11/13/01: The Fall of The Taliban & Retailer Reports Give Wall Street A Rise

JEFF YASTINE: Stocks on Wall Street pushed higher today, buoyed by optimism that US and allied forces are gaining ground in their fight against the Taliban. The Dow jumped 196 points. The NASDAQ was up 52. Also pushing stocks higher: on-the-mark earnings from Dow components Home Depot (HD) and Wal-Mart (WMT). Home Depot's earnings jumped 20 percent to $0. 33 a share. That was bolstered by new store openings and strong expense controls. The jump in revenues comes despite an increasingly difficult retail environment. Wal-Mart, the nation's largest retailer, posted third-quarter earnings of $0.33 a share. That was in line with estimates and $0.02 better than last year. Wal-Mart also updated its fourth-quarter guidance, telling analysts that $0.48 a share looks better than the $0.48 to $0.49 it was previously predicting.

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.

11/13/01: Stuart Freeman of A.G. Edwards Reacts To The Rally

PAUL KANGAS: It is now my pleasure to welcome Stuart Freeman, chief equity strategist for AG Edwards. Stuart, good to see you.

STUART FREEMAN, CHIEF EQUITY STRATEGIST, AG EDWARDS: Good to see you, Paul.

KANGAS: Were you impressed by today's rally on Wall Street or do you think it was just a temporary snapback from an oversold condition?

FREEMAN: Well, it is really quite an impressive rally. Forty five out of 87 industry groups were up, beating the market today. But that's been true for the last month. Forty groups have been ahead of the market. It's broad and I think it's been extreme, but we'll see some profit taking along the way. But this is real.

KANGAS: Over the longer run, do you think the economy is too weak to support any further major gains in the stock market?

FREEMAN: You know, we really think that we're going into a period here where the year ago earnings numbers were the strongest and the first second and third quarter last year, so the comps get easier. We're going to a period here where stimulus has started in January and accelerated after September 11th, it's going to have an impact the next six months and so those are very positive things. I think the market is looking forward towards higher earnings next year.

KANGAS: Well we've seen some signs of deflation in the economy, do you think that's a real threat or no?

FREEMAN: Well, you know, it's very typical when we have a slowdown, we saw it in '98, that producer prices, copper (ph) prices, material prices of various types are down over the course of 12 months. But we haven't seen them drop out of line. What we've seen in other slowdowns in the last 30 years, and typically the correlation with earnings is very positive looking forward when you get that type of pressure taken off of commodity prices and energy prices.

KANGAS: Well, given this background, in your mind, what is the stock market strategy you're using right now?

FREEMAN: We think it's going to be a broad increase. Money supply, liquidity driven increase, and some of the groups we like at this point, personal lending companies, company like Capital One Financial (COF) we think should perform well, as we see continuing consumer lending. And this company has done a very good job keeping the quality of its portfolio together. We think the KB Home (KBH) in the home building area is interesting. We think the lower interest rate's going to continue to stimulate the housing market as we move into next year. And we think the net's interesting, the newspaper area. Further stimulation of this economy will see better advertising growth and Gannett's (GCI) a consistent grower with over $700 million in pre-cash flow this year.

KANGAS: Well, you know, for instance, some of these consumer credit companies had a big run up today, and a lot of the groups that you've mentioned have performed very well. Would you chase them at these prices or just wait for them to back off a little?

FREEMAN: I think we could buy them here. Many of them have rebounded from the dramatic lows in September. But we've got the economy, the type of economy that should sustain the fundamentals for those types of companies over the next six, seven months.

KANGAS: Well, you mentioned some interesting names, let's not stop there. Let's have some more that you like.

FREEMAN: OK. We also like, I won't give you names, but we like the investment banking and brokerage stocks. As expansion moves along, as we see more volume in the marketplace, and as prices go up, we'll see the banking side of that business do better. So those stocks look attractive here. We still like at this point some of the pharmaceutical stocks, but our expectation is that as we move through the next few months and the news in the economy gets a little bit better, that we'll probably pare back our exposure there and look more towards cyclicals and away from defenses.

KANGAS: Very interesting strategy, Stuart, I'm glad that you could be with us. Thanks very much for your ideas.

