SUSIE GHARIB: Some encouraging news today for Americans. Consumer prices fell, thanks to the biggest drop in oil prices in 15 years. The Consumer Price Index declined 0.3 percent in October. Excluding food and energy, the Index rose 0.2 percent. The news comes as oil prices have plunged roughly 20 percent this week to their lowest level in two and a half years. Where do prices go from here? Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT ANCHOR: Calm returned to the trading pits of the New York Mercantile Exchange today after two days of brutal selling.

SCOTT HESS, OIL TRADER, G&HAFFENREFFER: COMMODITIES: Today the market seems to have slowed down a bit. We’ve had a big of a rebound since the last couple of days. We had sharply lower prices in crude end products.

MILLER: Benchmark light sweet crude ended the session up $0.58 at $18.03 a barrel. But since September 11th, oil prices have tumbled almost 40 percent, and some traders predict they could head even lower on expectations of a price war between OPEC and non-OPEC producers. Earlier this week, OPEC announced it would reduce daily output by as much as 1 1/2 million barrels, or 6 percent, but only if non- OPEC nations cut total production by 500,000 barrels a day. Experts say that’s not likely to happen.

PETER ROSENTHAL, SR. MARKET ANALAYST, ENERGY ARGUS: They’re as dependent or more on oil exports as OPEC is. So, Russia, for instance, which has just started to increase its production over the last year and a half, is starting to gain some hard currency which has enabled it to improve its economy.

MILLER: The showdown comes at a time when demand for crude has fallen sharply, the result of the worldwide economic slowdown. And some observers say OPEC’s power will be further weakened by President Bush’s decision to boost emergency oil reserves by nearly 30 percent. OPEC’s goal is to raise crude oil prices to the mid-$20s a barrel. But some analysts say that’s highly unlikely anytime soon.

MILLER: Plunging oil prices could provide a much-needed boost to the economy. As lower wholesale prices get passed along to businesses and consumers, experts say Americans will have more money to spend on other things. 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.

11/16/01: Bonds Are Bruised But Not Beaten

SUSIE GHARIB: This has been one of the roughest weeks for the bond market. Prices have plunged as traders speculate that the Federal Reserve may have wrapped up its campaign of cutting interest rates. And as Darren Gersh reports, traders aren’t the only ones who think that.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Last week financial markets put 80 percent odds on another Fed interest rate cut in December. This week futures markets put those odds at just 40 percent. What changed? First, retail sales rang up a record 7 percent increase in October; second, US troops are reported to have the Taliban on the run in southern Afghanistan.

GEOFFREY HALL, US ECONOMIST, THOMPSON FINANCIAL IFR: We’re making good progress on the military front right now. We’re making good progress on the economic front right now. There is still substantial stimulus working its way through Congress and the real economy through fiscal policy changes, so I think traders are waking up to the reality that perhaps the Fed has already done enough.

GERSH: As more traders conclude economic recovery is on the way and the Fed may be done cutting interest rates, bonds have slammed into reverse. Yields on two, five and 10-year Treasury notes shot up more than half a percentage point this week, the biggest weekly change in 20 years. Economist Steven East says the market is overreacting.

STEVEN EAST, CHIEF ECONOMIST, FRIEDMAN, BILLINGS, RAMSEY & CO.: I think that we’ve gotten one or two good data points and people have forgotten about all the bad things that are still out there in the economy.

GERSH: East predicts retail sales will plunge when auto makers cut off zero percent financing deals, and he says traders are over-estimating the risk a recovery might spark inflation.

EAST: Bond traders are hard-wired to think that that recovery means inflation, so they kind of shoot now and worry and wait for later to be convinced that they’re wrong, that inflation will actually go down. And that’s my belief, that inflation will be lower next year than it was this year.

GERSH: But others argue the Fed will look desperate if it keeps cutting interest rates.

HALL: We’re currently with a Fed funds target of 2 percent, some of the lowest since the Kennedy administration, and I don’t think the economy is as weak as it was in the start of the cold war.

GERSH: And even those who do think the Fed will cut interest rates again next month, now admit it is a much closer call than it was just a week ago. 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.

11/16/01:Will Box Offices Be Wild About Harry?

