0.02 gain.
Pfizer (PFE) down $0.07.
AT&T (T) rose $0.07. The company in with first quarter results, $0.52, $0.03 above the Street estimate, excluding charges related to the SBC/AT&T combination.
Nortel Networks (NT) was down $0.02, fifth in big board volume.
Then Time Warner (TWX) a $0.06 gain.
Followed by General Electric (GE) $0.04 rise there.
ExxonMobil (XOM) down $0.46.
Valero Energy (VLO) off $2.80 despite big first quarter earnings of $1.32 versus $0.96 last year, $0.07 above the Street estimate, but a lot of the energy stocks were hit by profit taking today.
Citigroup (C) lost $0.54, tenth in big board volume.
Big blue, IBM (IBM) up $0.56. The company`s boosting its quarterly dividend by 50 percent. That`s the biggest ever in the company`s history. It`ll go from $0.20 to $0.30 quarterly and the company`s also boosting its stock buyback program by $4 billion to a total of $6.5 billion.
Dupont (DD) $0.58 loss. First quarter earnings excluding one time expenses, $0.93 up $0.13 from the Street estimate and the company also boosted its full year outlook, stock still down a bit.
United States Steel (X) off $2.08. First quarter earnings dropped to $2.04, versus $3.51 last year and there is speculation that big steel may bid for AK Steel, just might make a buyout bid.
Alcon Inc (ACL) tumbling $13.32. The eye products company had first quarter earnings of $0.95, up from $0.80 last year, $0.07 better than the Street expected, but the company`s sales and outlook for its restore lens product were quite disappointing. On top of that, Standard & Poor`s downgraded it from "buy" to just a "hold."
The Chicago Mercantile Exchange Holdings (CME) tumbled $18.25 on traded $10 below that during the session. First quarter earnings $2.61, up from $2.04 last year, but $0.02 below the Street estimate. No room for disappointment.
Rayonier (RYN), this is the Timberland real estate investment trust, down $2.80 on lower earnings, first quarter $0.30, down from $0.45 a year ago.
And a home builder with lower stock price and lower earnings, first quarter for M/I Homes (MHO) was $1.14 versus $1.16 last year and that`s despite an increase of 7.3 percent in revenues.
Reynolds American (RAI) up $0.84. The company will acquire smokeless tobacco firm Conwood. The price, $3.5 billion.
And then Indymac Bancorp (NDE) up $3.44. First quarter earnings $1.18, well above last year`s $0.98 and Standard & Poor`s today repeated a "strong buy" on Indymac.
Google (GOOG) topped the active list on NASDAQ with a $13.34 drop.
Intel (INTC) up $0.24.
Microsoft (MSFT) showed no change.
Apple Computer (AAPL) a $0.42 gain.
Sun Microsystems (SUNW) you just heard the interview there, edged up a penny.
Dell (DELL) $0.15 gain.
Cisco Systems (CSCO) $0.18 rise.
Oracle (ORCL) was up $0.17.
Ebay (EBAY) dropped $0.44.
Tenth in dollar volume was Yahoo! (YHOO) with a loss of $1.02 a share.
Amazon.com (AMZN) closed down $0.24. After the close, first quarter earnings came out, $0.12 versus $0.18 a year ago, but revenues exceeded expectations and the stock edged $0.40 higher in after hours trading.
Then Serologicals (SERO) up $7.83. Millipore Corp. will acquire it for $31.55 a share in cash and Millipore stock jumped $5.90 to close at $75.25.
And look at this gain in NutriSystem (NTRI) up $17.31. The company of course sells weight management systems. In its first quarter earnings, weighty indeed, $0.60, way up from $0.10 last year, a six fold increase.
Those are the stocks in the news tonight.
