JEFF YASTINE: Stocks ended the week on Wall Street with a thud. Behind today's steep sell-off was Microsoft's profit warning late yesterday. It spooked investors already nervous about fourth-quarter earnings, and had far-reaching effects on the major averages. The Dow plunged 240 points and the NASDAQ lost 75. But as Suzanne Pratt reports, investors may see relief sooner, rather than later.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here we are two days after finally getting a president, and investors are still waiting for that Bush rally. So what gives? Why is the market still in a funk? Some experts say window dressing is partly responsible.

RICHARD McCABE, CHIEF MARKET ANALYST, MERRILL LYNCH: There probably is a lot of window-dressing selling going on in technology stocks that have not performed too well all year long. In other words, a lot of money managers, fund managers who've had these stocks on their books, don't want to show them.

PRATT: But others say investors are mostly fretting about the economy and slipping corporate profits. Microsoft's warning late yesterday fanned fears that a weaker economy could be harder for companies to weather than originally thought. Add to that a growing sense on Wall Street that the Fed has fallen behind the curve, and that the slowdown will accelerate into something worse. Experts say what that means is that the market could remain in limbo until the Fed hopefully starts lowering rates early next year. But others think if the Fed adopts a neutral bias at its meeting next Tuesday, sentiment could pick up sooner. As a result, some say investors might want to start shopping.

ART HOGAN, CHIEF MARKET ANALYST, JEFFERIES & CO.: If I could stand up on a table and scream it right now, I would say this is a great time to get back in the marketplace. You know, I don't necessarily think you need to hurry and buy something this afternoon or tomorrow morning, but I think you should start looking at some stocks, big-cap tech and telecom stocks, that have clearly been oversold.

PRATT: The stock market often gains ground in the last week of the year in what's known as, the Santa Claus rally. Experts say Santa could definitely make an appearance this year, given the fact that stocks are oversold and there's a lot of cash on the sidelines. Suzanne Pratt, 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.

JEFF YASTINE:The President Elect's transition team will be in high gear this weekend. George W. Bush is expected to announce his first cabinet nominations. But in addition to his cabinet, the next president will also have to work closely with a key economic player, Federal Reserve Chairman Alan Greenspan. Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The President Elect made quite clear today he's concerned the economy may be slowing down.

GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: I think there's concerns about some of the manufacturing base. I've heard concerns expressed about the automobile sector. I think all of us ought to be concerned about high energy prices.

GERSH: Bush said he felt strongly tax rates needed to be cut to keep the economy moving. But the man who has done the most to slow the economy down is another powerful Republican, Alan Greenspan, which is why so many in Washington are wondering how the new President and the Fed Chairman will get along. Journalist Bob Woodward has written a new book on Greenspan. He says there is no question what kind of relationship the Fed Chairman would like.

BOB WOODWARD, "MAESTRO: GREENSPAN'S FED & THE AMERICAN BOOM": He is very inclined to be deferential to presidents. He is a political animal. He is not going to go out and castigate the new president. He is going to want the Clinton model.

GERSH: The Clinton model was to keep hands off the Fed no public criticism, whatever the feelings may be in private, very different from how the president elect's father treated Greenspan. Bush, Sr.'s administration publicly and privately pressured the Chairman to lower interest rates faster. The Chairman resisted, a fact Bush believes led to his crushing reelection defeat. But Woodward argues this Bush administration will be different, especially given Alan Greenspan's long friendship with Dick Cheney.

WOODWARD: Oh, I am quite sure that Cheney would urge a President Bush to forge an incredibly close working relationship with Greenspan.

GERSH: A senior aide says the President Elect looks forward to a close, cordial and cooperative relationship with the Fed Chairman and former Fed Vice Chair Alice Rivlin says there no reason for the next administration to tangle with the Fed.

ALICE RIVLIN, FMR. VICE-CHAIR, FEDERAL RESERVE BOARD: I'm not sure what a new administration would want Alan Greenspan to do except keep on doing what he's been doing,

GERSH: Bad economic times always strain relations between the White House and the Fed, but Greenspan has already signaled he's prepared to act if the economy turns down sharply. And the huge budget surplus gives this President Bush something his father did not have-room to cut taxes. 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.

12/15/00: Should California Pull The Plug On De-Regulation?

JEFF YASTINE: Federal energy regulators OK'd new rules to prevent power shortages in California as that state deals with sharp spikes in electricity prices. California was once considered a model for utility deregulation, but as Pat Anson reports from Los Angeles, there's now talk of re-regulating the industry.

PAT ANSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Faced with skyrocketing energy prices and an almost daily threat of blackouts, Californians are dimming their Christmas lights to conserve electricity. Many are saying the plugs should also be pulled on the state's three-year experiment with deregulation.

