SUSIE GHARIB: A short trading day on Wall Street, but a big gain for blue chips: investors came back from the Thanksgiving holiday in a buying mood. The Dow jumped 125 points, and the NASDAQ rose 28. Now retailers are hoping some of that enthusiasm will spill over to them. Stores across the country kicked off the holiday shopping season today, and Scott Gurvey was in the midst of the crowds sampling the mood and the deals.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: If anything will save this year's holiday sales it will be the children. Although all indications are that consumers will be cutting back on buying in these difficult times, children are not to be disappointed. There is no standout toy this year, but movie characters like "Harry Potter" and "Monsters, Inc." And electronic games are expected to be big sellers. The crowds at Manhattan's FAO Schwarz seemed a little thin early, but they did get larger as the day wore on.

BUD JOHNSON, CEO FAO SCHWARZ: The traffic is back to pretty near normal on the weekends. The week days have been a little slow, but now today we've certainly seen it back to - I mean, this is at normal volumes that we've experienced in past years.

GURVEY: At Bloomingdale's, crowds also seemed smaller than in previous years. This year many stores opened early, some at the crack of dawn. Sales and promotions were common, even at this early date.

ABBY, SHOPPER: We both got a suit, they're different, but they were both were incredibly marked down, so they were really inexpensive.

GURVEY: Surveys of consumer sentiment are all across the board. Some say shoppers will not let the effects of the economy and the terrorist attacks change their plans, but most see some cuts in spending this holiday season.

LAUREN, SHOPPER: I have to say I am spending less money, but Christmastime is coming up, so I am out spending money now.

GURVEY: This is making most analysts pessimistic about retail sales this year.

DANIEL BARRY, RETAIL ANALYST, MERRILL LYNCH: Our forecast is that this Christmas season is going to be pretty poor. We think the US general merchandise sales will be flat versus last year and that compares with up five last year and a very strong up seven-and-a-half the year before. And we think about 3 percent of the impact will be from terrorist attacks. In other words, it would have been up three, but now it's flat because of the terrorist attacks.

GURVEY: Manhattan stores are probably not the best indicators of retail sales nationwide because so much of the traffic here is based on tourism, and that is still way off. But from Saks (SKS) Fifth Avenue to Bloomingdale's to FAO Schwarz, the retail stores in Manhattan can amount to more than 20 percent of corporate sales at this time of the year. So they are important. 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.

11/23/01: The Terrorist Attacks Have Much of America Facing Economic Crisis

SUSIE GHARIB: Many states across the country are facing a budgetary crisis because of the weak economy and the ripple effects from the September 11 terrorist attacks. Now lawmakers are facing the prospect of billions in spending cuts or tax increases. Quinn O'Toole reports.

QUINN O'TOOLE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With unemployment offices filling up and tax coffers emptying, state governments around the country are watching their bottom lines turn from black to red.

RAYMOND C. SCHEPPACH, EXEC. DIR., NATIONAL GOVERNORS ASSN.: With the economy slowing, revenues have turned down. So over the last four or five years, states witnessed revenue growth in the 5, 6, even 7 percent range. Most are looking at no growth whatsoever for this coming year.

O'TOOLE: Thirty-five states are currently facing budget shortfalls, shortfalls that could reach as high as $30 billion this year alone. And since 49 of the 50 states have some sort of balanced budget requirement, legislators and governors have no choice but to make up the difference by cutting spending or raising taxes.

PETER ORSZAG, ECONOMIST, BROOKINGS INSTITUTION: They force these sorts of very harmful changes in the middle of a recession, again, spending cuts or tax increases, exactly the opposite of what we want to be doing. During a recession, you want the government to be raising spending and reducing taxes in order to spur spending and get more people employed and get firms back to full operating capacity.

O'TOOLE: The credit markets are already aware of these dire financial states. This week, Moody's lowered its rating on $20 billion of bonds issued by the state of California, citing the state's projected shortfall, which could run as high as $10 billion. Standard & Poor's has put bonds issued by states that rely heavily on tourism revenues, including Hawaii and Florida, on credit watch. And while balanced budget requirements present states with tough choices in the short term, they say it's this fiscal responsibility that helps keeps their costs down in the long run.

SCHEPPACH: If you run deficits, you're going to be in the capital markets and you're going to be borrowing money. And the more you borrow and the larger the deficit, the higher your borrowing costs. So I think you'd be asking citizens really within a particular state to pay for those borrowing costs.

O'TOOLE: Since spending cuts or tax increased taxes would likely blunt some of the effect of the stimulus package being debated here in Washington, states are lobbying hard for billions of dollars in help with Medicaid costs and increased security. Quinn O'Toole, "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.

11/23/01:It's Time For The Box Office To Reel In Some Blockbuster Revenue

SUSIE GHARIB: This holiday weekend is a crucial one for Hollywood. Box office receipts at theaters will set the tone for ticket sales and the financial future of movie studios. So far, the big winner is "Harry Potter and The Sorcerer's Stone." And as Stephanie Woods reports, the Warner Brothers release has benefited from a massive marketing effort.

