10/29/01:The Blue Chips Take A Bruising

PAUL KANGAS: The blue chips get socked as investors lock in profits ahead of a slew of economic reports. Consumer confidence, gross domestic product and the September jobs report are all due this week. Also dragging blue chips lower, General Motors' deal to sell Hughes Electronics (GMH), and Boeing's loss of the huge joint strike fighter contract. The Dow fell 275 points and the NASDAQ Index dropped almost 70. Analysts say while investors could shake off last week's economic news, this week's numbers may not be easy to ignore.

BRIAN FINNERTY, MARKET STRATEGIST, CE UNTERBERG TOWBIN: Today it seems to be is the economy really is in bad shape, the war is going on, things aren't going that great. There's more anthrax cases every day. Let's take a little profit here. So it's just a matter of the investor mood and how it shifts, but whatever way that mood is, it just seems to be gaining momentum, and I think we'll have a little bit of downside momentum for the next couple days or maybe even through the end of the week.

KANGAS: Finnerty expects more profit taking as the week goes on, with the NASDAQ testing its 1635 support level and the Dow under pressure as well.

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.

10/29/01: GM Drives EchoStar Closer To A Satellite Superiority

SUSIE GHARIB: Now, for more about the news swirling around GM stock today. General Motors agreed to sell its Hughes Electronics unit to EchoStar Communications (DISH) for $31 billion. It was a stunning victory for EchoStar, which beat out Rupert Murdoch's News Corp (NWS) for the satellite TV broadcaster. But as Stephanie Woods reports, the deal still faces regulatory obstacles.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The combination of Hughes DirecTV and EchoStar's dish network would give EchoStar a monopoly in the satellite TV market. Executives played up the benefits of a strong company with the resources to provide broadband services to its customers. But in an early nod to regulators, EchoStar's CEO is already talking about concessions.

CHARLES ERGEN, CHAIRMAN & CEO, ECHOSTAR: We've offered a nationwide pricing, for example, so that people in rural America don't pay any more than people where there's vigorous competition in the cities, and I think that's the kind of thing that we're willing to discuss with the Congress, with the government agencies, to make sure that this transaction, once completed is, in fact, at every step of the way a good deal for consumers.

WOODS: Ergen has already won over some consumer groups who see the combined company as a competitor to cable TV. But these groups want regulators to keep prices steady.

GENE KIMMELMAN, CO-DIRECTOR, CONSUMERS UNION: There's a potential benefit here, but we have to make sure rural consumers are protected, that they don't get harmed with price gouging as we move from two players to one, and we need to try to bring a new entrant into the market to replace DirecTV.

WOODS: For the past three years, NorthPoint (NPNT) broadwave has been trying to be that new entrant, needing a license to compete against DirecTV and EchoStar. But both object, saying Northpoint's new signal would interfere with their existing ones. Analysts say even if a new company were to be licensed, it may not be enough to let the EchoStar/Hughes deal go through.

PAUL GLENCHUR, ANALYST, SCHWAB CAPITAL MARKETS: So having a new player would help the deal, but the question comes down to how viable a player that is, and whether the antitrust regulators will see it as a real competitive force that constrains the market behavior of the other participants.

WOODS: The FCC and the Justice Department will both review the deal. As expected, company executives say they are confident it will be approved. 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.

10/29/01: UAL's New Commander-John Creighton, Jr.

SUSIE GHARIB: Shares of United Airlines (UAL) took off today on news of new management at the controls. John Creighton was named chairman and CEO of the troubled airline yesterday after the resignation of James Goodwin. And as Diane Eastabrook explains, analysts say that Creighton is facing some turbulent times.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: James Goodwin's ouster at United Airlines comes at a time when the airline is burning through roughly $20 million of cash a day, laying off nearly a quarter of its workforce, and slashing flight schedules. United's stock has lost nearly half its value since the September 11th attacks disrupted air traffic and made passengers fearful of flying. The shares rallied today on news Goodwin is out, and John Creighton is in as chairman and CEO. In a conference call with reporters, Creighton said United can return to profitability but it will take a company-wide effort.

JOHN CREIGHTON, JR, CHAIRMAN & CEO, UAL: We have got to come up with collective, creative solutions for our collective problems. Everything is on the table.

EASTABROOK: Analysts say that may include salary cuts for the 80,000 United employees, both union and management, who remain on the job. Last year, under Goodwin's leadership, United negotiated a four-year contract with its pilots, making them the highest paid in the industry. It is still trying to hammer out a new contract with its machinists. Analysts say getting the unions to agree to wage concessions is crucial at United.

