10/22/01: The Postal Service Still Delivers Despite The Anthrax Scare

SUSIE GHARIB: Wall Street kicked off the week with a rally. Investors looked beyond today's disappointing earnings news and weak economic forecast, hoping things will improve next year. The markets also shrugged off more worrisome reports of anthrax, again at a Washington D.C. post office. Stephanie Woods looks at how Washington and the US Postal Service are responding to the outbreak of anthrax.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: A second postal employee who worked at this Brentwood sorting facility is confirmed as infected with anthrax. Two other workers died today under circumstances health officials call suspicious. Now the challenge is to stop any more outbreaks.

IVAN WALKS, DIRECTOR, DC HEALTH SERVICES: This is a new day for us. We are focused on defining who is at risk as quickly as we can and getting those people treated.

WOODS: 2,000 postal workers are now being tested for the disease. The post office temporarily closed Brentwood and a second Washington, D.C.-area post office for inspection. Still, the postmaster general says mail service will continue.

JON POTTER, U.S. POSTMASTER GENERAL: We have no intent of-to stop delivery of the mail unless we have a situation where people - we suspect the anthrax, and obviously there we'll pull back.

WOODS: Even before the anthrax cases and the September 11th attacks, the postal service was facing a $1.6 billion loss despite two rate increases. Now the agency faces millions of dollars in costs for rerouting mail and inspecting and sanitizing facilities. Businesses are expected to cut back their use of the mail.

GENE del POLITO, PRESIDENT, ASSOCIATION FOR POSTAL COMMERCE: I don't believe anyone will totally abandon the use of mail, because mail is still a very powerful communication medium, vehicle by which you can transact commerce. But for sure, they are going to take some of their advertising and marketing dollars and begin to move them to other media.

WOODS: American companies already are changing the way they handle mail. For example, Luitpold Pharmaceuticals, a maker of drugs for the veterinary market, is no longer accepting mail. It now requires customers to place orders by phone. Retailer Abercrombie & Fitch (ANF) canceled plans for its holiday catalog mailing. The Federal Communications Commission has even stopped accepting filings by mail at its headquarters, encouraging firms to file electronically. The slowdown in mail volume and increased security costs could mean big rate hikes for mailers. The postmaster general says he will ask Congress for financial help. Stephanie Woods, "NIGHTLY BUSINESS REPORT," Washington.

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.

10/22/01: The Massive Layoff Axe Looms Over Wall Street

SUSIE GHARIB: It's been a rough year for Wall Street's investment firms, and now more bad news: layoffs. Wall Street workers are now joining more than a million Americans who have lost their jobs this year. As Suzanne Pratt reports, the layoffs could accelerate in the months ahead.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: For many Wall Street firms, being so close to ground zero is bad enough. But in recent weeks, Wall Street has been coping with a different type of destruction: huge layoffs. In fact, it looks like some investment firms have embarked on what could be the biggest round of job cuts since 1987. Experts blame a sharp slowdown in stock trading, underwriting, and brokerage businesses, areas which were slipping even before September 11th.

GUY MOSZKOWSKI, BROKERAGE ANALYST, SALOMON SMITH BARNEY: Firms have two ways of managing their expenses down in line with revenues. One is firing people, and the other is just managing the bonuses down until the business is better. And they're using a combination of those tactics.

PRATT: So far this year, J.P. Morgan Chase (JPM), Merrill Lynch (MER), Charles Schwab (SCH), CS First Boston and Morgan Stanley (MWD) have announced significant job cuts. Together, the layoffs account for about 10 percent of the Street's workforce. But some analysts estimate another 10 percent may be sliced in the coming months. Experts say Merrill, which temporarily lost its headquarters in the terrorist attacks, is most vulnerable due to high costs and bloated payrolls. The firm says it will begin offering voluntary severance packages to employees this week. That's before it starts a fresh wave of cuts, which reportedly could total as many as 10,000 employees. Experts say Schwab and J.P. Morgan are in the best shape to weather Wall Street's storm, Schwab because it slashed headcount earlier this year, and J.P. Morgan because the recent merger already forced it to get lean and mean. And because finance is a cyclical business, experts say conditions throughout the industry will ultimately improve.

AMY BUTTE, FINANCIAL SERVICES ANALYST, BEAR STEARNS: We need to see announced M&A. We need to see equity underwriting coming back to the market. We need to see people coming back to trading more frequently. Until we start to get indicators that revenue growth is on the way, I think head count reductions will be a major focus on the street.

