11/08/01: Discount Stores Out Muscle Department Stores

SUSIE GHARIB: A mixed day on Wall Street: an early rally ran out of steam. The Dow rose only 33 points, giving back a triple-digit gain, and the NASDAQ lost 9. Afternoon selling was triggered by concerns about the weak economy and in anticipation of reports tomorrow on producer prices and consumer confidence. Meanwhile, consumers have been choosy in the way they shop. Scott Gurvey reports on the latest from the nation's retailers.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It is a tale of two markets: the high and the low. Virtually every major department store saw its sales decline in the four weeks ending November 2, but sales at discount stores were strong. At the biggest of the discounters, Wal*Mart (WMT) sales jumped 6.7 percent. At Target (TGT), sales gained 2.2 percent. A closer look at the Target number demonstrates the situation. Target's discount stores saw a 12.8 percent sales gain while the company's Marshall Field Department Store division posted a decline of 10 percent. An increase of sales for low margin goods at the expense of higher profit items is seen as bad news for earnings. Wal*Mart is warning that earnings will be lower in the months ahead.

THOMAS EXSTEIN, RETAIL ANALYST, CREDIT SUISSE FIRST BOSTON: Wal*Mart sales have held up very nicely because their mix of businesses has changed, and that's not good for the margin, per se. You see people buying lower priced items, more commodity items and more day to day consumables, and not many of the seasonal items you typically do when the margins are better.

GURVEY: As they kick off the holiday shopping season, traditional department stores appear to be struggling. At Federated (FD), owner of Macy's and Bloomingdale's, sales fell 8.7 percent. Sears (S) posted a 4.4 percent decline, and at J.C. Penney

THOMAS FILANDRO, RETAIL ANALYST, J.P. MORGAN SECURITIES: This could be the most challenging season we've seen in over 20 years. It's very difficult to tell because you've got obviously the threat of terrorism, emotions are swinging left and right. The Halloween scare is a great example. I mean, businesses across the country in regional malls on Halloween, given the so-called hoax that there was an attempted attack on a mall in America. If something like that happens during the holiday season, it could just destroy business.

GURVEY: One analyst suggested safety may be an issue in today's retail numbers. He thinks shoppers may feel more secure in a stand-alone store, like a Wal*Mart, than they do in a store usually found in a shopping mall. 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.

11/08/01: The Economic Stimulus Plan Is Going Downhill On The Hill

SUSIE GHARIB: Now we go Washington, more wrangling today on Capitol Hill, this time in the U.S. Senate over the proposed economic stimulus plan. This bill has been in the works for over a month now. And as Darren Gersh explains, the debate is turning more political every day.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The chairman of the Finance Committee says the $67 billion plan put forward by Senate Democrats is not a silver bullet, but it will help.

SEN. MAX BAUCUS, FINANCE COMMITTEE CHAIRMAN: It'll provide an effective stimulus for economic recovery. It provides some basic help to people who have lost their jobs and risk losing their health insurance.

GERSH: But Republicans dismiss the plan as partisan window dressing, heavy on special interest spending for everything from rum distillers in Puerto Rico to bison ranchers in the plains.

SEN. PHIL GRAMM , R-TEXAS: In the end, this is a collage of political giveaways. It doesn't add up to stimulus, and we would be much, much better off not to pass any bill than to pass this bill. This is an economic depressant bill.

GERSH: One of the sharpest points of disagreement is the Democrats' plan to spend $14 1/2 billion to help pay the health insurance premiums of workers laid off after September 11. Republicans say that would require a massive new bureaucracy and would take months to implement. Instead, Treasury Secretary Paul O'Neill says the Bush administration wants to give national emergency grants that allow states to target relief where it's needed.

PAUL O'NEILL TREASURY SECRETARY: It doesn't seem to make sense to send willy-nilly a broad national entitlement across the whole country, because the effects of September 11 and the unemployment effects of September 11 and beyond are not uniformly distributed across the country.

GERSH: There is bipartisan agreement on the need to extend unemployment benefits and enhance incentives for business investment, but O'Neill says the process is bogged down in politics as usual.

O'NEILL: And I doubt that most of the American people are very patient with the notion of politics as usual when we are in a war and the president has been clear, very, very clear about what he believes we should do.

GERSH: Senate Majority Leader Tom Daschle says he hopes the Senate can pass a stimulus package next week, but judging by the partisan rhetoric today, analysts say that won't be easy. Darren Gersh, "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.

