SUSIE GHARIB: George W. Bush paid his first visit to Alan Greenspan in Washington; and on Wall Street, blue chips rallied. Investors bought up stocks on speculation that Mr. Greenspan and the Federal Reserve might cut interest rates when they meet tomorrow, and the hope that the meeting between President Elect Bush and Fed Chairman Greenspan, could be the first step toward a tax cut. The Dow surged 210 points today, but the NASDAQ slipped about 30. We have two reports tonight on the news from Washington and Wall Street. We begin with Scott Gurvey in New York.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: At the start of the day, it looked to be a bullish session for stocks. The "Wall Street Journal" had openly speculated that the Federal Reserve's interest rate setting committee could go as far as to lower interest rates when it meets tomorrow. That was music to investors' ears, even though few economists believe the Fed would make such a bold move.

PADDY JILEK, ECONOMIST, CREDIT SUISSE FIRST BOSTON: We think the language that comes out of the FOMC meeting will be kind to markets. We think the Fed will remove its tightening bias and will probably move to a balanced stance, although there is a very good chance they move from the tightening bias to an easing bias.

GURVEY: In the end, investors faced a decidedly mixed session, with financial and other interest rate sensitive stocks pulling the Dow to a healthy gain, while the tech sector pushed the NASDAQ down for the fifth day in a row. Many analysts today cut near-term earnings forecasts for the tech sector, citing fears of a slowing economy. Even if it doesn't happen tomorrow, the markets do expect rates to be lowered during the first half of next year, and they expect the old economy and new economy segments to continue going their own ways. That, they say, is because the so called "old economy" sectors have actually been slowing for some time, and will begin to recover as soon as interest rates begin to fall. For the technology stocks, the correction began later, and as a result, a recovery is not expected until the second half of next year.

ALAN SKRAINKA, CHIEF MKT. STRATEGIST, EDWARD JONES: If the economy slows down significantly, if we do move into recession, there'll be very few places to hide. The best strategy for a long-term investor is to make sure that they have good quality stocks in their portfolio, and they add gradually to their portfolio as prices move lower.

GURVEY: This last Fed meeting of the year is a one-day affair, and the statement should be released about 2:15 Washington Time, tomorrow. Scott Gurvey, 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.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Darren Gersh. The president-elect began his first official visit to Washington with breakfast with Federal Reserve chairman, Alan Greenspan.

PRESIDENT-ELECT GEORGE W. BUSH: We had a very strong discussion about, about my confidence in his abilities. I mean that in all sincerity.

GERSH: There were a few details on the private meeting, but clearly, the president-elect is concerned the economy is slowing down, and he thinks big tax cuts are needed to keep it going. With Congress increasingly willing to spend the budget surplus, analysts say Mr. Greenspan and Mr. Bush may find they have much to agree on.

L. DOUGLAS LEE, CHIEF ECONOMIST, WASHINGTON ANALYSIS: Given the choice between large tax cuts and large spending increases, Mr. Greenspan would certainly prefer a tax cut over spending increases.

GERSH: Then it was on to Capitol Hill for a meeting with Republican and Democratic leaders. The public hopes were for bipartisanship.

BUSH: We can come together, to heal whatever wounds may exist.

GERSH: But the bitter election battle clearly lingers, prompting reporters to ask Democrats if they felt Bush was indeed, a legitimate president.

REP RICHARD GEPHARDT, MINORITY LEADER: …January 20, not too many steps from here, he's going to be sworn in as the next president of the United States. I don't know how you can get more legitimate than that.

GERSH: For his part, Mr. Bush made it clear he campaigned for a $1.3 trillion across-the-board tax cut because he believed in it, and he would not back off now.

BUSH: Secondly, secondly, I talk about marginal rate reduction, to serve as an insurance policy against a potential economic downturn. I was saying that a year ago. The potential economic downturn is perhaps more real today than it was a year ago.

GERSH: But even if a large across-the-board tax cut can make it through Congress - a big "if" - economists say its full effects would not be felt for several years, making it unlikely to be of much help to the economy as the Bush presidency gets underway. 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.

12/18/00: View From A Bridge: The Fed Meeting & The End Of The Year

SUSIE GHARIB: So will the upbeat buying that we saw on Wall Street today continue through the end of the year? Let's get the view from the Bridge. Our roundtable discussion at news. On our panel tonight, Michael Kahn on the markets, Deborah Lagomarsino on monetary policy and our special guest, Joshua Feinman, Chief Economist at Deutsche Asset Management. Josh, let me start with you. What do you think the Federal Reserve will decide to do tomorrow?

