SUSIE GHARIB: While consumers already hit hard by high gasoline prices could be in for a double-whammy, heating oil prices are surging to levels not seen since the Gulf War. And as Erika Miller reports, even higher prices might be in the pipeline.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's summer, and winter seems a long way off. But when cooler weather arrives, many Americans may be in for a shock when their heating bills arrive. Low inventories have pushed heating oil prices to 96 cents a gallon, edging ever closer to the one-dollar mark. Here at the New York Mercantile Exchange, the price of heating oil is about 50 percent more expensive than this time last year, and analysts say it could go even higher.

MICHAEL ROTHMAN, ENERGY RESEARCH DIR., MERRILL LYNCH: It is unlikely that heating oil inventories are going to be built up to a normal level by the start of winter. And, any sort of cold weather, even if it's normal, will likely create some upward pressure on at least the relative price of heating oil.

MILLER: The reason for the low inventories is a shortage of production capability. Strong demand for gasoline has forced refiners to boost its production, at the expense of heating oil. Plus, crude oil inventories still remain near 24-year lows.

SCOTT HESS, HEATING OIL TRADER, G & H COMMODITIES: For the most part, crude oil is quite strong; the OPEC members seem to be adhering to their quotas. Therefore, there's not much cheating going on. And basically these oil prices that we're seeing today, I think they're going to remain strong throughout the rest of the year.

MILLER: Still another factor that could help keep prices high, is the government's decision to create a heating oil reserve in the Northeast.

ROTHMAN: The government wants to create a two-million-barrel stockpile. And the problem is they're going to basically have market participants, for the government, go out and buy two million barrels of heating oil, at a time when their market is very, very tight.

MILLER: But that stockpile isn't likely to provide much of a benefit to consumers. Analysts say if the winter is unusually harsh, the entire amount could be used up in a day or two. Erika Miller, NIGHTLY BUSINESS REPORT, New York.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.


08/25/2000: High Prices, Mortgage Rates Hurt Housing Affordability

SUSIE GHARIB: New figures show sales of existing homes are slowing. But home prices are on the rise. Add in high interest rates, and affordability is at its lowest level since 1991. Stephanie Woods reports.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Realtor Greg Pappas has yet to feel the slowdown in the housing market. High prices, driven by multiple bidders, for relatively few homes, have kept his real estate business even.

GREGORY PAPPAS, REALTOR, COLDWELL BANKER: We do have a slight slowdown in the number of units that are being sold - 6, 7, 8 percent. But we also have an increase in price equal to 6 or 7 or 8 percent.

WOODS: It's the combination of strong prices, higher interest rates, and only modest income increases nationwide, that has pushed the Realtors' Affordability Index for first-time home buyers to its lowest level since 1991. Economists say that means home prices could even off.

DOUGLAS DUNCAN, CHIEF ECONOMIST, MORTGAGE BANKERS ASSOCIATION: As the Affordability Index declines, it's just going to mean that the purchase activity of the market is going to slow because it's harder for folks to afford. So you might have a buildup of inventory. If you get a buildup of inventory, that probably means that's going to put some pressure - downward pressure - on prices.

WOODS: And home buyers are having a hard time finding cheaper interest rates through adjustable-rate mortgages.

KORY BOCKMAN, NATIONAL ASSOCIATION OF REALTORS: The spread between 30-year fixed rates and one-year adjustable rates is very narrow, and so the benefit of switching into an adjustable rate mortgage is, is dwindling right now.

WOODS: Real estate prices aren't expected to come down, especially in hot markets, like here in tech-heavy Northern Virginia. But lower mortgage rates should help ease the cost of home ownership. Stephanie Woods, NIGHTLY BUSINESS REPORT, Northern Virginia.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.

08/25/2000: Ford, UAL CEOs Try TV Ads To Improve Customer Relations

SUSIE GHARIB: Problems at Ford Motor (F) and United Airlines have turned the chief executives of those companies into TV pitchmen. Both are in TV ads taking responsibility for recent problems plaguing their companies and customers. But as Diane Eastabrook explains, experts say that the ads could turn off consumers.

