SUSIE GHARIB: Two big developments tonight for the world's biggest software company, Microsoft. First, a new judge has been named to decide how the company should be punished for violating government antitrust laws. She is US district court judge Colleen Kollar Kotelly. She is a Clinton appointee who has been on the court since May of 1997. She takes over the case from Judge Thomas Penfield Jackson who ordered Microsoft be split up. He was removed on appeal due to his prejudicial comments. But analysts say this development might not bode well for Microsoft.

BILL WHYMAN, PRESIDENT, PRECURSOR GROUP: Of the 10 active judges at the districted court, nine were appointed by Democrats, and this is a pretty liberal court. And any of these judges are not where Microsoft wants to go. Their best shot was the conservative appeals court that was skeptical of active anti-trust.

GHARIB: Still, Washington lawyers say that Kollar Kotelly is an organized and efficient judge who is meticulous about weighing facts and making decisions. Paul.

KANGAS: The second development for Microsoft involves its new Windows XP software. The final code was released to computer makers this morning and that's the last production step before the new operating system hits store shelves in October. As Scott Gurvey explains, the release was done in typical Microsoft fashion.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: There is more than a little PT Barnum in Bill Gates. Today the Microsoft chairman signed off on the company's new operating system, Windows XP. Then he handed copies to representatives of six major personal computer makers. They climbed into helicopters and raced to their manufacturing plants where they will load it on new computers. No matter that the whole program could have been transmitted over the Internet in a matter of minutes. This was an event to celebrate.

BILL GATES, CHAIRMAN AND CHIEF SOFTWARE ARCHITECT, MICROSOFT: I can think of only two occasions that were similar to this. The first release of Windows, and about six years ago when we stood on this lawn and released Windows '95.

GURVEY: Many in the industry hope Windows XP will spur the sales of new computers and help revive the moribund tech sector. The home version of XP will sell for $199; a professional version for $299. Each represents an increase of about $20 over previous versions. Pre-release versions of XP have been available to "NIGHTLY BUSINESS REPORT" and others for some time. It sports a new, attractive look and feel, and home version users will notice a dramatic improvement in reliability.

CHRIS JONES, VP, MICROSOFT WINDOWS CLIENT GROUP: One of our design principles was to bring that new level of reliability to consumers with that Windows 2000 code base, as well as to unlock a new set of experiences so that, as you mentioned, developers and partners are going to have a great platform to build on that's consistent from home to business and has new capabilities in it.

GURVEY: And therein lies the rub. The new capabilities have drawn the attention of Microsoft critics and antitrust regulators who ask if Microsoft's addition of the new capabilities to the operating system is reminiscent of Microsoft actions to take market share from the Netscape navigator web browser. There will certainly be more on the legal issues in the weeks ahead.

MELISSA EISENSTAT, SOFTWARE ANALYST, CIBC WORLD MARKETS: It's going to be sort of an ebb and flow of information. I think it's going to lend volatility to the stock, but I think particularly with XP, it's probably not going to be meaningful if the DOJ can't react like immediately.

GURVEY: While manufacturers can begin loading XP on their computers now, they cannot deliver them to customers until the official release date, October 25. Scott Gurvey, "NIGHTLY BUSINESS REPORT," New York.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. © 2001 Community Television Foundation of South Florida, Inc.

PAUL KANGAS: This week's interest rate cut by the Federal Reserve could spark another round of mortgage refinancing. That's good news to retailers who say lower mortgage rates are putting extra cash into the hands of consumers. But as Diane Eastabrook explains, many economists fear the "refi" boom could have a backlash.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's been a near blockbuster summer at Bert Weinman Ford (F). The dealership says vehicle sales are brisk because consumers are enjoying the benefit of hefty rebates and mortgage refinancing.

LEE WEINMAN, OWNER, BERT WEINMAN FORD: We're getting more and more cash business where people have been refinancing their homes. Their mortgage payment may be $4 or $500 a month less than it was prior to the "refi."