RAYMOND NEIDL, AIRLINE ANALYST, ABN-AMRO: They have to get across to the employees that now is the time to make not only temporary, but permanent changes in the overall compensation and cost structure if we want to be long-term survivors.

EASTABROOK: The Airline Pilots Association, which represents United's 10,000 pilots, says it is willing to work with the carrier as it navigates through tough economic times, but a union spokesman stops short of agreeing to salary cuts.

CAPT. HERB HUNTER, SPOKESMAN, ALPA: We want to sit down and hear what Mr. Creighton has to say. He said that he wanted to work with the employee groups. That's good news. What we're willing to do, where we're willing to go, that's for people at a higher pay rate than mine to discuss.

EASTABROOK: Creighton was successful working with labor unions when he was chairman and CEO of Weyerhauser Paper Company (WY) during the 1990s. While analysts are encouraged by that, they also concede working with airline unions can be more difficult. 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.

10/29/01: Market Outlook With Vince Farrell, Chairman of Victory Capital Management

SUSIE GHARIB: Our guest tonight says it's too early for the stock market to have a sustained rally. He is Vince Farrell, chairman of Victory Capital Management. He joins us live from midtown Manhattan. Hi, Vince.

VINCE FARRELL, CHIEF INVEST. OFFICER, SPEARS BENZAK SALOMON & FARRELL: Hi Susie.

GHARIB: For a while there, investors were getting hopeful that we would have a market recovery. What is your outlook?

FARRELL: After you've had a catastrophic event like we've had, unfortunately, there have been two dozen of them since World War II and may this is different than any. Well, you know, after you had a catastrophic event like we've had, unfortunately there have been two dozen of them since WWII and maybe this is different than any, but it's similar in the market pattern. The market sells off, typically recovers that within a couple months. It was a very fast recovery here. And then you've got to figure out what's going to happen. What's going to happen, in my opinion, is that the economy will recover because you're going to throw massive stimulus at it but that's going to take a little while. So I think the market probably is going to go test those September lows. I'm guessing those September lows will prove to be the low, but it's just too early for a sustained rally with the bad economic news we have in front of us.

GHARIB: Well, a lot of people-you mentioned the stimulus, a lot of people I've been talking to are feeling optimistic because they're saying the combination of the Federal Reserve cutting rates and the government putting together the stimulus package is a real positive. What do you think?

FARRELL: Oh, definitely. But the Fed started to cut rates in January this of this year. It usually takes 12 month for a move like that to be felt in the economy, which would have put us in first quarter next year anyway. But you add the attack to it and the disruption there, I just think it's going to be a little bit later. But, you know, last time we had a V-shaped recovery, that is, a sharp dip and then a sharp back up. It was the '81-'82 recession. And what brought about the '83 recovery was a stimulus package that equaled 1.8 percent of GDP. And the stimulus package they're talking about now is 2 1/4 percent of GDP. So I think it's going to have the same sort of impact once you give it time to work its way through the system. I think you'll have a very sharp recovery in the economy, but we've got to get through the down leg first.

GHARIB: All right, let's talk about what you're doing with your investment portfolios. You're managing billions of dollars. In the past you've told us that pretty much you had 100 percent invested in stocks. Have you changed your investment strategy since September 11?

FARRELL: Not too much. But the world has been put on hold for a little bit. So what we did do, Susie, is we sold a few things where the near term just didn't look that promising. So right now we have a little bit more than 10 percent in cash and we'd be looking to put that money to work on a stock by stock basis. Our biggest concentration is in financial stocks right now, property casualty insurers, which look very attractive to us on a price basis and banks, and we're kind of taking a look through the valley here to the recovery and a Citigroup © or J.P. Morgan (JPM) has a great lending operation and a great investment banking operation both. A little bit of religion is required here that a recovery will come, but these stocks historically are very cheap, so I choose to buy them now.

GHARIB: In the past you told me-and by the past I mean a couple of months ago-you told me that you had really whittled down your technology holdings. Do you have any change there?

FARRELL: Well, we've been adding tech. Susie, if you go back a year and a half to two years ago, we were almost zero in technology. Being a value investor we did not participate in that '99 run up. But consequential we spared ourselves the 2000 agony.

GHARIB: What do you like in tech?

FARRELL: I'm sorry?

GHARIB: What do you like in tech? We just have like two seconds left.

FARRELL: IBM, EDS (EDS) and then buy something like a Tellabs (TLAB) that has fallen angel, no dealt, plenty of cash.