UNIDENTIFIED ACTOR: Stop, stop, stop.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Non-stop promotion of Harry Potter is designed to get people from the Web to the theaters. It appears to be working. Through its Moviefone division, the company sold hundreds of thousands of advance tickets. Katherine Borscenik programs America Online. She says selling tickets is just one of the company's goals.

KATHERINE BORSECNIK, PRESIDENT, AOL BRAND PROGRAMMING: It's not simply movie tickets online, although that's a piece of it, getting advance ticket sales and building anticipation for the movie transaction itself. But where we think it's been really successful is raising the level of awareness around a movie among our customer base, getting people excited about it, giving them the opportunity to do things online.

WOODS: AOL Time Warner is also going online to promote its upcoming "Lord of the Rings" movie, including the release of trailers and special chat rooms. But promotions for company owned products may come at the expense of paying customers.

PAUL KIM, MEDIA & INTERNET ANALYST, KAUFMAN BROTHERS: If you are cross promoting, if you are cross pollinating, you are forgoing revenues that could come from the outside. So at the end of the day, it's a tradeoff between what you can generate for internal properties and, as opposed to generating external revenues. So that's always a cost and it's not something that's free.

WOODS: AOL says it gains by using Time Warner content, be it movies, magazines or TV programming. And 90 percent of its promotional work is still done for outside companies.

BORSECNIK: We have lots of partnerships and lots of business partners who pay us money to develop promotional campaigns on their behalf and I can assure you we work just as hard or harder on them than we do on our own properties.

WOODS: While the advertising market is soft, analysts say AOL Time Warner's strategy of selling to itself works. But once advertising business picks up, that story could change.

KIM: In a downturn scenario it makes a lot of sense to sell it to yourself in that you can probably use better in terms of the total value of that inventory. But let's say if the economy does better, if the advertising market turns up, then does the same argument hold true? I don't think so.

WOODS: AOL Time Warner still has to prove its use of cross promotion will pay off.

UNIDENTIFIED ACTOR: That was bloody brilliant.

WOODS: A touch of the Harry Potter magic may help it make its case. 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.

11/23/01: Market Monitor-David Katz, Chief Investment Officer of Matrix Asset Advisors

PAUL KANGAS: Our market monitor guest says the worst of the bear market is over and is positive about the outlook for stocks. And joining us now, David Katz, Chief Investment Officer of Matrix Asset Advisors. That's a New York money management firm. And it's really nice to have you on the program. This is the first time you're our market monitor, David. So welcome.

DAVID KATZ, CIO, MATRIX ASSET ADVISORS: Thank you.

GHARIB: So you're very optimistic about the outlook for the markets. Tell us why.

KATZ: It's important to put the market in perspective. We've had the first, third worst bear market in the last 40 years. Stocks are down as much as 25 to 40 percent. We think the worst is behind us. The stock market is a discounting mechanism. It generally looks forward. We think the economy is going to be better by next summer, or start to show improvement by next summer. Stocks should start to react shortly to that.

GHARIB: All right, so you're saying, though, in the next six to 18 months things look good but we do have the economy in a recession. The outlook for earnings is not good.

KATZ: That's, if you look at the stock market over the last 50 years, when earnings are declining at a rapid rate and when the Fed is aggressively easing, that's the best environment for stock prices over the next 18 months. Typically, investing in the middle of a recession also is one of the best things to do in order to make money in the stock market over the next six to 18 months. So it's somewhat counterintuitive. The economy was great 18 months ago. Stocks have done poorly since then. The economy is horrible now. Stocks will do better.

GHARIB: All right, you have a lot of portfolios that you're managing. How are you positioning them in this environment?

KATZ: I think it's very important as an investor that you start to position for the next upturn rather than trying to be defensive. So we're buying a lot of different industries. We like select technology now. We like the financials now. We like some old economy companies and even some pharmaceuticals. Really spread it out, buy good businesses with good prospects under 15 times earnings.

GHARIB: All right, actually, I want to talk to you a little more about that before we go to the specifics. You're a value investor. What do you look for when you're choosing stocks?

KATZ: We look for a strong balance sheet first. Make sure a company can weather a difficult time. Next we like to buy low price/earnings ratios or low price to cash flow ratios. And we like companies that are in good industries that can grow, where management likes to enhance or wants to enhance shareholder value.

GHARIB: You mentioned that you're investing in technology. Kind of unusual for a value investor.

KATZ: A lot of value investors say they can't understand technology, they're not going to analyze the companies or buy them. We're very comfortable analyzing those businesses. You can analyze a semiconductor company just the same as you can analyze a ketchup company. So if they have earnings, if they have a balance sheet, if they have cash flow, we're comfortable looking at them.

GHARIB: All right, so let's talk specifics. Tell us some of the technology stocks that you like right now.