11/08/01: Market Outlook With Mario Gabelli, Chairman of the Gabelli Funds

SUSIE GHARIB: Our guest tonight says that the short-term market outlook is quote, "ugly," but long-term it's, quote, "poised for a major earnings recovery." Joining me live from midtown Manhattan is Mario Gabelli, chairman of the Gabelli Funds. Mario, it's really nice to have you on the program.

MARIO GABELLI, CHAIRMAN, GABELLI FUNDS: Always terrific to be here, Susie.

GHARIB: Why don't you start us off talking us through your market outlook.

GABELLI: Well, I'm a bottoms up investor, I like to buy good businesses cheap. As far as the market goes, earnings short term, everyone knows it, are going to be ugly, bankruptcies are rising and the bad news is here. However, as I look out a year from now and as I look out over the next twelve months, very strong earnings gains, combination of lower interest rates, lower oil prices, combination of companies cutting costs, FASB 142, the elimination of goodwill amortization. And everybody is starting is throwing the kitchen sink. And Susie, so I see a big jump. And after next year I see earnings growth of 6 to 8 percent and I think that's pretty solid.

GHARIB: So when do you see the market momentum? Are we going to have to wait a year?

GABELLI: Well, Susie, I guess I missed something, but on 9-17 if you sold, you're already up 12 percent. That's not been so bad. And, you know, the markets are reasonably fully looking forward already. They've done a good job.

GHARIB: well, the one thing I hear from a lot of market strategists is that, you know, yes, but, you have to look at the political risk factors. How are you factoring in political risk into your investment strategy?

GABELLI: Well, I don't think it's political risk as much as the fact that every business-I just came back from Phoenix and I was on the West Coast twice in the last week. Everywhere people are concerned, whether it's business or the consumer. It's very fragile and we need a booster shot for confidence. And we've got to fortify America morally, physically and economically and fortify the world, and we're going to do it, Susie.

GHARIB: all right, you're a preeminent value investor. What sectors are you seeing value right now?

GABELLI: Well, when interest rates have come down to two percent you have a whole series of dynamics that work for you. First, you look for companies that have been beat up by the stock market, that have been thrown out, like an American Express (AXP), like a Dana (DCN). Dana has dropped to $10 or $11. We think they've got $3 or $4 of earnings. By the way, they're an auto parts company. Then we look for companies that have good dividends that are growing, like Genuine Parts (GPC), where the yield is four percent and the market is saying hey, I can only earn two percent, let me buy a Genuine Parts. There's a whole bunch of companies like that in the energy area-Southwest Gas (SWX), $21, Central Hudson Gas & Electric, both of which are takeover candidates. So I can have my cake and eat it in some of those stocks. And then finally, Susie, and more importantly, road stocks become extraordinarily valuable here because if you're discounting down a present value of those future earnings for companies like Kellogg (K), Gillette (G), Proctor and Gamble (PG), at four or five percent instead of seven or eight, they're worth a lot more.

GHARIB: What about in technology? Are you seeing any value in the technology sector?

GABELLI: Susie, we're-we have, you know, as value investors I look at technology today just as I would look for any other beat up company, any company that has catch flow, how bad is bad, how good is good, can they survive, and does it have a good business model. And, yes, the answer is we're starting to find some. We're looking, for example, right now, what are the next three or four areas of technology, nano, small miniature things, voice recognition, connectivity, speed, digital. And when we can find that for free we're buying it with a basket.

GHARIB: Are there any fallen angels among like the big name blue chips that you are nibbling at right now?

GABELLI: Well, as I said, I mean I kind of look at the middle, the colonels of the world as opposed to the old generals. But General Mills (GIS) has been one that we've looked at, but it's not a fallen angel. Kellogg's is not a fallen angel relative to the last couple of months, but we think there's a lot of snap, crackle and pop in Kellogg's. And the purchase of Keebler was a transforming transaction. So we think that management is on the right track and there are a lot of companies like that, Susie.

GHARIB: OK. All right. Mario, thank you so much. We really appreciate your talking to us.

GABELLI: Oh, I'm delighted to be here. Any time, Susie.

GHARIB: OK. We'll call you on that. My guest tonight, Mario Gabelli of the Gabelli Funds.

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.

11/08/01: The FCC Dials Up New Options For The Wireless Industry

SUSIE GHARIB: The Federal Communications Commission took a step today that could dramatically change the future of the nation's cell phone companies. As Stephanie Woods reports, it was a technical decision that has a wide range of practical implications.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Citing a highly competitive wireless industry, the FCC adopted a plan to lift restrictions on the amount of spectrum any one company can control. The move gives firms like Verizon (VZ) and Cingular an incentive to get bigger.

