SUSIE GHARIB: On Wall Street, it was a day to worry about the three e's: energy prices, the euro, and earnings. Oil prices soared to a new 10-year high, gushing to almost $37 a barrel. And more jitters about the impact of the weak euro on earnings. The result: triple-digit losses in the markets. The Dow plunged 118 points, and the NASDAQ got slammed with a loss of 108 points.

ALAN SKRAINKA, CHIEF MARKET STRATEGIST, EDWARD JONES: I think it's a pretty rational response to higher oil prices. Higher oil prices obviously could lead to higher inflation in the short run, and stock prices are puling back to reflect that. But I do think it's a short-term scenario, a short-term temporary problem; and as we look out in the months ahead, we think the market can get back on track.

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.


09/18/2000: Investors Show Short Term Patience With Long Term Bonds

SUSIE GHARIB: Meanwhile, the threat of inflation from those soaring oil prices also sparked a sell-off in the bond market. The 30-year Treasury bond fell 24/32 today, and analysts' forecasts continued declines. Erika Miller reports, on why.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the past few weeks, there's been a big change in the way investors view long-term Treasury bonds - namely, they don't want to own them.

WILLIAM SULLIVAN, SR. ECONOMIST, MORGAN STANLEY DEAN WITTER: We would characterize it as a significant shift in investor expectations and in investor psychology. We've seen long-term bond yields move sharply higher in a very brief period of time.

MILLER: In fact, in September, the yield on the 30-year Treasury bond has climbed from 5.6 percent to 5.9 percent. The price, which moves in the opposite direction to yield, has plunged. The yield on the 30-year is once again higher than the yield on the 10-year note. Something that hasn't happened since January, but is actually a more normal state for the bond market. Essentially, the yield curve is steepening as investors now get a premium for holding long-term debt. That's because longer-term securities have much more exposure to risks, such as inflation. And as oil prices spurt higher, fears of inflation brew, and investors become less willing to hold bonds. Another concern is the supply of Treasuries. The Treasury Department has been using the federal government's budget surplus to buy back long-term debt. That reduction in supply has been pushing up bond prices. But recent campaign rhetoric from Democratic nominee, Al Gore, and Republican contender, George W. Bush, have heightened fears that the government might spend or give back a lot of the surplus. A heavy supply of corporate debt is also exacerbating the sell-off in Treasuries, by offering an appealing investment alternative. Many analysts expect the yield curve will continue to steepen.

BOB DICLEMENTE, CHIEF U.S. ECONOMIST, SALOMON SMITH BARNEY: Well, I think in the very near term, we might see further steepening. Naturally, the market's going to be a bit skeptical about these fiscal plans, until we know a lot more about the makeup of the new Congress and administration.

MILLER: Experts say that could mean an increase in long bond rates, comfortably back above 6 percent. And analysts say yields could head even higher if oil prices continue to climb or the economy shows signs of reaccelerating. 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.

09/18/2000: View From A Bridge-Economics & Oil

SUSIE GHARIB: Well, with oil prices gushing and the euro sagging, what's the outlook for the markets and the economy? Let's get the view from the Bridge: our roundtable discussion at BridgeNews. On our panel tonight: Michael Kahn on the markets; Deborah Lagomarsino on interest rates; and our special guest, Robert Brusca, chief economist with his own firm, Ecobest Consulting. Bob, there just doesn't seem to be any letup in oil prices. What is the impact of all of this?

ROBERT BRUSCA, CHIEF ECONOMIST, ECOBEST CONSULTING: Well, the market has been really surprised by what's going on with oil prices. And they've been acting like oil prices are like some petulant child that's going to behave in a couple of months, and everything will be fine. I think we have to come to the realization that maybe oil prices are going to stay high. And if they do, there are some challenges for this economy. Higher oil prices can create inflation; they can squeeze corporate profit margins. They're going to hurt the consumer. The consumer's going to treat this like a tax - there will be less money to spend on other things. Maybe productivity will remain strong and we won't see the inflation consequences or the profit margin impact as much as we thought we might. But in any event, you're going to have real challenges for the Fed; the Fed is going to have a real hard time deciding what to do with monetary policy in this environment.