JACQUES NASSER, FORD MOTOR COMPANY: Hello, I'm Jacques Nasser.

JIM GOODWIN, UNITED AIRLINES: Hello, I'm Jim Goodwin.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: The ads by United and Ford appeared within days of each other. Nasser attempts to calm consumer fears over the safety recall of Firestone tires used on Ford Explorers. Goodwin apologizes for flight cancellations caused partly by United's recent union troubles.

ANDY PLEWS, SPOKESMAN, UAL: It's been a horrible summer and we really felt the time had come that we needed to get out front and say we're sorry.

EASTABROOK: Marketing experts say reacting quickly in a crisis can turn a company with a black eye into a white knight. Johnson and Johnson (JNJ) got high marks nearly 20 years ago for quickly responding to the Tylenol poisoning scare. But Coca-Cola (KO) was criticized last year for responding too slowly to a contamination problem in Europe. University of Chicago Marketing Professor Sanjay Dhar says putting a CEO before the public during a crisis can be very effective, but very risky too.

SANJAY DHAR, MARKETING PROFESSOR, UNIVERSITY OF CHICAGO: There's the promise of the highest authority in the organization saying that this will happen, and if you're not able to fulfill those promises, then you're going to be in trouble.

EASTABROOK: Dhar gives the Ford ad high marks because Nasser is reassuring and takes action.

NASSER: To meet short term demand, we're stopping some vehicle production to increase the supply of tires.

EASTABROOK: But Dhar gives the United ad low marks for offering too little, too late.

GOODWIN: To deal with the problem we're reducing our flight schedules so we don't make promises we can't keep.

DHAR: And after so many weeks have elapsed, and I don't know how many months, we still don't have something tangible from Jim Goodwin and I wish there was more positive things forthcoming.

EASTABROOK: Dhar says what probably won't be forthcoming is more ads like these. He says CEOs should only appear in ads when a crisis is so great that it can potentially impact a company for months or years to come. And that kind of crisis doesn't happen that often. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.

08/25/2000: "Market Monitor": Joan Lappin, President, Gramercy Capital Management Corp.

PAUL KANGAS: My market monitor guest this week is Joan Lappin, President of New York City based Gramercy Capital Management Corporation. Welcome to NIGHTLY BUSINESS REPORT, Joan.

JOAN LAPPIN, PRESIDENT, GRAMERCY CAPITAL MANAGEMENT: Well, thank you for inviting me. It's my pleasure to be here.

KANGAS: Well, because this is your first appearance with us, I'm sure our viewers would appreciate a brief summary of your investment philosophy.

LAPPIN: Well, our approach is patience and contrarian. We emphasize U.S. equities only because we've determined that over the long haul, equities are a far better investment than bonds have been over the last 30 years or so. And we concentrate our portfolios in a limited number of holdings, maybe a dozen or 15.

KANGAS: What is your present stance on the U.S. stock market? Are you bearish, bullish, neutral?

LAPPIN: Well, we're quite bullish and part of the reason is that there was, there is a lot of bearishness and fear around now after so many people were eliminated or erased, or however you want to describe it, in April, with margin calls of extreme severity. We think that the market has been in a major repair mode over the last several months and is actually preparing or has prepared itself for a vigorous end to the year.

KANGAS: OK. Now, tell us about your current investment strategy, given your bullishness.

LAPPIN: Well, there are three sectors that I think should be emphasized now and actually, as I was preparing for your show, I thought of a fourth, which people wouldn't consider a sector, but you'll see what I mean.

KANGAS: OK.

LAPPIN: I think that I'm in the camp that technology is where the growth is in our economy and I think you have to be there. I think that biotech with the mapping of the genome is now going to enter a whole brand new very exciting phase of trying to figure out what all these genes do. And I think that as the interest rate situation starts to improve, which means interest rates starting to come back down either in six months or sooner, I think the financial stocks will do well as well. Now --

KANGAS: All right. There's one more area that you like?

LAPPIN: Well, my fourth category is excellent management and that plays no matter what sector you like.

KANGAS: All right. Let's go back to the beginning. The first sector you like, can you get specific on the stocks that you like there and that you would be buying now?