GHARIB: OK. You answered that in two seconds. Thank you very much, Vince.

FARRELL: Thanks, Susie.

GHARIB: We appreciate your talking to us. We've been speaking with Vince Farrell of Victory Capital Management.

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.

10/29/01: The Boat Business Is Staying Afloat In This Sinking Economy

SUSIE GHARIB: The economy may be stumbling, but there's one sector that seems to be staying afloat pretty well-boat and yacht sales. Jeff Yastine reports.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's one of the highlights of the powerboat sales circuit, the Fort Lauderdale Boat Show, packed with thousands of boat enthusiasts. Most are just looking, but despite a struggling U.S. economy, industry reps say there are still plenty of buyers for these vessels. Even with a sagging economy, the September terrorist attacks and the ongoing war, industry groups say sales have held up well.

CATHY JOHNSTON, SOUTH REGIONAL MANAGER, NATIONAL LIVE REPORT, MARINE MANUFACTURERS ASSOCIATION: The statistics that we have put together show that we're about nine percent off compared to last year, comparing apples to apples. So that's not, you know, too bad, considering. A 10 percent, nine, 10 percent adjustment is not the worst thing that could happen to us.

YASTINE: Industry analysts say low interest rates have been key for helping to keep boat and yacht sales reasonably strong. Also, the Fed has made sure that the banks have plenty of money to lend so anyone who wants a boat loan can get one.

KEN LANDON, EXECUTIVE VICE PRESIDENT, KEY BANK: We thought about doing a Med trip to the Mediterranean perhaps next summer and it was gonna be a $15,000 trip. And I said to her, actually I'd rather stay close to home and stay with my family and do more weekend junkets and that rolls into let's buy a new boat for the same amount of money that that trip was going to cost us.

YASTINE: Industry veterans say economic slowdowns tend to affect the purchases of small boats, those under 25 feet. Larger boats and yachts see less impact.

PHIL FRIEDMAN, PRESIDENT & CEO, PALMER JOHNSON: From the economic slowdown we haven't been feeling any significant impact. The market niche that we're in is a niche where the buyers have significant discretionary dollars and they are fairly well insulated from the ups and downs of the economy.

YASTINE: Although boat sales have yet to although boat sales have yet to drop off sharply, industry watchers say that may yet change. We'll know more once the critical fall and winter selling seasons are finished. Jeff Yastine, NIGHTLY BUSINESS REPORT, Fort Lauderdale.

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.

10/29/01: Commentary: Ideas & Incentives For The Stimulus Package

SUSIE GHARIB: Tonight's commentator has some suggestions for a fiscal stimulus package that's being discussed on Capitol Hill. Here's Alice Rivlin, Senior Fellow at the Brookings Institution and former Vice Chair of the Federal Reserve.

ALICE RIVLIN, COMMENTARY: The economy needs a quick shot of fiscal stimulus to avoid falling into a serious recession. To be effective, the package has to stimulate immediate consumer, investor and government spending that would not otherwise take place. Measures that do that include help to the unemployed to keep them spending while they look for a job, temporary incentives for new investment by companies and a short run infusion of funds to state and local governments to keep them from laying off workers in the face of declining revenues. Suspending payroll taxes temporarily would also be a quick way of fattening the paychecks of workers in time for the holidays without mailing rebate checks. The so-called stimulus package passed by the House is stingy to the unemployed and gives big tax breaks to corporations without providing incentives for new investment. It is generous to high end taxpayers, who are least likely to spend their tax cuts. Even the make up call for taxpayers missed in the last rebates would not generate checks until well into 2002. Worst of all, the package escalates future budget deficits, which raise long run interest rates. The House has given us a travesty, not a stimulus. If senators can't start over, they should just kill it. I'm Alice Rivlin.

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.

10/29/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market opened broadly lower today, partly in reaction to losses averaging 2 to 3 percent in the major European markets where investors showed concern over those upcoming US economic reports. At 10:30 a.m., the Dow Industrial Average gained back 166 points of last week's 341-point gain, while the NASDAQ Index was down 26 points. Multiple point losses in General Motors and Boeing stocks kept the blue chips under pressure throughout the rest of the morning and the weakness soon spread into the high-tech arena as profit takers took advantage of last week's rally there. At 1:00 the Industrial Average posted a 207-point or 2.2 percent loss. NASDAQ Index down 38 points, also 2.2 percent. The market's poor performance triggered more selling through the rest of the session and the Dow Industrial Average plunged to a closing loss of 275.67 points at 9269.50. The NASDAQ Composite closed 69.44 points lower at 1699.52.