PRATT: Right now, most Wall Street firms expect earnings to recover by the end of 2002. But there are still some variables that could alter that timetable namely, the economy and the long-term effects of September 11th. Suzanne Pratt, "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.

10/22/01: Market Outlook With Stuart Freeman Of A.G. Edwards

SUSIE GHARIB: Our guest tonight is counting on that same timetable: a broad-based recovery in stocks and the economy by the end of next year. He's Stuart Freeman, chief equities strategist at A.G. Edwards and he joins us live from his firm's trading floor in St. Louis. Hi, Stu.

STUART FREEMAN, CHIEF EQUITY STRATEGIST, A.G. EDWARDS: Hi. Good evening.

GHARIB: So you're looking for a broad-based rally by the end of next year. Share with us your thinking on that.

FREEMAN: Well what we were thinking going into the September 11th period was that the slowdown was ending around the second quarter of this year and that it would. We're starting to see demand pick up, the production and manufacturing part of the segment of the economy and we thought we'd see a rolling recovery, fewer groups hitting lows as we moved out back (INAUDIBLE) November and December and into next year. I think that the September 11 issue has put the recovery off a couple quarters into the first part of next year. But we also saw a dramatic broad decline in stocks that kind of leveled the marketplace across industry groups, and made a lot of industries attractive.

GHARIB: Do you think though that the worst of the selling is over then?

FREEMAN: Yes, I think the panic response, the get me out of stocks response we saw on large volume across most industry groups in September is probably behind us, all those groups hitting at the same time and dropping those indices to the lows we saw in September. We could drift back towards the mid 8,000's again on the Dow perhaps, but only on specific events.

GHARIB: As you look ahead, assuming that there aren't any terrorist events or any serious political event, what industry sector groups do you see leading the way back up?

FREEMAN: Well, Susie, what's really interesting about coming out of what we think here has been a rolling correction, really a group at a time, for the last three years ending with large cap tech, is you tend to find a broad recovery. And many groups participating, not just a few like we saw in the '99 market in technology. So we see some financials we like. We see some consumer nondurable companies we like, and other cyclicals we like, while we're even weighting all the sectors at this point.

GHARIB: Can you name a few stocks in those groups that you like for long term investors?

FREEMAN: Sure. One company, HIG is an insurance business, multi-line insurance and property and life and annuities, well diversified distribution system and a company that's really focused on profit growth, 12 to 13 percent earnings growth there. Citicorp ©, well diversified across the Travelers insurance business, the banking business, investment banking and brokerage. That's attracted a lot of cross selling opportunities between Travelers and Citigroup. And then McKesson (MCK), which is a wholesale drug distributor, one of the largest in the US, 15 percent revenue growth opportunities and potential for a turn around in their information services segment.

GHARIB: As investors have been looking to improve their investment portfolios, they're also dealing with a lot of nervousness about this outbreak of anthrax. How is that influencing the investment decisions that you're making at A. G. Edwards?

FREEMAN: Well, for long-term investors, that makes the or even short-term investors, it makes the volatility a lot greater in the marketplace, but we see that the economic conditions and the money supply growth and the stimulation from the government over the long term is really what's going to drive stocks. So on those days where there is a lot of concern and volatility and downside, those are opportunities to collect a broad base of stocks for the long haul.

GHARIB: All right. Very interesting insights. Thank you so much Stu.

FREEMAN: Thank you.

GHARIB: We've been speaking with Stuart Freeman of A.G. Edwards, live from St. Louis.

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.

10/22/01: Violent Video Games Fight For A Place In The Post Terrorist Attack Market

SUSIE GHARIB: It seemed like game over for the makers of video games after last month's terrorist attacks. Since the games rely heavily on realistic depictions of violence, they sold poorly right after the tragedy. But contrary to expectations, the $20 billion industry, which is centered in Japan, has bounced back. From Tokyo, Lucy Craft reports.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: At the recent Tokyo game show, it was punching, shooting and slashing as usual. A few software launches are being delayed and at least one best selling game, the point is to assassinate terrorists, has been modified to reflect the altered New York skyline. Manufacturers report sales overall are scoring right on target. No surprise here, say analysts, pointing out the game industry has always been insulated from the social and economic upheavals that have buffeted most consumer goods and services.

SOICHIRO FUKUDA, VIDEO GAME ANALYST, MIKKO SALOMON SMITH BARNEY, LTD: That game industry is quite independent on that economy or other things. It is often said in Gulf war in 1991, there was no sign of slowdown in games sector. So good game, I think good game will be "Crypt" in the game market.