EASTABROOK: Economists say mortgage refinancing is helping to keep the U.S. economy on track by putting extra cash into the pockets of consumers. The Mortgage Bankers Association of America says its index measuring "refis" is more than four times higher than it was one year ago. Many homeowners who refinance are also cashing out part of the equity that have in their homes, then spending the money on everything from college tuition to appliances. Chicago-based LaSalle Bank says it is seeing homeowners tape anywhere from $5,000 to $100,000 in equity.

FRANK BINETTI, VICE PRESIDENT, LaSALLE HOME MORTGAGE: Some people are putting room additions on their homes or expanding their homes. Those people obviously need more cash out than somebody who's just going to go out and purchase a car or do whatever else with their money.

EASTABROOK: While tapping home equity is propping up consumer spending, it has economists very worried. They fear it's creating over-leveraged consumers who could be in big trouble if the economy deteriorates further.

PAUL KASRIEL, ECONOMIST, THE NORTHERN TRUST COMPANY: If people start to lose their jobs, they're not going to be able to make their mortgage payments, and you could have a tremendous number of defaults which would have a very negative impact on lenders' balance sheets.

EASTABROOK: Kasriel adds that could have a ripple effect on the overall economy. Some economists believe the volume of mortgage refinancing will begin declining before the end of the year, but they say the potential danger from equity cash outs will linger until the economy improves. Diane Eastabrook, "NIGHTLY BUSINESS REPORT," Chicago.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. © 2001 Community Television Foundation of South Florida, Inc.

08/24/01: Market Monitor- James Stack, President of Investech Research

PAUL KANGAS: My guest market monitor this week is James Stack, president of Investech Research, based in Whitefish, Montana, and welcome back to "NIGHTLY BUSINESS REPORT," Jim.

JAMES STACK, PRESIDENT, INVESTECH RESEARCH: Thank you, Paul. It's great to be here.

KANGAS: Judging by the rather impressive rally in stocks on Wall Street today, is the market telling us that the US economy is on the verge of recovery or is this a bull trap?

STACK: Well, I think the fundamentals are going to continue to get worse because I think we are in a recession, but the stock market always leads the economy and a number of important blocks have dropped into place to make this a new bull market or I would call it a profit opportunity.

KANGAS: What are some of the recessionary signs you're still seeing?

STACK: Well, for example, the survey of purchasing managers of the nation's factories has never spent seven months at this such a low level, except in a recession. Even if you look at the unemployment rate which has already risen six tenths of one percentage point, it has never done that in the past 50 years, except as a result of recession. Moreover, unemployment I think will continue to head higher in the months ahead.

KANGAS: All right. Now, of course we've had seven interest rate cuts by the Federal Reserve in a record shortness of time. When is that going to take hold and help this economy?

STACK: Well, those seven rate cuts, it's being debated whether or not they're having any effect on Wall Street. I think they've had a substantial effect in stabilizing what would be a lot worse stock market this year. Yes, the blue chips are down, and the technology stocks have continued crashing, but a lot of the value stocks, the stocks that we have been focusing on, have moved higher. The Russell2000 Index, the S&P 600 small cap Index are both up for the year to date.

KANGAS: Now, your last visit with us, February 16 of this year, you gave us some value stocks, which were values, in your opinion, Engelhard (EC), Genuine Parts (GPC), Phillips Petroleum (P) and Excel Energy (XEL). Every one of them are up four for four. That's a great batting average and they're up an average of almost 10 percent in total, while the Dow was down about 5 percent in that period of time. The S&P 500 off over 10 percent. The NASDAQ down 24 percent. So your performance was excellent. I compliment you.

STACK: Well, thank you, Paul. I think it shows the importance of going up there and searching for value; that is, bargain-hunting, not bottom-fishing.

KANGAS: All right, let's hear some more bargains, in your opinion.