BRIAN FONTES, V.P. FEDERAL RELATIONS, CINGULAR WIRELESS: The only means that we will have to obtain additional spectrum right now is to enter into partnerships or acquisitions or mergers.

WOODS: Analysts say Verizon, AT&T (T), Cingular and Voicestream are most likely to be the first buyers. Analysts say regional companies like Western Wireless (WWCA), Rural Cellular (RCCC), Dobson Cellular and Leap Wireless (LWIN) are the most likely targets. Analysts also predict combinations of Verizon and Sprint (FON) or Cingular and AT&T. But mergers that big may run into regulatory static.

DAVID KAUT, ANALYST, LEGG MASON: Either deal is going to get significant antitrust scrutiny and the moment one deal is announced, the other two carriers are likely or will conceivably announce a deal and then that could encourage antitrust authorities to block both deals.

WOODS: There's also risk Congress could change the FCC plan. Some lawmakers fear industry consolidation will lead to higher prices and fewer choices for consumers.

REP. EDWARD MARKEY (D), MASSACHUSETTS: What we see is a rewarding of the least efficient companies, who also happen to be the largest, in terms of their ability to garner more spectrum, but with no guarantee that they are going to use that spectrum more efficiently or that the consumer will be a beneficiary of lower prices.

WOODS: The industry says lifting the spectrum caps will let companies offer new services like text messaging and Internet access. Despite the fact that it will be two years before the restrictions are fully lifted, analysts say companies already are making merger calls. 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.

11/08/01: Commentary: Auto Industry Math Gets Fuzzy

SUSIE GHARIB: Tonight's commentator says there is math and there's new math. And sometimes, neither of them add up. Here's Alan Sloan, Wall Street Editor of "Newsweek" magazine.

ALLAN SLOAN, COMMENTARY: Math has always been a funny subject in Detroit. For instance, if you add up each car company's prediction of its market share, you get a market with 110 percentage points. Then there's Ford (F). A year ago it had so much money it wanted to give $10 billion to its shareholders. Now it's so short of money it had to cut its dividend. Must be new math. And finally, we have General Motors (GM), which has made zero the biggest number to hit Detroit in years. That's zero, as in zero percent financing, which G.M. introduced and other companies copied. For the first time, it's easy to figure out your monthly payment on a new vehicle. You divide the price by 36 or 48 or whatever. It looks like you're getting a steal, even though you aren't. Carrying a three year zero interest loan costs a company only about $1,250 for a $25,000 SUV, about what rebates were in pre-zero days. But it's a wonderful piece of marketing and it's helped car sales enormously, which is one of the few things keeping the economy more or less afloat these days. I don't know if companies are making money on these sales and I certainly don't know if today's sales boom will become tomorrow's bust after zero interest goes away. But I do know that zero interest is keeping factories open, keeping job losses down and inspiring something in the way of consumer confidence. This time, what's good for general motors is good for the country, however you do the math. I'm Allan Sloan.

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.

11/08/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Not only did some of those better-than-expected retail sales give stocks on Wall Street a solid opening boost but so did a 1/2 percent interest rate cut by both the European Central Bank and the Bank of England, and that triggered some strong rallies in European stock markets. In a straight line advance then, the Dow Industrial Average jumped to a 162-point gain by 11:00 a.m., while the NASDAQ Index rose 50 points. Another factor behind the strong early rally in the market, especially in the tech sector, was word from the Semiconductor Industry Association that it was forecasting a 6 percent rise in 2002 chip sales, followed by 21 percent gains in the two years after that. Even so, traders who were anxious to lock in some profits, began to sell into the strength by late morning. At 12:30 p.m., the Dow saw its gain trimmed to 113 points, NASDAQ was still up 35 points. The selling pressures persisted throughout the afternoon, and the Dow Industrial Average had its closing gain cut to only 33.15 points, putting it at 9587.52. The NASDAQ Index came in with a loss of 9.76 ending at 1827.77.

Big Board volume moved up about 71 million shares or so from yesterday and we see just a little bit more up volume than down volume, about 52 1/2 million shares more.

The Dow Transports Index up just about 13 1/2 points.

Utilities edged up 4.07.

The Closing Tick slightly bearish at -148.

Standard & Poor's 500 up 2 3/4 points.

Almost a 3-point rise in the 100.

The MidCap 400 down 2/3 points.

And the Bridge Futures Price Index gained 1.59.

And exactly the same gain on the New York Stock Exchange Composite Index.

Value Line down 0.64.

Russell2000 Small Cap Index fell 1 3/4.