GHARIB: Deborah, from all the Fed watchers you're talking to, do they agree with Bob's point of view?

DEBORAH LAGOMARSINO, MONETARY POLICY REPORTER, BRIDGENEWS: They do, for the most part. They see the risks clearly on the upside for core inflation. We know the latest month in August, core inflation on a year-over-year basis, ticked up to 2 ½ percent, from 2.4 the month before. But this is up pretty sharply from the 1.9 percent rise for all of last year. And Fed officials I'm talking to say, energy prices have been rising since December 1998, and clearly there is going to be most likely some more pass-through here so that we may not have seen the end of it in terms of the core inflation rise.

GHARIB: All right. So, Michael, it seems like the real critical question is, here: how much higher are oil prices going to go? From a technical point of view, what have you seen?

MICHAEL KAHN, CHIEF TECHNICAL ANALYST, BRIDGENEWS: Well the trend is definitely rising. We had a consolidation, or a stabilization, over the last few weeks. That has ended. We're going up. We broke out to the upside, and I could see another two or three dollars, maybe $39 a barrel, fairly soon.

GHARIB: All right, that's very high. At that level, what impact would that have on stocks?

KAHN: Well, the stock market doesn't like higher oil prices, and that's really a chain of events. The bond market doesn't like the higher oil prices. The stock market doesn't like a bond market that doesn't feel well. So, we may see a few things breaking down in the near future, I think. We've already seen a few breakdowns, such as the NASDAQ - the NASDAQ Composite Index has broken down below the trend line that it was following since the May low. And that was the low for this year. So, in the short term, it looks pretty scary for the NASDAQ. Long term, trends are still higher.

GHARIB: Well, one of the assumptions on Wall Street is that the economy is in pretty good shape, we don't have to worry about interest rates. Some people are even talking about an interest rate cut some time in the near future, that if there's any overhang, it's corporate earnings. Are those correct assumptions, Bob:

BRUSCA: Well, I think there are also some people talking about aliens and I don't worry about those. As far as the concern about the earnings, you've got to remember that I think what we see here is pessimism. We see what people are thinking. They think that f growth is weak, then earnings are going to be weak, if growth is strong, the Fed's going to raise rates and then that's going to create a problem with earnings. I think the fact is that we could still continue to have this good productivity growth. We don't know, the Fed doesn't know. We're taking this a step at a time and I think that's how we have to view this. The clear thing we do know, the market has lost some of its optimism.

LAGOMARSINO: I'd say our lost poll of economists showed that they do expect the Fed to keep the federal funds rate at 6 ½ percent, where it is currently, for the rest of the year. At the same time we know that this whole year the Fed has been cautioning us that the risks remain weighted toward higher inflation after each meeting this year. And some people have been talking about well, are they, maybe they'll lift that bias because the data has been coming in softer and inflation's still contained. But I think the risks is that we're going to continue to see that statement in the October meeting and perhaps November, with some of these hawkish comments the Fed has been issuing. And also, they don't want the markets to run away.

BRUSCA: In fact, I wouldn't look for the Fed to take that bias statement out any time soon. I think the economy is still-with a very low rate of unemployment I think that the risk in this economy exists. The Fed is not going to take that away any time soon.

LAGOMARSINO: Yeah, I agree.

GHARIB: All right, you were talking, Michael, about the near-term outlook scary, but long-term is still good.

KAHN: Right.

GHARIB: How does all this factor in?

KAHN: I think it fits in well. The market just doesn't like uncertainty and that's a big question mark right now, what are we doing with interest rates, what's going on with the Euro, is that going to change? And we've seen that the companies that are affected by changes in the dollar are being hurt. So uncertainty, the market doesn't like it.

GHARIB: OK. Real quickly from all of you, what are you going to be watching over the next couple of weeks? Bob?

BRUSCA: Short-term oil prices, longer-term productivity, those two things.

GHARIB: Deborah?