STACK: Well, again, this is what I would call a safety first strategy. I still like those stocks that we had at that time. We continue to like Excel Energy, a safe utility company paying a 5.5 percent dividend yield, very, very competitive in this low interest rate climate. Archstone Communities (ASN), a multifamily, a residential REIT paying close to 6 percent. We also like Teleflex Inc. (TFX), something that we've liked in years past. Teleflex has 27 consecutive years of earnings growth. Those kind of values are the ones I think we want to be swinging at here, going for safe singles and doubles, not swinging for those home runs, so to speak.

KANGAS: Can you give us the ticker symbols on those stocks? Do you know them offhand?

STACK: Yes, Excel Energy is (XEL). Archstone is (ASN). Teleflex is (TFX). A couple other positions that we're looking at, SBC Communications (SBC) I think is approaching a good value. It's down quite a bit in price. Mentor Corp. That's symbol (MNTR). That company specializes in medical products.

KANGAS: All right, now, these are value stocks, in your opinion. So it doesn't sound like you think this market's really going to have a big year-end rally, that we're not going to be like Japan either, is that correct?

STACK: Well, keep in mind we have popped a valuation bubble on Wall Street. Any time that happens, when you suddenly let out $4 trillion in paper wealth in barely a year, you have the potential for a Japanese-style scenario. And that is why the Federal Reserve is so worried. That's why we are seeing a record easing on their part. That risk still remains, but as long as consumer confidence holds steady or continues increasing out of the low that it hit earlier this year, I think the Federal Reserve has not lost control.

KANGAS: All right, so you're partially bullish, and of course you were very bearish when the bubble was the biggest and people faulted you for that and you were right. And now you're turning bullish when a lot of people are turning bearish. So we'll listen carefully from here on out.

STACK: Thank you, Paul. It's time to be a selective contrarian again.

KANGAS: And you are well-known for that, but you've been very correct. Thanks very much for being with us, Jim.

STACK: Always my pleasure.

KANGAS: My guest Jim Stack, president of Investech Research.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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. © 2001 Community Television Foundation of South Florida, Inc.

PAUL KANGAS: Stocks on Wall Street opened higher today, especially the high-tech sector, led by Cisco Systems in reaction to its post-market announcement yesterday saying its business was stabilizing. Adding to hopes that a US economic recovery is in the offing, was the report that July new single family home sales rose a solid 4.9 percent when analysts were actually expecting a decline. In practically a straight -line advance, the Dow Industrial Average moved to a 117-point or 1.1 percent gain by 11:00 this morning, while the NASDAQ Index posted a 43-point gain or 2.3 percent. Good positive market breadth and the aggressive nature of the buying soon had scared bears running to cover short positions and their purchases gave the rally an added boost. By noontime, the Dow was sporting a 203-point or 2 percent gain. The NASDAQ Index was up 57 points or 3.1 percent. The market held its gains impressively throughout the afternoon amid the growing belief an economic turn is on the horizon. The Dow Industrial Average closed with a gain of 194.02. That's 1.9 percent. We now stand at 10,423.17. This week the Dow rose three times, fell twice and gained 182.39 points or 1.8 percent. The NASDAQ today surged 73.83 to close at 1916.80. And this week the Index was in lock step with the Dow, rising three times, falling twice except it had a net overall gain of 49.79. That's 2.7 percent.

Big board volume today moved up just over a billion shares, but still not that impressive but the up volume over down was by a 7 to 3 margin.

The Dow Transports Index up 57 1/3 points.

Utility Index edged up just over 2.

And the Closing Tick modestly bullish at +232.

Standard & Poor's 500 gained nearly 23 points.

The 100 up 13 3/4.

MidCap 400 gained just over 5 points.

And the Bridge Futures Price Index fell .78.

A gain of 7 2/3 points in the New York Composite.

Value Line up just over 6 1/2.

A 7 1/3 point rise in the Russell2000 Small Cap.