Big board volume however declined a bit to 1.1 billion shares from Friday's pace, but no contest between up and down volume, about four times more of the down variety.

The Dow Transports Index off 28.62.

Utility Index fell 2/3 of a point.

And the Closing Tick just modestly bearish at -363.

Standard & Poor's 500 off 26 1/3 points.

14 2/3 point drop in the 100.

The MidCap 400 off just over 10 points.

And the Bridge Futures Price Index up 1.18.

A loss of nearly 10 3/4 in the New York Composite.

Value Line down almost 7 1/2 points.

The Russell2000 Small Cap Index fell 9 1/4 points.

And the broadly based Wilshire 5000 off 235.28 or 2.3 percent.

Growing pessimism about the depth of the US recession sent the bond market higher for the fourth straight session today, and once again bonds benefited from flight to quality buying triggered by the stock market's nasty sell-off.

At the close of trading, tax free and corporate issues were up 1/8 to 3/8s on average and the Treasury market ended moderately higher across the board.

A gain of 6/32 in the 5-year note.

10-year note up 9/32.

And the 30-year bond up 4/32.

While the Lehman Brothers Long-Term Treasury Bond Index gained 4.69.

We had a major sell off here in the blue chip Index, the Dow off 275 2/3, almost three percent. And a 2 to 1 decline to advance ratio. Only 36 new yearly highs, 58 new lows.

Enron (ENE) topped the active list on 28.3 million shares, down another $1.69. The company is negotiating with banks for a new $1 billion to $2 billion credit line. Meantime, Moody's today downgraded the company's unsecured long-term debt by two notches, just two notches above the junk bond status.

EMC (EMC) fell down $0.46.

And AT&T (T) losing $0.24.

Lucent Technology (LU) a $0.30 drop.

And then Lockheed Martin (LMT) down $0.92 on the close, but it traded as high as $52 early in the day after getting a $200 billion

U.S. jet fighter contract. But profit takers then moved in.

GM Hughes (GMH) losing nearly a $1 despite the news it's going to be taken over by Echostar (DISH).

Citigroup, a very weak financial group today. It started in Europe. Heavy selling there and it continued over here, down $2.23.

General Electric (GE) off $1.45.

The NASDAQ Qs (QQQ) down $1.97.

And AOL Time Warner (AOL), tenth in volume, lost $1.35.

Boeing (BA) off $3.93. We know why.

And then General Motors (GM), another Dow component, off $2.64. The losses in those two stocks alone accounted for 45 points of the loss on the Dow.

FedEx (FDX) moved up $1.38. The company sees better than expected second quarter earnings, in the range of $0.40 to $0.45.

Genentech (DNA) fell $2.67. A.G. Edwards Brokerage downgraded it from "buy" to just a "hold."

Humana (HUM) edged up $0.28. Third quarter earnings up 30 percent, $0.18 a share, up from last year's $0.14.

And Omnicare (OCR) did well, up $1.14. Third quarter earnings $0.25, nicely higher than $0.18 last year. Sales rose 10 percent.

Cabot Industrial Trust (CTR), the star of the day, up $3.86. CalWest Industrial Properties (ph) is going to acquire this REIT for $24 a share in cash.

Core Labs (CLB) up another $1.10. It was strong last Thursday and Friday after reporting a big jump in third quarter earnings, $0.27 versus only $0.17 the year before.

Carbo Ceramics (CRR) up $2.29. Two weeks ago that company had sharply higher earnings. And also, this is probably due today to a rebound in natural gas prices that helps stocks like these.

Semco Energy (SEN) down $2.32. The company reported a third quarter loss of $0.37 a share, bigger than last year's $0.26 loss. And the company sees 2001 results worse than expected. Merrill Lynch downgraded it from "long-term buy" to just a "neutral."

Solectron (SLR) losing $1.80. The company sees fiscal 2002 revenues well below earlier guidance.

And C-Mac Industries (EMS) fell on that news because it's merging into Solectron for stock, a sympathetic reaction.

NASDAQ trading, down nearly 69 ½ points or 3.9 percent there, but volume trailed off from Friday's pace. 12 stocks up for every 23 down.

Microsoft (MSFT) topped the active list, dropping $2.56.

Cisco Systems (CSCO) fell $0.87.

Intel (INTC) was down $1.68. The company is cutting prices on some of its microprocessors by 29 percent.

eBay (EBAY) down $4.48. After the close, however, the company reaffirmed fourth quarter earnings guidance and expects gross merchandise