SUSIE GHARIB: Well, today is the opening day for the hottest movie of the holiday season, “Harry Potter and The Sorcerer’s Stone.” Industry analysts think the film could take in more than $70 million this weekend alone. That would be a big boost to the sagging theater industry. We sent Jeff Yastine to the movies.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Get used to the lines and the crowds. For the next few weeks, there is likely to be nothing hotter than Harry Potter. One chain pre-sold 20,000 tickets online before the film opened, and the big megaplexes say they’ll be showing “Harry Potter” on a quarter or more of their screens at each location. The film about the young wizard in training and his companions will be conjuring up customers and profits for theatre chain owners.

PETER BROWN, CHAIRMAN & CEO, AMC ENTERTAINMENT: It’s a very exciting time to be a theatrical exhibitor. We’ve got a great lineup this holiday season. We’ve already seen that with “Monsters, Incorporated,” that very big. And the “Harry Potter” movie and then we’ll be moving into “Lord Of The Rings.” So it’s a well deserved time to be a theatrical exhibitor.

YASTINE: Indeed, it hasn’t been much fun in recent years to be a movie theater owner. One dozen chains, including one of the largest, Regal Cinemas, went bankrupt. Many faced cash crunches as they rushed to build the new megaplexes while still paying the rents on the older, smaller multiplexes. But the worst may now be over. The total number of movie screens nationwide is declining from a peak of more than 36,000 in 1999 to about 32,000 two years from now. Analysts like that kind of math.

STUART LINDE, ANALYST, LEHMAN BROTHERS: If you take capacity out of market and even if you keep overall attendance relatively the same as we’ve seen, that the average attendance per screen should go up. You have basically a fixed cost business so you should have margin expansion.

YASTINE: Some investors have already anticipated the upturn. Shares of industry leader AMC (AEN) are now sharply higher compared to the $1.00 share price seen last fall. That leaves well positioned megaplex owners like AMC or privately held Muvico to grab up more customers.

HAMID HASHEMI, CEO, MUVICO THEATERS: When you take a theatre like this theater or any 24 screen theatre, you can take a picture like “Harry Potter” and show it in eight auditoriums. That allows us to give our guests the flexibility to walk up to the theater at any time and within 15 minutes having their favorite show showing. Therefore it takes the guesswork out of which theatre am I going to go to, which show time am I going to go to and that’s basically the principal behind the megaplex and why they are so much more in demand than your traditional, you know, multiplex, neighborhood multiplex locations.

YASTINE: With much of the industry shakeout out of the way, many analysts expect that trend to pick up steam in the years ahead. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.

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.

11/16/01:Market Monitor-Robert Morrow, Editor of “The Institutional Advisory Service”

PAUL KANGAS: My guest market monitor this week is Robert Morrow, Editor of ?The Institutional Advisory Service? and also publisher of the monthly market letter called ?The High Tech Growth Forecaster.? Welcome back to NIGHTLY BUSINESS REPORT, Bob. Good to see you.

ROBERT MORROW, EDITOR, INSTITUTIONAL ADVISORY SERVICE: Thank you very much, Paul.

KANGAS: How do you view?let?s cut right to the chase here?how do you view the recent upturn in the U.S. stock market? Is it a bear market rally or the beginning of a new bull market?

MORROW: I think it?s absolutely the beginning of a new bull market. I think that the bull market started on September 21.

KANGAS: That was the bottom.

MORROW: The absolute bottom.

KANGAS: After the attacks, yes.

MORROW: And this will go for all the indices, too, and I think it will result at least in a minor bull market peak by September or maybe mid year next year.

KANGAS: But is this a cyclical bull market within a secular bear market?

MORROW: Absolutely.

KANGAS: Absolutely.

MORROW: That?s the way I look at it, cyclically.

KANGAS: In other words, we?re still in a long, long-term bear?

MORROW: Or a long-term bull in the long run.

KANGAS: Oh, bull? OK. All right. OK. And you?re, you study cycles. You?re a mathematician and engineer.

MORROW: Right.

KANGAS: And this is what you base your forecasts on.

MORROW: It?s strictly mathematical.

KANGAS: OK. The last time you were with us, May 4th, the Dow was around 10,950. And you predicted that by November, this very month, it would peak out at 14,770. Instead it went the other way. Where did your calculations go wrong?

MORROW: Yes, it was clearly wrong. The peak that we saw in the year 2000, in August, that was correct. Then it, I predicted a 15 percent decline in the S&P and the Dow, 30 percent in the NASDAQ. Clearly it went over twice that and really entered bear market territory and kept going.