And the broadly based Wilshire 5000 up 196 1/3 points or 1.8 percent, about the same rise as the Dow had.

The bond market headed lower on that much stronger than expected jump in July new home sales and also a negative was a 0.6 percent decline in July durable goods orders because most analysts were expecting a bigger 1 percent drop. To make matters worse, the big rally in stocks siphoned funds out of the debt instrument market and a $0.27 per barrel rise in September New York oil futures also prompted some selling.

Tax-free and corporates ended down 1/8s and 1/4s. The Treasury market was also rather weak.

5-year notes dropping 5/32.

Bellwether 10-year note down 11/32, bringing the yield up to 4.93 percent.

30-year bond down 17/32.

Lehman Brothers Long-Term Treasury Bond Index down .42.

It's been quite a while since we've seen such a spirited rally on a Friday, but we had it. The Dow up 194 points, A 19 to 11 advance decline ratio and 156 new yearly highs, only 38 new lows.

Lucent Technologies (LU) on 22.6 million shares, topped the active list, moving up $0.37. That's a 5 1/2 percent gain. Of course yesterday the company forecast it'll break even next year, be profitable the following year.

NorTel Networks Corp. (NT) coming alive, up $0.42.

Kmart (KM) however, down $0.73, traded as low as $9.81 after Prudential Securities this morning downgraded it from "buy" to "hold."

Qwest Communications (Q) making a comeback after recent weakness as did EMC Corp. (EMC) up $1.51.

General Electric (GE) up $0.95.

Taiwan Semiconductor (TSM) down $0.26.

And then the NASDAQ 100 Shares (QQQ) cubes or Q's as they're called, up 1.98, reflecting the nice rally on the high-tech NASDAQ.

JP Morgan Chase (JPM) edging up $0.21.

Citigroup, tenth in volume, a gain of $1.51.

Delta Air Lines (DAL) up $1.89, representing a firm airline group on hopes of an improving economy.

Edison International (EIX) closed up $0.02 after the market closed. City Light and Power, a small California power company, said it's been in talks to acquire Edison. But Edison said it's not for sale and that the takeover bid was without merit.

IBM (IBM) was the best point gainer in the Dow, up $3.99.

Kohls (KSS) department stores up $2.02 after Goldman Sachs added the stock to its recommended list.

McDonald (MCD) was the biggest point loser in the Dow, down only $0.35, not bad.

Providian Financial (PVN) of $2.77. Goldman Sachs cut earnings estimates on this credit card issuing company.

IT Group (ITX), the big percentage gainer of the day, rising $1.03 or nearly 21 percent. It's an engineering services firm and it says 2001 earnings will come in around $0.65 to $0.70 a share. The Street was looking for $0.85. But the company said, it has won a slew of new contracts which will bolster next year's earnings.

Williams Sonoma (WSM) up $3.61. Second quarter earnings only $0.02 but the Street was expecting just break even and the company says third quarter will be $0.05 to $0.07 a share.

Teradyne (TER) up $3.79. Yesterday the company introduced its new web-based software licensing tool and apparently a very warm reception indeed.

Prime Group Realty Trust (PGE) up $1.54. Prime Group Inc. and Katem Inc. are offering to buy this company for $14 a share in cash.

Golden West Financial (GDW) tumbling $6.38. Yesterday the Dain Rauscher Brokerage downgraded that stock from "buy" to "neutral." Today Jefferies Group cut earnings estimates and this affected the whole thrift group, including GreenPoint Financial (GPT) which dropped $4.13.

Composite Index and NASDAQ up nearly 74 points or 4 percent, impressive, but volume wasn't. It was up only $50 million shares from yesterday. But 22 stocks closed higher for every 13 lower.

Microsoft Corp. (MSFT) up $2.93.

You heard the news, Cisco Systems (CSCO) on that improved business outlook, gained $1.49.

Intel Corp. (INTC) up $1.41.