JOSHUA FEINMAN, CHIEF ECONOMIST, DEUTSCHE ASSET MANAGEMENT: I don't think they're going to be cutting interest rates. But I do think they are going to convey that the balance of risk is no longer tilted towards accelerating inflation. Rather, they're going to articulate that they see down side risks to the economy and they stand ready to guard against those risks should they broaden. But I don't see a rate cut much before January 31st at the earliest.

GHARIB: Deborah, of the other economists you've been polling recently, what are you hearing?

DEBORAH LAGOMARSINO, MONETARY POLICY REPORTER, BRIDGENEWS: Well, our last poll showed that economists see a 19 percent chance the Fed will cut rates at its meeting tomorrow but people do, most people believe the Fed will say that the risks to the economy have become more balanced between higher inflation and extensive growth, although, you know, there's been a lot more speculation today the Fed could actually go one step further and ease rates. The Federal Funds Futures contract for January is showing a 44 percent chance of that. So certainly the markets are very nervous heading into that meeting.

GHARIB: Michael, have the markets already priced in a Fed rate cut at some point?

MICHAEL KAHN, CHIEF TECHNICAL ANALYST, BRIDGENEWS: I think they have. At least they're looking for any kind of reason to rally We had a bad week last week. We're a little over sold. We're going to bounce off that. We're also looking for any kind of news that the Fed is going to move. So, yes, they're pricing it in now.

GHARIB: Well, today there was a sense of positiveness on Wall Street. President Elect Bush was meeting with Alan Greenspan. What do you think happened at that meeting?

FEINMAN: I think they talked about a number of things. Probably front and center was the President Elect's tax cut proposal. He'd like to get Greenspan on board supporting that. Greenspan has in the past said he'd rather see debt paid down, but he could go for a tax cut in lieu of spending increases. Also, if the economy is starting to falter, maybe his resistance to a tax cut would diminish.

LAGOMARSINO: I would agree. I think-and also, I don't think it's a coincidence that, you know, amid heightened concern that we may be in, you know, a lot of people in the markets are worried about a recession next year, that Bush made it his priority to meet with Greenspan first. I think that was very astute on his part. I also think Greenspan, it would be key to get him on board and he has been resistant to tax cuts in the future, even though he's a Republican. But if the economy does show signs of this downturn accelerating, I think that is going to lessen his resistance to it, absolutely.

GHARIB: Michael, do you think Wall Street can build on some of the momentum in the Dow today and maybe we'll have a Santa Claus rally?

KAHN: I'm really not looking for a Santa Claus rally or that late year rally. think the markets are still very heavy, still trending lower, and I'm looking for lower prices before we start moving higher on both indices.

GHARIB: Deborah, let me go back to what you were saying about the possibility of a recession. Is this slowdown going to turn into a slump?

LAGOMARSINO: Well, at this point the economists I'm talking to say a 25 percent of such a possibility. What could intensify this probability is number one, if the stock market pulls back even more than it has, which would affect consumer spending. And number two, business spending, which is already starting to taper off, pulls back even more because that's been a big contributor to fueling productivity growth.

GHARIB: So Josh, could we see more pink slips in 2001?

FEINMAN: Well, we could, but I think that the consumer spending pullback is not going to intensify much more so we'll see some more production cutbacks for a while to bring inventories in line but then by the spring and summer I think we'll stabilize.

GHARIB: Michael, from a technician's point of view, what sectors will do well in 2001?

KAHN: I think we're still playing defense. The sectors that do well in a slower economy, those are the drugs, tobacco, health care, that sort of area. I think food stocks in any variety, the distributors, the retailers, they're still doing very well. So I think the area, again, is defense, not the aggressive tech stocks just yet.

GHARIB: All right, let's get your forecasts from all of you for 2001. Michael, start us off. Your forecast for Dow and NASDAQ by December 2001?

KAHN: I think we're going lower first, but a year from now I think Dow 11,500, about the old highs, NASDAQ around 4,500, nowhere near the old highs.

GHARIB: Deborah, Fed funds rate?

LAGOMARSINO: Yeah, six percent is what our last call showed, but the financial markets are already pricing in six percent by the end of the fourth quarter so the risk is there could be even a lower Fed funds rate by the end of 2001.