KANGAS: And you recommended a lot of semiconductor stocks like Intel (INTC), Analog (ADI), Applied Materials (AMAT), Advanced Micro Devices (AMD) and they, some of them went nicely higher. Did you sell any of them at a profit before they went below where they were back on May 4th?

MORROW: Well, in the letter I always institute the 15 percent sell signal and you would be out of those at 15 percent. Some of them recovered, though.

KANGAS: Oh, most of them, as I see, are back to where they were in May or above. So if you held onto them you wouldn?t be hurting, if you didn?t sell.

MORROW: Right, exactly.

KANGAS: OK. Where are you doing your buying now?

MORROW: Well, I think that list is OK. I think they will be market performers, the ones that I recommended before.

KANGAS: Intel, Analog Devices, Applied Materials, Advanced Micro Devices, Lam Research (LRCX) and LSI Logic (LSI).

MORROW: Right. I think there are some stocks that perhaps will do better than the market.

KANGAS: OK.

MORROW: Computer Sciences, the symbol is CSC. Adaptic (ADPT), Broadcom (BRCM), Cyprus Semiconductors (CY) and Cisco (CSCO). There are others.

KANGAS: There?s no mention of a Bill Gates type stock in there.

MORROW: No, I don?t have that in the list.

KANGAS: OK. So these look the best to you in your cyclical research and mainly from a technical standpoint?

MORROW: Exactly, over the next 12 months.

KANGAS: OK. Give us your range for what the Dow could be over the next 12 months.

MORROW: OK, well, I think, of course, the bottom was, you know, September...

KANGAS: Eighty-three hundred I think it was.

MORROW: Right. And I think the Dow is going to go up to the previous top closing of 11,723. The S&P, I think, will be at the closing of last year of 1,527. Not so good on the NASDAQ. I see a number of 2,911. of course, we were over 5,000 on the NASDAQ in 2000, but now 2,911 is the best I can hope for there.

KANGAS: So you think that those high tech stocks that you just mentioned will outperform the market overall? Those will be some of the best gainers?

MORROW: Exactly, because technology right now happens to be the highest group, industry group.

KANGAS: Yes. But price/earnings multiples overall are kind of high, too, pretty high for a new bull market to start, wouldn?t you agree?

MORROW: Right. The valuations are high. But they were high in 2000 when we reached those levels. The question is where the market goes after that and that?s pretty much on my research plate, what happens after September next year.

KANGAS: So you think the peak at this round, this upward cycle, will be the old high in the Dow?

MORROW: Right, and if we?re lucky it will be a minor peak and will go further.

KANGAS: OK. Bob, thanks very much for being with us.

MORROW: Thank you, Paul.

KANGAS: My guest, Robert Morrow, Editor of ?The Institutional Advisory Service?

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.

11/15/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Stocks on Wall Street opened narrowly mixed with the blue chips edging a touch higher in reaction to that report on falling consumer prices. But that was nearly overshadowed by news of a hefty 1.1 percent drop in October industrial production. At 10:30 this morning, the Dow Industrial Average was up only about 1 1/2 , while the NASDAQ Index was down one point. The market improved modestly by late morning on word that a top Al Qaeda leader had been killed in a Taliban stronghold in Afghanistan, giving allied troops control of most of that country. At 11:30 a.m., the Dow posted a 12-point gain. NASDAQ Index up 5.25 points. As dull as morning trading was, the afternoon made it look frenzied as price movement practically stood still despite fairly active volume due to normal pre-weekend evening up operations. The Dow Industrial Average ended with a loss of 5.40 points at 9866.99. But for the week, the Industrial Average rose three times, fell twice and had a net overall gain of 258.99 points. That’s 2.7 percent. The NASDAQ Index came in with a loss of 1.99 today, ending at 1898.58. And for the week, this Index advanced 70.1 points, or 3.8 percent, pretty good move there.

Big board volume simmered down quite a bit from yesterday, about 120 million shares fewer and up volume exceeded down volume by a 7 to 6 ratio.

The Dow Transport Index up 43 1/3 points.

A gain of just over 1 1/2 in the Utility Index.

And the Closing Tick decidedly bullish at +750.

Standard & Poor’s 500 down a little over 3 1/2 points.

A 2 1/3 point drop pin the 100.

But the MidCap 400 edged up just over 1/2 point.

And the Bridge Futures Price Index rising 2.02.

A loss of nearly a point in the New York Composite.

Value Line up 1.39.