The broadly based Wilshire 5000 hung on to a gain of 11.11.

The bond market's recent run-up took a breather today, prompted by the report that the latest weekly new jobless benefit claims tumbled by 46,000. Caution was also triggered by anxiety over tomorrow's Producer Price Index, as well as a hefty $1.08 per barrel jump in New York December oil futures.

Tax free and corporate issues fell 3/8, all the way up to 7/8 of a point.

And the Treasury market was broadly lower.

The 5-year note fell 15/32.00

The 10-year note down 28/32.

The 30-year bond fell 1 12/32.

While the Lehman Brothers Long-Term Treasury Bond Index off just over 6 1/2 points.

Let's have a look at the closing Dow first, up only 33. It had been up well into triple digits early in the day, as you heard. And here we see about a 17 to 14 margin of advancing issues over decliners. 109 new yearly highs, only 26 new lows.

Enron (ENE) did top the active list on nearly 40 million shares, the stock down another $0.64. It's off 80 percent now in just the last, oh, few months or so, and of course now they're restating all those earnings from '97.

Corning (GLW) was down $1.01. The company is in the midst of a $600 million convertible bond offering and of course that represents some earnings dilution.

AOL Time Warner (AOL) moving up $1.95. Apparently there's a lot of optimism about the company's upcoming Harry Potter film release.

EMC (EMC) a $0.02 loss.

No change today at all in Compaq Computer (CPQ), fifth in volume.

Lucent Technologies (LU) fell $0.20 a share.

And then the big percent loser of the day, Barnes & Noble (BKS), tumbling $13.60 a share. That's a drop of 35.7 percent. The company's October same store sales fell 4/10 percent and the company itself cut its own 2001 earnings estimates all the way from $1.60 down to $1.08 to $1.12 a share.

General Electric (GE) moved up one full $1.

Nokia (NOK) edging up $0.19.

And Liberty Media A Stock (LMG.A) was up $0.75, tenth in big board volume.

Advanced Micro Devices (AMD) lost a $1.12. The company says weak demand for its products could delay a return to profitability until the second quarter of next year.

Becton Dickinson (BDX) tumbling $3.93. Fourth quarter earnings were higher, $0.49 versus last year's $0.39, but the Bank of America was disappointed by the company's 2002 forecast of only 10 percent earnings growth.

Clear Channel (CCU) stock up $1.10. Its third quarter pro forma results were down 17 percent but the Robertson Stevenson Brokerage repeated a "strong buy." That's what helped the stock.

Disney (DIS) a $0.35 gain. Then after the close, fourth quarter earnings came in at $0.06, a $0.01 below Street estimates and well down from $0.16 a year ago. For the full year, Disney earned $0.72. That was a $0.01 shy of estimates. At worst in after hours trading the stock fell about $0.42 below the regular close.

And then we see Micron Technology (MU) moving up $1.01. That's a positive reaction to the company's- or, I should say, to the semiconductor industry's forecast of strong chip sales ahead. The stock at one point this morning was up at $28.30 a share.

And then Wal*Mart (WMT) moving up $0.67 on news that its October same store sales were up 6.7 percent.

Media Arts (MDA) the big percentage gainer of the day, moving up $0.80. On this program last night, our guest mutual fund manager

Howard Mah of the Ameristock Focused Value Fund said this is one of his favorite stocks.

Celanese (CZ) yup $2.18. A spokesperson couldn't account for that gain.

Dynegy (DYN) itself up $3.50, positive reaction to its apparent intention to make a takeover bid for Enron.

Rayovac (ROV) one of the big percentage losers, down $1.97. The Chief Financial Officer resigned in the wake of a 31 percent drop in the latest quarterly earnings.

Borders Group (BGP), that's clearly in sympathy with the $13 a share drop in Barnes & Noble.

And Vintage Petroleum (VPI) losing $1.05. Third quarter operating earnings sharply lower, $0.20 versus $0.92 last year.

NASDAQ trading a 9 3/4 point drop in the Index, where it had been up 50 points early in the day, and volume was up about 230 million shares from yesterday. 1790 stocks up, 1752 down, just about in sync there.

Microsoft (MSFT) was a $0.17 gainer.

And Cisco (CSCO) up $0.16.

Then Intel (INTC) lost $0.01.

QUALCOMM (QCOM) moving up $1.18.

Sun Microsystems (SUNW), fifth in big board-or, I mean, NASDAQ volume-up $0.68.

Broadcom (BRCM) a $0.65 gain.

Then Applied Materials (AMAT) dropped