DOUG CHRISTOPHER, SENIOR ANALYST, CROWELL, WEEDON & COMPANY: It's very clear that from what we've seen is that it is a disaster and the reason that it's a disaster is because it's not really true deregulation.

ANSON: In exchange for the free market system they lobbied hard to get, California utilities sold many of their power plants and agreed to keep rates frozen until the year 2002. That rate cap is now threatening the financial health of the state's two biggest two companies. Southern California Edison (EIX) and Pacific Gas & Electric (PCG) can pass onto consumers only a small fraction of what they pay for electricity on the wholesale market. Faced with billions of dollars in losses, there is even talk of bankruptcy, although consumer activists see that as nothing more than a ploy to get that rate cap lifted.

HARVEY ROSENFIELD, FOUNDATION FOR TAXPAYER & CONSUMER RIGHTS: It's not the rate payer's responsibility to bail out companies that make stupid mistakes.

ANSON: Harvey Rosenfield says bankruptcy would teach the utilities a much needed lesson.

ROSENFIELD: And what's happened here in California to the rate payers of this state, this whole rate deregulation debacle is a crime and people need to be punished for engaging in it. And these utilities, especially Edison, were paramount in perpetrating the crime and a little punishment would serve as a good message around the nation.

ANSON: Deregulation was supposed to keep energy costs down through competitive bidding and a free market system, but critics say the system is being manipulated by power producers, driving the cost of electricity higher and higher. Because of all the problems, Edison has started lobbying in Sacramento for a return to regulation. Analysts say the threat of bankruptcy carries a lot of weight.

CHRISTOPHER: To even consider having these electric utilities go bankrupt would be political suicide. I think this is an industry that is truly one of the industries that is better off regulated and that should be run as a monopoly.

ANSON: Recreating that monopoly would be very expensive. Utilities would have to buy back the power plants they sold a few years ago.

GEORGE SLADOJE, PRES., CALIFORNIA POWER EXCHANGE: We can't go back. It's totally impractical. The investor owned utilities sold these plants and they sold them at handsome profits. And to purchase them, I've heard estimates would cost anywhere from $10 billion to $20 billion to purchase these plants back.

ANSON: But the alternative could be even more costly. Analysts say if energy prices don't come down soon, they could trigger a recession in California. Pat Anson, NIGHTLY BUSINESS REPORT, Los Angeles.

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.


12/15/00: Market Monitor-Carl Marker, Portfolio Manager, IMS Capital Value Fund

PAUL KANGAS: My guest market monitor this week is Carl Marker, Portfolio Manager of the IMS Capital Value Fund based in Portland, Oregon, and tonight he comes to us from Chicago. And welcome back, Carl.

CARL MARKER, PORTFOLIO MANAGER, IMS CAPITAL VALUE FUND: Thanks, Paul. It's great to be back.

KANGAS: Your conservative investment philosophy is no doubt an advantage in the beatings that some of the more speculative sectors of the market are experiencing these days. Tell us how your IMS Capital Value Fund has done year to date?

MARKER: Well, I don't have up to the minute figures, Paul, but earlier in the week we were still in positive territory for the year. I suspect we're flat at the moment.

KANGAS: Well, that's considered pretty successful in this market. Actually, the severity of the market sell-off seems to be telling us the U.S. economy may be headed for a recession. In your view, is one likely?

MARKER: No, I wouldn't predict a recession, but if you recall my last visit I did think we were headed towards lower interest rates, which is a slowing economy.

KANGAS: But look at this market. We don't hear too many people calling it a bear market. Are you calling it a bear market?

MARKER: Well, certainly certain sectors in stocks have experienced a bear market. But I'd call this a good old fashioned buying opportunity.

KANGAS: OK, so you do see the sell-off nearing an end, is that true?

MARKER: I think we'll see a lot of strength in the first quarter of 2001.

KANGAS: What's on your shopping list here?

MARKER: Well, I think this is a great opportunity for investors whose have been underweighted in tech and communications stocks to get fully invested.

KANGAS: So you're conservative philosophy, you're going into the techs despite that because you think they're bargains at these levels, is that true?

MARKER: There's opportunities now to pick up companies at 15, 20 times earnings where we didn't see those earlier in the year.

KANGAS: Ones have you selected as "buy" candidates?

MARKER: Well, I like Motorola (MOT), which historically you've paid 35 to 40 times earnings and right now you're able to pick it up for about 20 times earnings.

KANGAS: OK. Go ahead.

MARKER: I also like LSI Logic (LSI), another example of a communications oriented tech stock that makes chips for the wireless Internet, cell phones and the Sony PlayStation. Again, able to pick them up for about 20 times earnings when you were paying two or three times that in the past.