CRAFT: Instead of going on vacations or to the movies say analysts, jittery consumers are spending more on video rentals and other stay at home entertainment.

LISA SPICER, VIDEO GAME ANALYST, ING BARING SECURITIES: The easy answer is it's not home luxury product and it's relatively inexpensive. If you already have the game machine, the software themselves are $40, $50, $60, which you can get a good week's, month of play out of that. And you feel you don't have to go out and be with people.

CRAFT: Manufacturers haven't toned down their frighteningly realistic action games, but some companies now are marketing their titles as quest for world peace. It's a pitch that may resonate with gamers in search of vicarious revenge.

SPICER: Everybody was afraid, uh-oh, will people want to buy a terrorist theme game? And they're finding that actually because you get to play the good guy going after the bad guy, that it may actually work in their favor where people can go out and kick the bad guy's butt.

CRAFT: The real test is yet to come, during the crucial Christmas shopping season. But early signs are any indication, experts say the video games should not only shrug off the September 11th terrorist attacks, they may even get a boost, as consumers increasingly hunker down at home. Lucy Craft, "NIGHTLY BUSINESS REPORT," Tokyo.

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.

10/22/01: Commentary: What Should Be Behind The Bailout Plan

SUSIE GHARIB: Tonight's commentator says any bailout plan for the economy should meet some pretty specific requirements. Here's Alan Blinder, partner with the Promontory Financial Group, and former vice chair of the Federal Reserve.

ALAN BLINDER, COMMENTARY: Three truths about the much discussed economic stimulus package should be self evident. First it should be nonpartisan so it can be enacted quickly, else the help with arrive too late. That should eliminate the favorite hobby horses of both Democrats and Republicans. Second, it must elicit new spending quickly or once again the stimulus will come too late. That should eliminate a host of tax cuts and spending programs that whatever their merits are inherently slow acting. Third it must be clearly temporary, so it doesn't ruin the long run budget picture. That should eliminate permanent tax cuts. Unfortunately many of the proposals that have been bandied about in Washington fail one or more of these tests. Some fail all three. Here's an idea that passes with flying colors. Let Congress reimburse 100 percent of the revenue lost by any state that agrees to cut its sales tax one or two percentage points for one year only. This proposal is neither Democratic nor Republican. What state legislature, regardless of party, wouldn't like to offer its constituents a tax cut that doesn't cost it a dime? Both legislatively and administratively, cutting the sales tax is about as simple as you can get, though Congress would probably add some special provisions for states with no sales tax. The tax cut would go only to consumers who spend money, and it would start at the first jingle of a cash register. In sum, it's nonpartisan, fast, targeted, and temporary. What are we waiting for? I'm Alan Blinder.

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.

10/22/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Buyers took the upper hand on Wall Street early today as they drew encouragement from last Friday's late rally, which turned an 80-point deficit in the Dow Industrial Average into a closing gain of almost 41 points, and lifted the NASDAQ Index to an 18-point closing gain. By 10:00 today, the Dow rose another 46 points, NASDAQ, a 21-point gain. The early upturn gained momentum into the noon hour with the help of lower, but better-than-expected earnings from 3M (MMM) Company and also hopes that many of the other 160 companies in the Standard & Poor's 500 Index would be reporting better than expected results this week. At 1:00 p.m., the Industrial Average was sporting nearly a 90-point gain, the NASDAQ Index up 19 points. When the market held its gains despite news of more anthrax incidents, potential buyers were impressed and came off the sidelines, shifting the rally into overdrive. Scared bears, running to cover short positions also helped the Dow Industrial Average vault to a closing gain of nearly 173 points, ending at 9377.03. The NASDAQ Index came in with a gain of 36.77 at 1708.08. Big board volume today not too impressive and well down from Friday, just barely over a billion shares. However, up volume exceeded down volume by a comfortable 7 to 3 margin.

The Dow Transport Index up 29.30 or 1.4 percent.

Utilities down 3 1/3 points.

The Closing Tick very bullish at +934.

Standard & Poor's 500 up nearly 16 1/2 points.

Nearly an 8 3/4 point jump in the S&P 100.

MidCap 400 up just over 7.

And the CRB Bridge Futures Price Index fell 1.51.

A gain of 7.13 in the New York Composite Index.

Value Line up nearly 3 1/2.

A 4.80 or 1.1 percent gain in the Russell2000 Small Cap.

And the Wilshire 5000 gaining just over 147 1/4 points.