LAPPIN: OK. All of the stocks that I'm going to mention we presently own and would buy at present levels.

KANGAS: Yes.

LAPPIN: The first one is Motorola (MOT). We love it because we think it's in the second year of a very exciting turnaround. I view Motorola as a giant that was not just asleep for about five years, but almost in a coma. And I believe that part of the problems that Ericsson and Nokia (NOK) have had in the last few months is that Motorola is now back on its feet.

KANGAS: OK.

LAPPIN: And becoming a fighting competitor. I think the stock is cheap on a multiple basis and I expect vigorous earnings improvement from them next year.

KANGAS: OK. And another choice?

LAPPIN: Well, in the financial sector I particularly like Lehman Brothers (LEH) and even though the stock is up dramatically in the last three months or so, if you compare it to Morgan Stanley and to Goldman Sachs and the others, it's selling at about a 12 times multiple and the others are all, Merrill Lynch as well, in the 18 to 20 times multiple.

KANGAS: OK. We just have a minute left now, Joan. How about that biotech area?

LAPPIN: Well, the stock I would pick to buy right now is a company called Cell Genesys (CEGE) and we like it because they just announced this week a very important breakthrough in gene therapy for cancer.

KANGAS: OK. Anything else you like? We have about a half a minute left.

LAPPIN: OK. Well, on the excellent management side I would pick Viacom (VIA). I think Mel Karmazin is fabulous. And I would pick Citicorp (C), because Sandy Weill can't be beat.

KANGAS: Well, he seems to be proving that, indeed, doesn't he?

LAPPIN: Yes.

KANGAS: All right, Joan, we know where you stand. You're very bullish but on very few issues, a concentrated portfolio, correct?

LAPPIN: Absolutely.

KANGAS: Thanks very much for being with us.

LAPPIN: Thank you for having me.

KANGAS: My guest market monitor, Joan Lappin, President of New York City based Gramercy Capital Management Corporation.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.

08/25/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Stocks on Wall Street followed through on yesterday's moderate advance as trading opened today, with the Dow Industrial Average rising 25 points at the outset, while the NASDAQ Index gained as much as 30 points early on. Then, the Dow fell to a 22-point loss at 11:00 a.m., largely because over a two-point drop in Coca-Cola (KO) stock after Salomon Smith Barney brokerage cut sales growth estimates for this year's second half. On top of that, that Emulex (EMLX) hoax we told you about shook up the NASDAQ market. It was part of the reason the Composite Index was down 17 points at 11:00 a.m.

The market regained its composure during mid-session, thanks in part to firm bond prices; but once again, it was difficult to get much upward momentum going throughout the afternoon in these lazy days of summer. The Dow Industrial Average managed to struggle to a closing gain of 9.89 points at 11,192.63. The Industrial Average rose all five days this week and had a net overall advance of 146.15 points, that's 1.3 percent.

The NASDAQ Composite fell 10.60 today, ending at 4,042.68. For the week, this Index rose four times, fell once - had a net overall gain of 112.34 points, or 2.9 percent.

We see the volume today way down there, at 676.6 million shares, one of the slowest days of the year. Up volume exceeded down volume by almost a 3-to-2 margin.

The Dow Transport Index up 43.38.

Utilities, after a series of record closings, down 2.56.

The Closing Tick just barely bullish at +130.

Standard & Poor's 500 down 1.85.

A loss of 1.60 in the 100.

But look at this. The MidCap 400 at a record high, with that gain of 1.69.

The Bridge Futures Price Index up 1.41.

New York Stock Exchange Composite - second day running at a record high - up 0.59.

The Value Line up 0.73.

The Russell2000 Small Cap Index gained 1.81.

And the Wilshire 5000 had a very small loss of 5.54.

The bond market today gave back just part of the gains racked up in the previous four sessions because the report of a brisk 5.3 percent growth in second-quarter gross domestic product was about as expected, and that kept profit-taking well in-hand. So did news of a sharp 9.8 percent drop in July existing home sales. And, word from Federal Reserve chief, Alan Greenspan that he found no real evidence that U.S. productivity is tapering off.

