|
Weekly Financial Report
With Scott Roulston of Fairport Asset Management
Friday, June 14, 2002
Scott Roulston, CEO of Fairport Asset Management, discusses
the possibility of a third down year in a row for the markets, the allegations
of insider trading swirling around Martha Stewart, and the effects of
the scandal on battered investor confidence.
David Barnett - I'm David C. Barnett and I'll bet
you know the feeling. You're driving along without a care in the world
and suddenly you're seeing orange barrels and the sinister glow of taillights.
Well, something like that appears to be happening with the economy. What
appeared to be a smooth drive to recovery has hit a bump or two in the
road. The stock market is at a seven month low and there are signs that
consumer spending is slipping. Scott Roulston is our favorite economic
traffic reporter. He's with Fairport Asset Management and he's here to
help us make sense of all this. Scott, good morning.
Scott Roulston - Good morning, David. I don't know
how much sense I can make of it but we'll give it a try.
David Barnett - Well, let's see what happens. Let's
see what we've got here. Nearly 1% drop in retail sales and a stock market
that fell another 115 points yesterday. Which of those do you see as the
bigger worry?
Scott Roulston - A 1% drop in retail sales. If
you look at the numbers, a lot of that relates to the fact that car rebates
stopped. They stopped a lot of that financing last month. But nevertheless,
the consumer (which is 2/3's of the economy) has slowed down and that
has been a big part of just what's held us in there. So I think there
is a big concern about a double dip. And the market just kind of feeds
on itself. It's down 12% (that is the S&P 500 this year). Some people
are wondering if we can have a third down year in a row.
David Barnett - Another specific story that has
been attracting attention lately is former ImClone CEO, Samuel Wacksle,
took the Fifth yesterday, refusing to talk to Congress about the way his
company handled the development of a new drug. Now this came a day after
he was arrested on a charge of insider trading. It's a controversy that
has even swirled around billionaire homemaker, Martha Stewart. We've heard
about insider trading scandals before. What's different about this one?
Scott Roulston - Well, we remember those insider
trading scandals back in the late 80's. Remember that popular movie Wall
Street?
David Barnett - "Greed is good."
Scott Roulston - That was Gordon Gecko, right?
Back then it was really more focused around brokers and Wall Street investment
bankers and so what's different this time is you have corporate people,
corporate CEOs. And obviously they are going to be very visible about
this - going after public figures in handcuffs. What's surprising about
it though is that Martha Stewart did use to be a stockbroker, in the late
60's.
David Barnett - Really?
Scott Roulston - And she should know better. But
she's claiming she had what they call a stop loss order, which means when
the stock went down to a certain level that would trigger a sale. They're
trying to find out whether that was really the case or not.
David Barnett - Well, how big a blow is something
like this ImClone scandal to investor confidence?
Scott Roulston - It sure doesn't help at all. I
mean, we don't need any more of this, but you put yourself in the position
of these folks and evidently they knew the bad news before it was public
and they thought - well, allegedly thought they could get away with it.
That sort of thing is definitely crossing the line, if it did happen.
Then they should be dealt with accordingly.
David Barnett - Scott, thanks for joining us.
Scott Roulston - Have a great weekend.
David Barnett - You, too. Scott Roulston is with
Fairport Asset Management and joins us every Friday morning right here
on your NPR news station, 90.3.
|