The bond market got a little support early today on the report that the index of leading economic indicators fell a steeper-than-expected 1/2 percent in September, suggesting the economy is still faltering and may need still lower interest rates to improve. Bonds then leveled off and headed lower as the stock market staged its very solid rally, siphoning funds away from safer havens. Tax-free and corporate issues ended with 1/8-point losses on average, and the Treasury market closed lower across the board.

5-year notes dropping 5/32.

The 10-year notes down 5/32 as well.

30-year bond dropped 13/32.

And the Lehman Brothers Long-Term Treasury Bond Index off 3 1/10 points.

A lot of bad news and yet a very solid rally, as the old saying goes on Wall Street, a market that ignores bad news is one destined to go higher and this one did, nearly 173 points higher on the Dow and the advance/decline ratio 18 to 13 in favor of advancers, but seven more new yearly lows than highs.

Enron (ENE) topped the active list on 28.8 million shares, down $5.40. Friday it lost nearly $3 and a negative "Wall Street Journal" article talking about certain transactions between the company and its chief financial officer and today the SEC has requested the company to voluntarily provide information on these limited partnerships.

Providian Financial (PVN) down another $0.20 after losing over $7 or 58 percent of its value on Friday, mainly because third quarter earnings were sharply lower, $0.20 versus $0.68, the previous year and a lot of brokerage downgrades.

EMC (EMC) moved up $0.68 on news that it's in a five-year strategic alliance with Dell Computer (DELL) regarding storage products.

General Electric (GE) edged up $0.36.

Lucent Tech (LCN) dropping $0.20. The company is expected to lose over $7 billion in the fourth quarter.

AOL Time Warner (AOL) managed to gain $0.48.

But SBC Communications (SBC) down $2.24. Third quarter earnings out today, down 31 percent, $0.59, versus $0.88 last year, a penny below the Street estimate.

Nokia (NOK) continues to edge higher, up $0.66.

And Pfizer (PFE) up $0.67.

Citigroup had a good day, rising $1.16, tenth in volume.

American Express (AMP) gained $1 in the strong financial group, but its third quarter operating earnings sharply lower, $0.22, versus $0.54 last year, $0.08 below the Street estimate.

Merrill Lynch (MER) gained $1.30. The company is offering severance packages to all of its 66,000 employees, figuring this could result in about 10,000 job cuts overall.

3M (MMM) up $5.22. Third quarter earnings were down 20 percent from last year to $1.10 but that was a penny above the Street estimate and the company expects to meet the low end of fourth quarter earnings estimates on Wall Street which range from $0.95 to $1.13.

Raytheon (RTN) down $1.26. The company is going to raise about $1billion through the sale of 29 million of its common shares.

That's about an 8 1/2 percent dilution factor. The stock down 3.7 percent today, reflecting that.

Nucor (NUE) up $2.71. Now last week the company reported better than expected third quarter earnings.

Ad another steel company doing well today, USX (X), U.S. Steel up $1.30. It reported third quarter loss of $0.22, nowhere near as big as the $0.42 loss expected on Wall Street. But the real reason for today's strength in these steel stocks, the U.S. Trade Commission today ruled domestic steel makers have been significantly harmed by cheap foreign imports and this appears to be the first step toward protective barriers.

Rhodia (RHA), this is a French chemical firm, up $1.28. There's takeover speculation here. Dutch chemical firm DSM is reportedly the main suitor. BASF (BF) denied that it's interested.

Arch Coal (ACI) up $1.98. Third quarter loss was smaller than expected, $0.15 versus a Street estimate of $0.19 in the red.

Bunge (BG) up $1.39. This is a company involved in agribusiness. Third quarter earnings nearly tripled over last year, $0.76, versus $0.26, sales up 16 percent.

And Quest Diagnostics (DGX) up another $5.05 after a similar gain Friday on sharply higher third quarter earnings. Wachovia repeated a "strong buy" today.

Movado Group (MOVA) down $2.25. Company says its jewelry sales are quite soft since the September 11th attacks and it sees third quarter earnings at $0.60 to $0.65. The Street was expecting $1.08.

Lexmark International (LXK) down $5.58. Third quarter earnings higher, $0.52 versus $0.50 a year ago but it sees lower fourth quarter earnings in the range of $0.40 to $0.50. The Street was expecting $0.65. Company's also going to cut 1600 jobs or 12 percent of the workforce.

NASDAQ trading, a 36 3/4 point gain in the Index. Volume down a bit from Friday. Twenty stocks higher f