FREEMAN: Thank you very much, Paul.

KANGAS: My guest, Stuart Freeman, chief equity strategist for A. G. Edwards.

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.

11/13/01: Presidents Bush & Putin Talk Arms & Oil

JEFF YASTINE: Crude oil futures gushed higher today on news that the Bush administration will bolster the nation's strategic petroleum reserve, adding as much as 150 million barrels to fill the SPR to capacity. And as Darren Gersh reports, oil was also on the agenda as President Bush played host to his Russian counterpart, Vladimir Putin.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: In their talks, the two leaders focused on arms control and the future of Afghanistan, but President Putin said he and President Bush also discussed economic cooperation in detail. The Russian president cited western investment in a Caspian pipeline and oil exploration agreements off Sakhalin Island as examples of an improving business climate.

PRESIDENT VLADIMIR PUTIN, RUSSIA: The Russian-American dialogue in this area
has become recently more constructive and more tangible.

GERSH: It is Russian oil that holds the greatest promise for profits, and analysts say Russian oil companies believe now is the time to raise the cash they need to grow up.

ZAHAN ZANOYAN, CEO, PETROLEUM FINANCE CO.: Russia wants to get to a point where their production and their market share in the global market is at least proportionate to the reserves that they have.

GERSH: Russia is the world's second largest oil producer, exporting 4.4 million barrels a day. And with more investment, it could increase exports to 6 1/2 million barrels. At that level, Russia might challenge Saudi Arabia as the industrial world's most important source of oil.

ROBERT EBEL, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: Would Russia be a more secure source than, say, a country or a group of countries in the Persian Gulf? Well, it's debatable. But I think the more choices you have, the more places you can go to buy oil, the better off you're going to be as an importer.

GERSH: Russia may be rich in oil, but it also has great needs. New pipelines need to be built, port facilities must be modernized. But Western oil companies are not willing to invest billions in a company where laws and contracts are not always honored.

EBEL: It's difficult for an American chairman of the board to walk in and say let's invest in Russia. He's not going to get much support at the present time.

GERSH: And Russian companies have made it clear they don't want American managers telling them what to do.

ZANOYAN: But they certainly want our money. If American companies were willing to put a lot of capital in Russia, we doubt having much say in how things are run they would welcome that.

GERSH: So while the West may welcome more oil flowing from Russia, analysts say for the foreseeable future the world will depend on OPEC for its oil. 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.

11/13/01: Toys R Us Opens A New Flagship Of Fun

JEFF YASTINE: Toys R Us (TOY) shares rose more than seven percent today, that as the company prepares for this week's opening of the world's biggest toy store in New York City's Times Square. Erika Miller looks at where the toy retailer is headed and how it's positioning itself this holiday season.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: With much fanfare, Toys R Us unveiled its new flagship store, complete with Ferris wheel. It's all part of a new corporate game plan.

JOHN EYLER, CHAIRMAN & CEO, TOYS R US: We have really first looked at the content. We want to make sure that we have unusual, fun toys in our stores, very affordable, but that you can find things only in Toys R Us.

MILLER: The new format features boutiques from Jurassic Park, Candy Land and Pepsi, among others. Toys R Us is hoping publicity from the high profile Times Square store will drive traffic to its other locations.

EYLER: We've already remodeled 433 stores in the last 16 months, all of which are much more fun, much better representations of concepts and merchandise and have much better service than we had just a few years ago.

MILLER: Toys R Us is also hoping to lure customers with the right mix of merchandise, including ample supplies of popular toys like Harry Potter, Monsters Inc. Microsoft's X Box and Nintendo's Game Cube. Excitement about the corporate makeover has helped lift Toys R Us shares from its September lows. But some analysts warn the company will continue to face challenges.

ARAM RUBINSON, RETAIL ANALYST, UBS WARBURG: One of the things that I'm still waiting for is to sort of the turn the guts of the company around and to really make it an efficient machine rather than just a cosmetic turnaround.