The Russell2000 Index fell almost 2 points.

And the Wilshire 5000 down 24.81 or .2 of a percent.

The bond market moved lower for the sixth consecutive session today as the massive safe haven buying binge which followed the September 11th attacks continued to unwind, especially since the war in Afghanistan is progressing so quickly in our favor. Bonds didn’t even respond positively to the report of a hefty 1.1 percent tumble in October Industrial production.

Tax-free and corporate issues fell another 0.5- to 0.75-point and the Treasury market was broadly lower once again.

The 5-year notes down 13/32.

10-year note dropping 16/32.

And the 30-year bond down 22/32.

The Lehman Brothers Long Term Treasury Bond Index fell almost 20 1/2 points.

Slow and narrowly moving day, but the week was pretty good for the Dow, off about 5 1/2 today, but up 259 points, or 2.7 percent for the week. About 17 stocks up for every 14 lower today, so the broader market was on the positive side, 71 new yearly highs as against only 24 new lows.

Lucent Technologies (LU) topped the active list on 28.1 million shares, moving up $0.49. The company today said it has now sold its fiber optics unit to a Japanese company for $2.3 billion, although that was about $225 million less than it was expected to get earlier.

Xerox (XRX) down $0.51. The company has a new chief financial officer in the wake of an investigation of its accounting practices. They reassigned the old CFO.

Nortel Networks (NT) moving up $0.17.

EMC (EMC) gained $0.18.

AOL Time Warner (AOL), fifth in volume, was down $0.65 a share.

ExxonMobil (XOM) edged up $0.35. As you saw earlier, December New York oil up $0.58 a barrel today.

Corning (GLW) gained $1.05. The company is going to buy a $2.25 million stake in that fiber optic unit that I mentioned Lucent sold today.

Citigroup was down $1.29.

AT&T (T) edged up $0.21, tenth in volume.

Compaq Computer (CPQ) down $0.40 a share.

AMR (AMR), parent of American Airlines, up $1.31, a positive response to the aviation bill that’s on the president’s desk and, of course, the recent drop in oil prices has helped the airlines.

American Express (AXP) fell $1.26 after the UBS Warburg Brokerage downgraded the stock from “buy” to just a “hold.”

Best Buy (BBY) losing $2.03. Bank America downgraded it from “buy” to “market perform.”

Capital One Financial (COF) off $2.73. UBS Warburg downgraded that stock from “buy” to “hold.”

And Fluor (FLR) down $1.79. Merrill Lynch downgraded it from “accumulate” to just “near term neutral.”

But Krispy Kreme (KKD) running circles around the rest of those stocks, up $1.70. Third quarter earnings up 68 percent, $0.11 versus only $0.07 a year ago, and that was $0.01 better than the Street was expecting.

US Airways (U) one of the best percentage gainers, up $1.27, positive reaction to the fact that Congress sent that aviation security bill to the president and also the company said it completed $404 million in financing.

Alstom (ALS), this is a Anglo-French engineering company, and it was upgraded by the London-based brokerage Cal Chevro from “under perform” to “outperform.”

Pep Boys (PBY), the auto parts retailer, up $1.49.

Third quarter earnings out today, better than expected, $0.20, $0.02 above the Street estimate.

And Nordstrom (JWN), the big department store chain, up $2.03. Third quarter earnings of $0.08 versus a loss of $0.03 last year and the company predicting fourth quarter earnings in the range of $0.27 to $0.31. Prudential Securities upgraded Nordstrom from “hold” to “buy.”

Rainbow Media Group (RMG) down $1.28. ATT (T) said it plans to sell 12.7 million of its shares in that company.

And Jacobs Engineering (JEC) losing $4.05. Merrill Lynch downgraded it from “accumulate” to “near term neutral.”

The NASDAQ off just about 2 points today, but up 70 points or 3.8 percent on the week. Volume down to 1.7 billion shares today. 19 stocks higher for every 16 lower, though.

Microsoft (MSFT) topped the active list, down $0.37.

Intel (INTC) lost $0.15.

Cisco Systems (CSCO) a $0.12 loss.

And then Dell Computer (DELL) down $1.09. After the close yesterday, as we reported, the company had $0.16 in quarterly earnings, a $0.01 above the Street estimate. But it also was cautious about the next quarter.

Oracle (ORCL) down $0.24.

JDS Uniphase (JDSU) was off $1.

Applied Materials (AMAT) a $0.17 gain.