GHARIB: And, Josh, GDP growth?

FEINMAN: I'm looking for maybe two-and-a-half to three percent for the year, but maybe a little bit softer early on and a little bounce later on Fed rate cuts, some oil price declines.

GHARIB: Productivity growth?

FEINMAN: Maybe two percent, a shade less. Nowhere near what we've gotten used to, but enough to keep alive the hopes that the underlying trend has still picked up.

GHARIB: Thank you very much to our BridgeNews team, Michael and Deborah and to Joshua Feinman of Deutsche Asset Management.

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.


12/18/00: Checking In To The Telecom Hotel

SUSIE GHARIB: Here's one type of hotel you'll never stay in. It's called a telecom hotel. It's not for people, but for telecommunications gear that's used to drive our Internet driven economy. And as Jeff Yastine reports, the new hotels are catching the attention of real estate investment trusts.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: On a city block in Miami, developers are constructing a new kind of building. Its a telecom hotel with concrete embedded with dozens of fiber optic cables which snake up inside the building's foundation and walls, its own kind of high tech plumbing. Instead of renting hotel rooms, the developers rent out rack space for telecommunications gear like routers and switchers. More than 70 telecom companies have already signed up to be tenants. The project's developer says demand for this kind of space far exceeds supply.

MANUEL MEDINA, CHAIRMAN & CEO, TERREMARK: If you fundamentally believe that the Internet is a way of us to communicate and its going to be here to stay, you fundamentally then believe that the market of this product is huge. Is there going to be bumps along the way? Of course. Is the industry going to stabilize? Of course. But the market is huge.

YASTINE: Analysts say about 10 million square feet of telecom hotel space is available now. That's expected to quadruple by next year as real estate investment trusts and private developers scramble for a piece of the market.

CHRISTOPHER HALEY, ANALYST, FIRST UNION BANK: The returns are much higher than your traditional real estate development, which are in the eight percent to 12 percent range, where development of this type of facility begins at 15 percent to 20 percent returns on invested capital and it can go as high as 30 percent to 50 percent.

YASTINE: Those returns are high because rents are high. Telecom hotels are expensive to build and ordinary buildings just won't do. Telecom hotels are notable for their high security environment. Most have backup power generators. This building has six of them so that the telecom networks located here don't lose power. Telecom hotels also have thicker floors to handle the heavy equipment, as well as reinforced weatherproof exterior walls and roofs. Analysts do have some caveats about telecom hotels. No one knows exactly how big the market is and the rapid changes in technology could also affect future demand. But that has not stopped developers from building more telecom hotels. Most are confident that demand for this kind of real estate will keep growing. 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.


12/18/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Wall Street's blue chip stocks, especially in the financial sector, opened with a strong rally, partly in reaction to that "Wall Street Journal" report, pointing to the possibility that the slowdown in the economy might prompt an interest rate cut by the Fed as early as tomorrow. Boosted by solid gains in components like American Express (AXP), Citigroup and J.P. Morgan (JPM), the Dow Industrial Average jumped 173 points by 10:30 this morning, while the NASDAQ Index rose nearly 52 points. Buyers continued to concentrate on the old-line stalwart stocks for the rest of the morning, while the tech-heavy NASDAQ market lost ground amid a continuing fear that the Internet and computer-related firms would be issuing more earnings warnings in the near future. At noontime then, the Dow was sporting a 209-point gain; the NASDAQ Index fell to a 15 1/4-point loss. In afternoon trading, persistent buying in the financial and energy sectors kept the large-cap stocks riding high, but technology issues lost some further ground. The Dow Jones Industrial Average closed with a gain of 210.46 points, that's 2 percent, and ended at 10,645.42. In today's 246-point trading range the Industrial Average closed down only 34 points from the best level of the session. The NASDAQ Composite lost 28 3/4 points exactly ending at 2624.52. In its nearly 129-point trading range, the Composite Index settled 102 points below its best level of the day.

Big board volume slipped considerably from Friday's record pace, down to 1.15 billion shares. About a 7-to-4 margin of up volume over down volume.

The Dow Transport Index up 40 3/4 points.

Utilities up a little over 7 1/2.

And the Closing Tick quite bullish at +677.

Standard & Poor's 500 up just over 10 1/2.

Almost a 5-point gain in the 100.

