| Media | Television |
| Station | CNBC |
| Market | National Cable |
| Date | March 15, 2004 |
| Time | 11:10 AM PT |
| Show | Street Signs |
| Subject | James Moffett/UMB Scout WorldWide Fund |
Ron Insana, Anchor:
Spain's Socialist Party claimed victory last night ousting the center-right party of Prime Minister Jose Maria Aznar just days after the terrorist bombings in Madrid killed 200 people and left 1500 injured. And that upset what had seemed like a likely victory Aznar's Popular Party, which had been in office for the past eight years. Some voters believed al-Qaeda plotted the attacks to punish Aznar for supporting the war, which Spaniards overwhelmingly opposed. Taking a look now at how Madrid is reacting to the news of yesterday's elections. The stock there market there, known as the IBEX 35, plunged four percent, or 333 points, to 7,699. Madrid's index, as we said, troubled by not just the election developments, but also the latest on the terrorism front as well. Now, how will all these events play out in a global market place and here at home? In today's "Street Smarts," Quinn Stills, chairman and CIO at Palisades Investment Partners joins us, and Jim Moffett. He is portfolio manager at UMB Worldwide Fund. I thank you both for being with us. And, Jim, if I may start with you, we saw Europe sell off pretty sharply, not only in the wake of the terror attack, but also now in this move to the left in Spain. What is your read on all of it?
Jim Moffett, Portfolio Manager, UMB Scout Worldwide Fund:
Well, I think it's to be expected that it would sell off in the face of the terror attack. I mean, the markets were-have been weak for a number of weeks both here and abroad. This just helped push it a little faster and specific areas been hit the same here as abroad. The travel industry, Iberia Airlines and...
Insana:
But, Jim, what about the broader political implications if there are any? Emanating from Spain and maybe outward that restive populations who are concerned not only about terrorism, but about those countries that have aligned themselves with the United States, appear to be shifting left. Is that a new political risk that global markets, particularly in the Western world, might start to face?
Moffett:
It probably is. It's got to increase the pressure on the countries like Italy and the United Kingdom where the population really hasn't been very excited about the venture into Iraq, and now that the Spanish government was punished for that, it's got to increase the pressure on the other allies that we have in Europe that have backed us.
Insana:
Quinn, what's the read here at home?
Quinn Stills, Palisades Investment Partners:
Well, I think we've got a couple of near-term events, the terrorism being one thing that's going on, but also, Ron, we're entering earnings season, so this is a crucial two weeks for the marketplace in the near-term. Remember, in the latter two weeks of March, we should start to see companies that have had difficulty meeting their earnings projections make negative pre-announcements, so that could be a near-term effect. I think that given the uncertainty that has increased here with the election in Spain and also the terrorism bombings, maybe some negative announcements would be greeted with a little more selling pressure than would otherwise be the case.
Insana:
And, Quinn, with respect to those negative announcements in the so-called confessional season, it has been several quarters since we have seen any that really rocked this stock market. Do you think now because of the tough comparisons, tougher comparisons, I should say, with last year, that we may see more negative pre-announcements than we've seen in a while?
Stills:
No, Ron, I'm not expecting that at all. In fact, I'm expecting a very strong earnings season, but I think we won't get to see the companies that are announcing positive revisions-I mean, we saw that a little bit with General Electric, but usually that will come in the beginning of April where we'll start to see the companies that exceeded expectations start to make those announcements. So, I think we're going to get another leg down or another lull here perhaps in the next two weeks.
Insana:
Now, Jim, with respect to the overseas investing environment, are you viewing this pullback, and maybe here in the United States as well, as just a correction or is it the start of maybe something a little bit larger given how far, not only the U.S., but the rest of the world markets have run so far in the last 12 months or so?
Moffett:
We view it as a correction and also kind of a transition from the period where the junk stock really bounced off its bottom last March and the tech stocks, in particular, to transition to a more quality growth orientation, the companies that are actually earning money.
Insana:
Where would you find those?
Moffett:
Well, the ones we're looking at in Europe, we're looking at some of the healthcare stocks. Noble Biocare* in Sweden that makes dental implants, Smith & Nephew* in the United Kingdom that makes artificial hips and knees.
Insana:
Now, with respect to your personal ownership or company affiliation, can you give us some disclosure on that?
Moffett:
We own those in the UMB Scout Worldwide Fund. I don't own any personally. I own some of the fund, though.
Insana:
That's always good to hear for a fund manager. Quinn, let me ask you about the domestic political environment. We have seen the presidential campaign season kick off a little earlier than normal and we've also seen it quite testy at the start. Do you think that this, what will likely be a pretty protracted and nasty battle between John Kerry and George W. Bush, will affect market psychology in the months ahead?
Stills:
Absolutely, I think we're going to see Kerry illustrate his positions in a little more depth, put a little meat on his policies. We're going to see if Ralph Nader pulls Kerry to the left. I think all of these things are going to affect the market, Ron.
Insana:
Alright, gentlemen, I will leave it there. Quinn Stills, chairman and CIO at Palisades Investment Partners, and James Moffett, portfolio manager at UMB Worldwide. Thanks for being with us today.
Stills:
Thank you.
Moffett:
Pleasure.
[WorldWide Fund Fact Sheet]
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