LAGOMARSINO: Greenspan speaks on Thursday and longer-term the inflation numbers for September.

GHARIB: Michael?

KAHN: I'm watching the bond market to see how that plays out and also how the NASDAQ reacts now that it's below this trend line.

GHARIB: All right, thank you very much to our BridgeNews team, Michael and Deborah, and our special guest, Bob Brusca.

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.

09/18/2000: British Telecom Talks Partnership With AT&T

SUSIE GHARIB: British Telecom (BTY) has confirmed it is in talks with AT&T (T). The British phone giant says it's discussing partnerships in business services with AT&T. Investors had a mixed reaction to the news. B.T. stock rose, but AT&T slipped. AT&T stock has lost almost half of its value in the last six months and investors do not see a link up with British Telecom as a positive. Analysts say AT&T should concentrate on its cable division.

ANTHONY FERRUGIA, TELECOM ANALYST, A.G. EDWARDS: Basically what AT&T needs to do is get telephony and data subscribers on its cable network so it can start generating cash flow to recover the capital that it spent in the form of shares issued for the cable properties.

GHARIB: Well, as we said, British Telecom's stock benefited from the news, up about $0.70 to $112.56.

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.


09/18/2000: Road To The White House: Middle Class Tax

SUSIE GHARIB: Today investors were also sizing up George Bush's economic plan to help the middle class. The Texas Governor talked up his promise to increase child tax credits. And as Darren Gersh reports in this edition of Road To the White House, the Gore campaign welcomed the challenge.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Holding up a copy of his economic plan, Texas Governor George W. Bush said 60 percent of the benefit from his $1.3 trillion tax cut goes to middle class families. And compared to his opponent, Bush says there are fewer strings attached.

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: I want to help people help themselves. I don't believe the role of government is to tell people how to run your lives. My plan is one that gives people options, not orders.

GERSH: To back up his claims, the Bush campaign is pointing to a study by the accounting firm Deloitte and Touche (ph) which says a family of four making $50,000 would get a $2,000 child tax credit under the Bush plan, cutting the family tax bill by 50 percent. The Gore plan would give the same family a cut of just $218. But the Vice President says the Bush plan still gives more than 40 percent of the benefits to the top 1 percent of taxpayers.

AL GORE, VICE PRESIDENT OF THE UNITED STATES: I'll never go along with a tax cut like that for the wealthy that hurts the middle class and stops our prosperity and progress.

GERSH: But pointing to the same Deloitte and Touche study, the Gore campaign says if the Vice President's tax incentives for health care, education and retirement savings are added in, that same family making $50,000 could get tax relief of between $2,500 and $5,000. But the Bush campaign says few families could jump through all the red tape needed to qualify.

LAWRENCE LINDSEY, BUSH ECONOMIC ADVISER: These are a very, very rarefied group of people. Everyone who pays taxes gets a tax cut from George Bush.

GERSH: Polls show the public favors targeted tax relief for the middle class over an across-the-board tax rate cut. That's what the Bush campaign is now trying to convince voters their plan delivers. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

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.

09/18/2000: South Florida Prepares For A High Tech NAP

SUSIE GHARIB: Is the Internet the new frontier? Well, some communities are certainly looking at it that way. As Jeff Yastine explains, in the same way that growth came to cities with good transportation connections, harbors, rivers, roads and ports, a similar tactic is at work in the information age.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: They're making the dirt fly on a lot near downtown Miami, drilling holes and laying reinforcing steel for a new building. The project may appear ordinary, but economic development boosters here think it carries far greater significance in terms of attracting high tech companies. Why? Because this building will house what's called a NAP, short for network access point. Think of a NAP like a major hub airport where a series of networks or routes all come together allowing travelers or data to switch directly from one route to another. Major so-called tier one NAPs, the biggest, fastest connections available anywhere, exist now in just four regions-California, Chicago, New Jersey and Virginia, all places loaded with high tech companies. Supporters of Florida's NAP plan think it could be a major draw there as well.