MILLER: Wal-Mart (WMT) has surpassed Toys R Us as the nation's largest toy retailer and electronics chains have been stealing away video game customers. Plus, the holiday season is expected to be particularly tough for all retailers this year. Consumers are nervous about everything from terrorism to layoffs to the stock market. As a result, some experts worry retailers like Toys R Us will have to promote aggressively and slash prices to get shoppers into the stores. Partly as a result of its expensive remodeling project and slowing sales, Toys R Us recently lowered earnings guidance for the third quarter. It now expects to report a loss of $0.22 a share when it releases numbers next week. But the company is more upbeat on the outlook for critical fourth quarter holiday sales.

EYLER: We think there's a lot of pent up demand and we actually believe that the season will come late, but that it will be very vibrant in those last three weeks before the holidays.

MILLER: Another potential positive for Toys R Us is that historically speaking toy sales tend to be more recession resistant than other retail categories. After all, some say Christmas wouldn't be Christmas without toys under the tree. Erika Miller, 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.

11/13/01: Commentary: Afghanistan's Influence On Our Economy

JEFF YASTINE: Well, tonight's commentary, what happens to the U.S. economy depends on what happens in Afghanistan. Here's Charles Schultze, Senior Fellow at the Brookings Institution.

CHARLES SCHULTZE, COMMENTARY: Two months ago, the economy was probably nearing the end of its year long slowdown, with recovery in sight. September 11 changed that. We're now in a recession. October retail sales data aren't yet in, but consumer spending in September, after the attack, dropped substantially. Given the shock and disruption, however, the drop wasn't as big as we might have expected. Indeed, the terrorist attacks seem to have affected business firms more than consumers. Typically when sales fall, firms respond gradually with cuts in production and employment. But this time, with the future suddenly clouded by uncertainty, output, employment and business orders for capital goods were quickly slashed. The fourth quarter GDP will show a sizeable drop. The key to next year is whether the terrorists successfully mount further major assaults. If not, consumer spending should gradually resume an upward path and business firms revert to their pre-September outlook. By early spring, we should be in or on the verge of recovery. We don't yet know what caused yesterday's plane crash, but if we're hit by a series of new attacks, the best bet is that renewed fear and uncertainty would prolong the recession. Yet barring weapons of mass destruction, it's at least conceivable the economy might shrug off attacks the second time around. Right now, no one can confidently predict which way it would go. I'm Charles Schultze.

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.

11/13/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Those solid earnings reports from some of the major retailers gave stocks on Wall Street a solid opening boost, and so did good news from the war in Afghanistan, where allied troops took control of the capital city of Kabul. In a steady advance, the Dow Industrial Average moved to a 137-point, or 1.4 percent, gain by 11:00 a.m. while the NASDAQ Index rose 44 1/2 points, or 2.4 percent. The market added to its upward momentum for the rest of the morning and well into the midsession hours as buyers were further encouraged by more indications that yesterday's plane crash in Queens was probably caused by a catastrophic mechanical failure rather than by a terrorist act. At 1:30 this afternoon then, the Dow jumped to a 193-point, or 2 percent, gain. The NASDAQ Index up 51 points, or 2.8 percent. The market withstood several bouts of selling pressure over the rest of the session, and held remarkably firm and the Dow Industrial Average closed with a gain of 196.58 points, or 2.1 percent. It now stands at 9750.95. The NASDAQ Index surged 51.98 ending at 1892.11, 2.8 percent gain there. And look at the volume increase on the rally, 1.35 billion shares today and about a 5 to 1 ratio of up volume over down volume.

The Dow Transport Index up 69 points thanks to some good strength in the airlines.

Utility Index up 1.69.

The Closing Tick modestly bullish at +490.

Standard & Poor's 500 up 20 3/4 points.

Nearly an 11 point rise in the 100.

The MidCap 400 up 8.70.

Bridge Futures Price Index gained exactly 1 3/4 points.

A gain of nearly 9 1/4 points in the New York Stock Exchange Composite.

Value Line up exactly 6 3/4 points.

A rise of 7.86 in the Russell2000 Small Cap.

And the broadly based Wilshire 5000 up 188 3/4 points or 1.8 percent.