At the close then, tax free and corporate issues were mostly unchanged.

And the Treasury market was down only modestly.

The 5-year notes dropping a mere 1/32.

The 10-year notes down 2/32.

And the 30-year bond down 6/32 with the yield at 5.67 percent.

The Lehman Brothers Long-Term Treasury Bond Index down just a small fraction, 0.21.

Every day this week, the Dow Industrial Average closed with a plus sign in front of us, including today, up 9.89. For the week, up a little over 146 points. The market's advance/decline ratio has been about the same one way or the other, 14 to 13 plus today. Yesterday it was the other way around. That's 75 new yearly highs, 33 new lows.

Lucent Technologies (LU) on 10.7 million shares topped the active list, moving up $0.56.

Then America Online (AOL) losing a 1/4.

As did AT&T (T).

AT&T Liberty Media (LMG.A) was up $0.19.

And then IBM (IBM) gained $4.31 partly in reaction to Schaeffer's Investment Research positive comments on Big Blue.

General Electric (GE) moving up another $0.25.

Compaq Computer (CPQ) down $0.19.

Texas Instruments (TXN) giving back a few of the previous day's gains, down $2.44.

Boeing (BA) was up $0.63. Yesterday, First Boston said increase positions in aircraft manufacturers.

And then Coca-Cola (KO) down $1.94. As I mentioned, Salomon Smith Barney cut sales volume growth estimates for the second half from about 5 1/2 to 4 1/2 percent.

Ford Motor (F) down a half a dollar. The company is idling its Michigan truck plant due to a parts shortage other than tires.

General Motors (GM) giving back $1.44 of yesterday's gain of $3.94.

And then Tyco International (TYC) up $1.19. No specific news, but it was quite active.

UAL (UAL), parent company of United Airlines, gaining $2.00, and that helped the Dow Transport Index gain 43 1/3 points.

Verizon Communications (VZ) up $1.31. The company's wireless unit filed for an initial public offering today and that offering could raise as much as $5 billion.

Wal-Mart (WMT) helping the Dow Industrial Average out with a gain of $1.25.

Hypercom (HYC) best percentage gainer, up $2.44. A subsidiary has received a contract to provide e-commerce solutions for a unit of the First National Bank of Omaha. Terms of the deal weren't disclosed.

Loral Space & Communications (LOR) up $1.50 thanks to positive comments in Gene Marshall's Inside Wall Street column in the latest issue of "Business Week." He quotes Chairman Bernard Schwartz as saying the company is not in trouble, contrary to other rumors and also in the article, there's a Lehman analyst quoted who sees the stock worth at least $12.00 a share.

Rio Algom Limited (ROM) up $1.69. The company has agreed to a $27 a share, that's Canadian dollars, cash buyout bid from Billiton PLC, a British firm, and of course that's a little better than Noranda's (NOR) buyout bid of $24.50 Canadian.

G.C. Companies (GCX) one of the big losers, down 2.31. The G.C., I believe, stands for General Cinema. That's one of the company's subsidiaries. And earlier in the week the company reported a third quarter loss of $1.30 a share versus earnings of $0.49 last year.

Lamson and Sessions (LMS) down another $2.50. Yesterday it was off $2.75 on news that a Gabelli Investment Group cut its stake from 10.1 percent down to 8.7 percent.

And Lear (LEA) down $1.81. The company makes auto seating and it says second half earnings could be cut by $0.18 a share due to weakness in the Euro and also production cutbacks of Ford Explorers and Rangers.

NASDAQ trading, a loss of 10.60, but for the week it was up 112 points. Volume very low today, under 1.3 billion shares, 21 stocks up for every 17 lower.

Microsoft (MSFT) topped the active list, down a half a dollar.

QLogic (QLGC) blamed that loss of $5.81 on the Emulex (EMLX) incident. The two companies are somewhat similar.

Intel (INTC) down $1.31.

Cisco Systems (CSCO) lost $1.00.

And Sycamore Networks (SCMR) down $7.19, fifth in NASDAQ dollar volume.

Oracle (ORCL) down $0.06.

And Emulex (EMLX), as I mentioned earlier, finally settled