FRANK LANGLEY, PRESIDENT & CEO, BROWARD ALLIANCE: We expect this NAP to have a significant influence on our target industry strategy here in south Florida. That target industry strategy for this whole region is to create high wage jobs and jobs that create additional capital investment in the region.

YASTINE: But if they build a NAP, will companies come? After all, smaller privately run network access points already exist in Houston, Dallas, Boston and other cities. But telecom and data service firms seem to think a larger NAP in Miami makes sense, in part because the region is linked literally with Latin America by dozens of undersea cables that come ashore in a 150 mile area and dozens of telecom firms have already agreed to connect to the Florida NAP because they expect big things once it's completed.

RICH PAUL HUS, CHAIRMAN, NAP COMMITTEE: As society becomes more Internet centric and we start relying on data, electronic data more and more, more and more companies are going to locate here to take advantage of the Latin American market. So we do see a very significant economic development that will result from this initiative.

YASTINE: South Florida's tech supporters have already coined a term for the region, the Internet coast, which they hope, with the help of the NAP, will be as well known someday as Silicon Valley. But there has to be demand for a network access point and telecom firms say it's there.

BENJAMIN FINZI, EXEC. VP, EPIK COMMUNICATIONS: There's no NAP unless a significant amount of companies that have agreed to connect to that point. And once you have achieved a critical mass, then you get into this virtual circle where because that's the point where everybody's agreed to connect, more companies will want to come and connect there. And by coming, the new companies coming there, the value of the NAP keeps growing.

YASTINE: Construction of the NAP is expected to finish next year. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.

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.


09/18/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: All those negatives, like the weak euro and the unexpectedly high oil prices, quashed an opening rally attempt on Wall Street, which was partly a technical rebound from last Friday's steep sell-off, and partly prompted by Fed chairman, Alan Greenspan's speech early today in which he said he sees no end to productivity gains, as yet. That helped the NASDAQ Index hang onto a 20-point gain at 10:30 this morning, but an early 10-point gain in the Dow turned into a 35 1/2-point loss by then.

The market began to fall along a broad front as morning trading continued, thanks in part to news that Morgan Stanley told its clients to reduce stock holdings from 74 to 72 percent of portfolios. Multiple point losses in 3M (MMM) and Johnson & Johnson (JNJ) helped to send the Dow to an 81 1/2-point deficit by 12:30 p.m., while the NASDAQ Index was down 82 points. A weak bond market hurt stock prices even more in active afternoon trading. And with the big board's breadth unusually negative, at a 22-to-7 ratio, the Dow Jones Industrial Average finally closed with a loss of 118.48 points, that's 1.1 percent; and we now stand at 10,808.52. In today's 138-point trading range, the Dow closed down 127 points from the best level of the session. The NASDAQ Composite finished with a loss of 108.71 points at 3726.52. In its 160-point trading range, the Composite Index settled 136 points below its best level of the day.

Big board volume dropped to 956 3/4 million shares, well down from Friday's; but of course, that was the triple-witching. But down volume swamped up volume by about 3-to-1.

The Dow Transport Index down 51.30.

Utilities down 2.41.

And the Closing Tick decidedly bearish at -657.

Standard & Poor's 500 off just over 21 1/4 points.

Almost an 11-point drop in the 100.

The MidCap 400 off 15.60.

Bridge Futures Price Index edged up 2/3s of a point.

New York Stock Exchange Composite down 9.64.

A loss of 8.86 in the Value Line

The Russell2000 Small Cap off nearly 14 1/4.

And the broadly-based Wilshire 5000 down 235 1/2 points, or 1.7 percent.

As you heard, the continuing rise in oil prices was a negative for the bond market today, especially in the longer maturities, where, for the first time since last January, the yield on the 30-year Treasury bond moved above both the 10-year and 5-year notes, ending the inverted yield curve of recent times, at least for the moment. The short-end of the market was also propped up by flight-to-safety buying in reaction to the steep sell-off in stocks.

Tax-free and corporates ended down with losses of 1/8s and 1/4s.

And the Treasury market was mixed.