The bond market headed sharply lower today, undermined by pent up selling from yesterday's Veteran's Day holiday. The sharp rally in stocks siphoned funds from the debt market in a big way, especially since the progress in the war in Afghanistan reduced the demand for safe haven investments. A $0.44-per-barrel jump in New York December oil futures also contributed to 1/2-point losses in tax-free and corporates, and a very weak Treasury market.

5-year notes down 11/32.

The 10-year notes dropping 19/32.

30-year bond down 19.32.

And finally the Lehman Brothers Long-Term Bond Index fell just over 11 1/2 points.KANGAS: Well, a positive impact on the stock today. GM was one of the big gainers in the Dow, up $2.60, closing at $44.99 a share. And Bausch & Lomb's shares rose $0.70, to $32.51.

And everything rose practically. It was a big day on Wall Street. The Dow Industrial Average up nearly 200 points, 2.1 percent, and the advance/decline ratio, no contest there, 22 to 9 in favor of winners; 118 new yearly highs, only 28 new lows.

Topping the active list on a hefty 37 million shares was Compaq Computer (CPQ), up $1.14. That's a 15 percent rise. Analyst Dan Niles of Lehman Brothers says that the company is on track for its fourth quarter results and he said he's positive on the stock with or without a Hewlett-Packard (HWP) merger.

Lucent Technologies (LU) edged up $0.39.

And then Enron (ENE) up another $0.75. Dynegy's (DYN) stock rose $2.63 so its stock swap bid is now worth a little over $12 as of today.

Nortel Networks (NT), a $0.61 gain.

And AOL Time Warner (AOL) up $1.57. After the close yesterday, the company announced it's in a broadband pact with Sony (SNE).

Corning (GLW) up $0.29.

EMC (EMC) rose $0.58.

Micron Technology (MU) doing well, up $1.85. The Girard Plower Brokerage upgraded it from "neutral" to "buy."

The big loser of the day, Watson Pharmaceutical's (WPI) stock tumbling $18.61. That's a drop of 39 percent. The company came in with third quarter operating earnings of only $0.35. The Street was expecting $0.62 a share. Also, the company is changing its focus from making generic drugs of existing drugs to its own branded products, so a real turnabout by this company. Motorola (MOT), tenth in volume, was up $0.59.

Alcoa (AA) up $1.61, an example of some of the basic metal stocks doing well today.

Delta Airlines (DAL) in that strong group, up $1.41. The airlines made a very nice comeback.

General Dynamics (GD), however, down $3.07. FMR Corp., which is the parent of Fidelity Investments, has cut its stake in General Dynamics from 10 percent down to 3.7 percent. This all happened since February.

Home Depot (HD) up $2.88 on those earnings, which were right on target.

J.C. Penney (JCP) moved up $1.50. It reported third quarter earnings of $0.09 versus a loss of $0.15 a share a year ago.

And then Texas Instruments (TXN) up $1.92. The company sees the third quarter as the low for its chip orders. They should get better from now. And the company reaffirmed its fourth quarter earnings guidance.

AMN Healthcare Services (AHS) up $4.66. This is a new issue. It went public at 10 million shares, priced at $17, opened at $21, the high today, $22.10. It's in the hospital staffing business.

Americredit (ACF) up $4.47. A lot of the consumer credit stocks like this were up strongly on signs U.S. consumers are continuing to spend quite freely.

Publicis Group (PUB), this is a big French advertising firm and it said its nine month bookings are up 56 ½ percent and revenues up 59 percent.

Williams Sonoma (WSM) up $2.93. Third quarter earnings came in at $0.07. That was $0.02 above the Street estimate.

Devry (DV) on the down side by $4.58. The company says new student enrollments are likely to fall below year ago levels.

And Barr Labs (BRL) down $5.62. Since July, FMR Corp., the parent of Fidelity Investments, has cut its stake in this company from 12 percent down to 6.9 percent.

NASDAQ trading, nearly a 52 point gain there, 2.8 percent. Look at the volume, almost 2.2 billion shares. 23 stocks up for every 12 down.

Cisco Systems (CSCO) topped the active list, up $0.32.

Microsoft (MSFT) did well, helping the Dow, up $2.11.

Intel (INTC) gained $1.67.

Oracle (ORCL), however, down $0.88. The company has warned second quarter earnings wi