The MidCap 400 gained just over 7 1/2 points.

And the Bridge Futures Price Index gained just over one point.

New York Stock Exchange Composite up 7 1/3.

Just over a 2-point rise in the Value Line.

Russell2000 Small Cap Index gaining nearly 5 1/4 points.

And the Broadly-Based Wilshire 5000 up just over 84 points.

The mere hint that the Fed might be inclined to lower rates tomorrow to ensure the economic slowdown doesn't turn into a recession, gave bonds a boost early today. But those who doubted the Federal Reserve would do such a quick turnabout in policy, did some selling into the rally. The big rally in blue chip stocks also deprived this market of any support from flight-to-safety buying. The result was a narrowly-mixed close for tax-free, corporate and Treasury issues, with the shorter-term bonds doing the best.

A 5/32 gain in the 5-year notes.

The 10-year notes up 2 2/32.

But the 30-year bond, as you see, down 11/32.

And the Lehman Brothers Long-Term Treasury Bond Index in minus territory, down 1.62.

A big day for the blue chips. A lot of buyers a lot of buyers around going for the old stalwarts, as I mentioned earlier, the Dow ending near its best level of the day, up 210 ½ points or two percent. The broader market nicely higher by a 19 to 11 margin, 224 new highs for a year, a mere 104 new lows.

America Online (AOL) topped the active list, losing $6.72 on 17 million shares. That's probably due that it's soon to be partner Time Warner (TWX) lowered its 2000 year growth rate estimate. We'll get more on that later.

Citigroup in the strong financials up $1.31.

Nortel Networks (NT) down $2.88, a little profit taking there.

Compaq Computer (CPQ) lost $0.95.

EMC (EMC) down $2.31 in the weak high tech group.

Lucent Technologies (LU) dropped $0.25.

Nokia (NOK) off $1.13.

General Electric (GE) up $1.19, one of those nice blue chips doing well.

As did Chase Manhattan (CMB), up $1.44.

AT & T (T) down $0.69, 10th in big board volume.

American Express (AXP) up $2.13.

J.P. Morgan (JPM) up $6.63. I mentioned those two earlier in the strong financial sector.

Kerr-McGee (KMG) up $4.25. Here's an energy related stock doing well. The ABN AMRO Brokerage is positive on the natural gas industry and repeated a "buy" on Kerr-McGee.

R&B Falcon (FLC) up $2.63. The Department of Justice has confirmed the proposed merger of this company with Transocean Sedco (RIG).

Schlumberger Limited (SLB) up $5.06, up on projections that oil and gas exploration will increase in this coming year.

Time Warner (TWX), as I mentioned, down $9.47 as the company lowered its 2000 growth estimate from 10 to 12 percent to only 11 percent.

Donna Karan International (DK) up $3.63. LVMH Moet Hennessy Louis Vuitton (LVMHY), that French firm with the long name, is bidding $8.50 on a buyout for Donna Karan.

ACNielsen (ART) rated high amongst the big gainers today, up $11.38. The Dutch company, VNU will acquire Nielsen for $2.3 billion. That works out to $36.75 a share.

Morgan Keegan (MOR), the regional brokerage, up $6.88. This company's going to be acquired by Regions Financial Corporation (RGBK) for $27 a share.

Allied Waste Industries (AW) doing well, up $1.63 after the company made an upbeat forecast for the year 2001.

United Rentals (URI) the big percentage loser, down $3.50 or 21 1/2 percent on the day. The company sees fourth quarter earnings of only $0.40. The Street was expecting $0.62.

And Royal Group Technologies (RYG), a Canadian firm, down $1.44. It sees lower than expected fourth quarter earnings of $0.23 to $0.28 Canadian. The Street was expecting $0.30.

NASDAQ trading, a 28 ¾ point drop there. Volume down some 600 million shares from Friday. Fifteen stocks up for every 24 lower. Cisco Systems (CSCO) down $5.23.

Microsoft (MSFT) lost $1.38.

Sun Micro (SUNW) off $1.88. Prudential downgraded Sun from "strong buy" to just "accumulate."

Oracle (ORCL), which had better than expected earnings last week, up $3.44.

JDS Uniphase (JDSU) rising $1.02.

Juniper Networks (JNPR) no change at all.

CIENA (CIEN) down $4.36, a real mixture here.

Broadcom (BRCM) off $17.69.

And SDL (SDLI) up $7.88.