KANGAS: All right, how about number three?

MARKER: A couple of non-tech stocks, Archer-Daniels-Midland (ADM), Conseco (CNC) and Waste Management (WMI), which was a prior recommendation.

KANGAS: That's right. You liked it at 17. It's now around 25. That's pretty good in a market like this and you're-

MARKER: That's up 50 percent from my last visit.

KANGAS: That's right. You're staying with it?

MARKER: We like waste. It's still down from 60 and they've got a new CEO and they're starting to building some serious momentum here.

KANGAS: Let's go back to your last visit with us in June, June 23rd. At that time you liked Compaq (CPQ) at 27 and it moved over to 30, almost to 35. Are you still with it or did you sell it? I think you sold it, if I recall.

MARKER: We got out in the low 30s.

KANGAS: OK. You did well there. Would you buy it here?

MARKER: We're not going to back to back into Compaq at this time.

KANGAS: OK, American Home Products (AHP) you liked. It's about where it was then.

MARKER: We did well on American Home as well. We no longer own the stock.

KANGAS: And Loral (LOR) is the clinker. It was around 7. It's now around 4, a little under. You're out of it?

MARKER: We took a bit of a beating on Loral and we're completely out of it at this point. We've moved on.

KANGAS: You liked 3Com (COMS) back in June because you were very positive on the Palm (PALM) spin-off and you did very well on that, did you not?

MARKER: 3Com is up over 50 percent from my last visit.

KANGAS: Right.

MARKER: However, at one point it was up over 130 percent from the time I recommended it. So, we've been happy with 3Com.

KANGAS: Oh, yeah. It's done exceedingly well. So basically, here, Carl, you have a shopping list, you're taking advantage of the weakness and you think it's not going to last too much longer, I assume?

MARKER: I think the end is in sight and it's time to start putting any unused funds to work.

KANGAS: OK. So you'll be 100 percent invested in stocks. You're not moving into bonds, like some people are, for safety?

MARKER: No, we're equity managers, always have been.

KANGAS: OK. All right. Well, we'll be keeping a close eye on some of these. Just quickly, your two or three favorites once again and to repeat them.

MARKER: Archer-Daniels-Midland, Waste Management, LSI (LSI), Motorola and Conseco, the life insurance company with the new CEO from General Electric (GE).

KANGAS: OK, very good, Carl. Thanks very much for being with us.

MARKER: Thanks again, Paul.

KANGAS: My guest Carl Marker, Portfolio Manager of the IMS Capital Value Fund.

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.


12/15/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: If yesterday's post-market revelation that Microsoft's revenues and earnings would fall short of expectations wasn't damaging enough to investor morale, downgrades on Sun Microsystems (SUNW) and EMC (EMC) stocks by the Bear Stearns Brokerage this morning really rattled Wall Street' bulls. In a straight-line decline then, the Dow Industrial Average, badly undermined by a six-point tumble in Microsoft's stock, fell nearly 144 points by 10:30 this morning, while the NASDAQ Index lost 102 points. Reflecting the potential seriousness of the slowdown in the U.S. economy, more earnings warnings and brokerage downgrades continued to impact stocks, like Hewlett-Packard (HWP), Black & Decker (BDK) and Clorox (CLX) as the morning wore on. Midway through the noon hour, the Dow fell to a 193-point deficit; the NASDAQ Index down 115 points. The tech-laden NASDAQ market trimmed its losses in afternoon trading, thanks to some cautious bargain hunting, but the blue chip sector continued to fall on selling linked to the quarterly expiration of stock indexes, futures and options - the "triple-witching," as it's called. So the Dow Jones Industrial Average staggered down to a closing loss of 240.03 points, or 2.3 percent and now stands at 10,434.96. The Dow did rise three times this week, fell twice, and had an overall decline of 277.95 points, or 2.6 percent. The NASDAQ Composite today stumbled 75 1/4 points closing at 2653.27. For the week, it rose once and fell four times, and had a net overall loss of 264.16 points, that's 9.1 percent on the downside.

Big board volume was a record today, 1.558 billion shares, the highest ever in one day. And down volume swamped up volume, no contest there.

The Transport Index down 39 1/2.

Utility Index managed to edge up .97.

Closing Tick slightly bullish at +313.

Standard & Poor's 500 down 28 3/4 points.

The 100 losing nearly 21 1/4.

MidCap 400 down 5.14.

And the Bridge Futures Price Index managed to gain 1.39.

New York Stock Exchange Composite down nearly 9 3/4.

Almost a 4 1/2-point drop in the Value Line

Russell2000 Small Cap Index off a little over 3 3/4 points.