A 2/32 gain in the short-end 5-year note.

But the 10-year note down 8/32.

And the 30-year bond dropping 24/32.

And finally, the Lehman Brothers Long-Term Treasury Bond Index fell 9.59 points.

It was a day when the bulls were starting to really feel the pain, down 118 ½ points or 1.1 percent on the Dow. And that advance/decline ratio is about the worst that I've seen this year, I believe, only 93 new yearly highs, 115 new lows.

Nortel Networks (NT) topped the active list, dropping $4.94 a share on nearly 16 million shares.

There we see AT&T (T) down $0.44 on the news you just heard.

America Online (AOL) was third in volume, gaining $0.25 despite news the European Union is prepared to block its merger with Time Warner. But the companies say they're totally confident the talks will conclude successfully and expect to close the deal in the fall.

Lucent Technologies (LU) down $1.94.

Micron Technology (MU) ended with a loss of $1.19, but at one stage this morning was up at $63.38 after Lehman Brothers increased earnings estimates and repeated a "buy" and then it got caught in the afternoon down draft.

Chase Manhattan (CMB) down $2.56. Its merger partner J.P. Morgan we'll see in just a moment.

GE (GE) bucked the overall trend, up $0.94.

Citigroup down $1.19.

Nokia (NOK) fell $0.56.

And then Compaq Computer (CPQ) down $0.63, 10th in NASDAQ-or in Big Board volume.

Abbott Laboratories (ABT) up $0.88 a share. The FDA has approved the company's new AIDS drug called Caletra. The stock at one stage this morning was up nearly at $47 a share.

Countrywide Credit (CCR) losing $3. A share after the Suturo Brokerage (ph) downgraded it from "accumulate" to just a "hold."

And Kohl's (KSS), the big department store chain, down $3.56. Negative comments in Alan Ableson's (ph) lead column in this week's "Baron's Financial." The article notes the high price/earnings ratio of Kohl's stock.

Gillette Company (G) down $2.19. The company sees flat third quarter sales and just slightly higher earnings, a disappointment.

J.P. Morgan (JPM) down $7.81, the biggest point loser in the Dow, and that drop cost the Dow Industrial Average 46 points alone.

Nippon Telegraph (NTT) was up $2.75. The company and Sony (SNE) reportedly will conduct joint experiments to send image data to home users on NTT's optical fiber optic network by next March, they hope to do that.

And then GC Companies (GCX), this is the parent firm of General Cinema, the company is considering several strategic alternatives, including bankruptcy protection.

Rockwell International (ROK) dropping $7.69. The company sees this year's earnings around $3.35. The Street estimate had been $3.40 to $3.45. The company cites soft, a soft U.S. market for its automation products.

Lennox International (LII) down $2.38. The company sees lower than expected third quarter earnings of only $0.20 to $0.25. The Street was looking for $0.71. The company blames cooler than expected weather in the northeast and Midwest of this country. Of course, the company's into commercial air conditioning.

Corn Products International (CPO), which was spun off from CPC International back in '97, sees third quarter earnings down 40 percent from last year's $0.61 a share.

Bindley Western Industries (BDY) down $4.31. Goldman Sachs notes this company may delay the spin-off of its central pharmacy services unit.

And Shaw Group (SGR) down $5.38. The company's planning a four million share offering.

NASDAQ trading, over 108 point loss there, 2.8 percent. Trading volume down a bit from Friday, but almost three times as many issues down as up.

Cisco Systems (CSCO) down $2.69, led the active list.

Intel (INTC) down $1.70.

Oracle (ORCL) losing $1.84.

JDS Uniphase (JDSU) dropped $5.81.

But QUALCOMM (QCOM) bucked the trend, up $3.56 after First Union Brokerage upgraded it from "buy" to a "strong buy" and has a $90 a share target.

Sun Micro (SUNW) up $2.19.

But Microsoft (MSFT) fell $1.19.

SDL (SDLI) down $24.25.

CIENA (CIEN) lost $7.44.

And Network Application (NTAP) up $7.31.