And the Broadly-Based Wilshire 5000 down 234.86 points, or 1.9 percent.

The bond market got a bit of a boost early today from the report that November consumer prices rose only 0.2 percent, which was just as expected. Buyers were also encouraged by all the earnings warnings, because they seemed to confirm the economy was slowing down to a point where the Federal Reserve might cut interest rates. Add to that a lot of flight-to-safety buying, triggered by the steep sell-off in stocks.

And corporate bonds, along with tax-free issues rose about 1/8-point on average.

And most Treasuries did a little bit better than that.

The 5-year notes didn't, up 5/32.

But the 10-year notes up 9/32, with the yield down to 5.19 percent.

And the 30-year bond up 8/32.

And finally, the Lehman Brothers Long-Term Treasury Bond Index was up 3 2/3 points.

Not much mixture on Wall Street today, a lot of minus signs and, of course, some late December tax loss selling also accounted for a lot of the weakness. Down 240 on the down and the broader market really not that bad as the advance/decline ratio indicates, 16 to 13 negative. And actually 30 more new yearly highs than lows.

General Electric (GE) topped the active list on a hefty 31.8 million shares, down $1.63.

Followed by EMC (EMC), off $6.50. It traded as low as $65.25 after Bear Stearns this morning downgraded it from "buy" to just "attractive."

Nortel Networks (NT) bucking the trend, up $0.44. Yesterday, the company said that it expects to meet earnings projections.

Citigroup down $2.69, weak banking group.

And Compaq (CPQ), in that high tech sell-off, down $1.35.

Pfizer (PFE) a $0.13 loss.

Lucent Technologies (LU) down $0.88.

America Online (AOL) dropped $1.04.

And then AT & T (T) down exactly $1, 10th in volume.

Tyco International (TYC) was up $0.56 a share.

Clorox Company (CLX) down $3.94. The slowing economy caused the company to warn its second quarter and full fiscal year earnings will be below last year's. The second quarter will be about $0.03 below last year's level.

Home Depot (HD) dropped $1.94 after Merrill Lynch trimmed earnings estimates there.

IBM (IBM) was the biggest point loser in the Dow, off $4.63 and nearing its lowest level in the last 52 weeks.

J.P. Morgan (JPM) was the big point gainer in the Dow, up $2.06.

PG&E (PCG), the west coast utility, was up $1.19 after Alex Brown Brokerage upgraded it from "market perform" to "buy."

And UnionBanCal (UB) down $2.38. The company says it sees lower than expected frequent earnings at only about $0.01 due to a $250 million credit loss provision.

Mynd Corporation (YND) the big gainer of the day, up $4.94. Computer Sciences Corp. (CSC) has agreed to acquire this company for $16 a share and today Computer Sciences said it'll bring forward the expiration date for its tender offer from December 29th to December 20th, earlier.

Azurix (AZX) up $1.94. The company plans to be acquired by Enron (ENE) for $8.3750 a share in cash. That's up from an earlier bid of $7 by Enron, so they sweetened the deal.

Cooper Companies (COO), this is a specialty health care firm, up $4.19. The company posted fourth quarter earnings, $0.63, $0.01 better than the Street estimate and well up from $0.53 a year ago. The company also announced its boosting its annual dividend from $0.08 to $0.10 a share.

Amphenol (APH) the big percentage loser, down $8.63. Of course, the company makes products like coaxial cable used by many high tech firms who, because of the slowing economy, are cutting back on capital spending. However, Amphenol says demand for its products remains strong.

Material Sciences (MSC) down $1.63. The company in with a third quarter loss of $0.03 versus $0.30 in earnings last year. Sales dropped 4.2 percent.

And Fomento Mexicano (FMX), a beer producer down there south of the border, down $4.38. The company sees lower, a lower than expected rise of nine to 11 percent in its year 2000 income. Alex Brown downgraded the stock.

NASDAQ trading, a loss of 75 ¼ today but for the week off about 264 points or 9.1 percent. Volume heavy at 2.6 billion shares, only 13 stocks up for every 24 down.

Microsoft (MSFT) topped the active list, losing $6.31 and that hurt the Dow by 38 points alone.

Cisco Systems (CSCO) down $2.77.

Oracle (ORCL), after posting better than expected earnings after the close yesterday, up $1.06.

Sun Micro (SUNW) down $1.25.

JDS Uniphase (JDSU) dropped $3.33.

Intel (INTC) down $2.69.

Juniper Networks (JNPR) fell $7.38.

And an $8.50 loss in QUALCOMM (QCOM).

BEA Systems (BEAS) topped the active list. I saw no news, but up $7.63.