KATZ: A company like American Power Conversion (APCC) or Novellus (NVLS). American Power Conversion, it makes uninterruptible power supplies. They've done great during this technology slowdown or recession. They're selling at about 14 or 15 times earnings and we think the earnings will grow nicely over the next two years. You're getting a very good company, 40 percent market share, at a great price.

GHARIB: Novellus. Why that?

KATZ: A semiconductor equipment company, very volatile industry. The business is about as bad as it's been in the last decade, but the stock is down 50 percent. People have to buy the equipment in order to stay in business. If you are a chip manufacturer, right now the companies say that buying is below keeping businesses around. We think that's going to change and you have to buy these companies early because typically we'll turn up six to nine months before any orders get any better.

GHARIB: David, what do you like outside of technology?

KATZ: We're starting to buy oil services companies. Slumberge, which is a company that we sold about a year and a half ago at $75, $80 a share we're buying right now in the mid-40s. We think at some point oil prices will start to stabilize and go up and you're getting a blue chip company at a great price.

GHARIB: You mentioned financials. What's in your financial sector investment?

KATZ: When the Fed is easing it's good for financials. We like companies like Bank America (BAC), FleetBoston (FBF). We think they're going to do quite nicely. We think American Express (AXP) in the low 30s also a very good place to be.

GHARIB: OK. Old economy. You mentioned old economy. We haven't heard that in a while.

KATZ: Well, a year and a half ago it was a four letter word. We think you can make money investing in some businesses that are just typical businesses, even the retailers, a company like Gap Stores (GPS) or Claire's Stores (CLE), selling at about 14 times earnings. We think this Christmas is going to be a very poor season but the stocks are down enough that if business gets better by next spring or summer, you're going to have a lot of upside and you're buying pretty close to the bottom.

GHARIB: Real quickly. We just have a few seconds left. Any fallen angels that you're finding attractive right now?

KATZ: A lot of the companies we've mentioned are fallen angels. Slumberage is a great company. It's down 50 percent. Schering-Plough (SGP) on the drug side is down 50 percent. We think those are good places to be. Don't buy a stock just because they're down 50 or 80 percent. Make sure you're buying them on a lower valuation basis.

GHARIB: You've given us a lot of good information. Thank you so much for being with us on NIGHTLY BUSINESS REPORT.

KATZ: Great to be here.

GHARIB: And our market monitor tonight, David Katz of Matrix Asset Advisors.

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.

11/23/01: Paul Kangas' Wall Street Wrap Up

JEFF YASTINE: Well, buyers were in the stock market today, although it was a light volume day, as you can imagine, for this holiday-shortened session. And yet the major indexes managed to climb sharply higher and they never looked back. The Dow Jones Industrial Average picked up where it left off on Wednesday, shooting to a 40-point gain in early trading. Advancers led decliners by a 2-1 margin, so not many sellers in the market, especially with much of Wall Street out of the office for the holiday. And the blue chips continued to build on that lead as the trading session wore on. At midsession, the NASDAQ also began to catch fire and aimed squarely at retaking the 1900 level, which it eventually did. All the typical big-cap techs were up nicely, and by noontime the NASDAQ Composite had tacked on a gain of 25 points. Nor was it over after that, as the Dow took over the lead. After a short breather after noontime, the buyers got started again, and the index gained another 40 points or so in that last hour of trading. And the Dow going on to close up 125 points at 9959. In this shortened holiday workweek, the Dow rose twice and fell twice for a net overall gain of about 92 points. Meanwhile, the NASDAQ Composite eking out a gain of 28 points to close at 1903.20. For the week, the index rising about 4.6 points as well.

Big board volume trading up 414 million shares. Down considerably, obviously, from Wednesday. And you can see no contest there regarding up volume versus down volume.

The Transports climbing 49. Every component sporting a plus sign helped by the continuing fall in oil prices.

Utilities rising 2.6 points.

The Closing Tick very bullish at +981.

In the broader market, the S&P 500, 100 and MidCap 400 each up over 1 percent.

The Bridge CRB was unchanged.

The NYSE Composite rising 6 1/4.

The Value Line advancing nearly 5.

The Small Caps gaining about 6.

And the Wilshire 5000 up 121 points.

Well, once again, the stock market's gain was the bond market's loss. Bonds drifted lower in a holiday-shortened session. Trading finished about 2:00 p.m. Eastern time. There were no economic reports due out, but the gains in stocks today had the few participants in the bond market unwilling to take much of a stand heading into the weekend. And it's interesting to note that people appear to be getting more comfortable with risk again. High-yield mutual funds, or junk bonds, have begun attracting money in the past couple weeks as buyers seek higher yields with less concern for safety.

So for today, Treasuries closed lower across the board.

The 5-year note falling 9 ticks.

The 10-year note dropping 12/32.

And the 30-year bond lost 10 ticks as well, with the yield at 5.38 percent.

And the Lehman Brothers Long Bond Index falling 4 3/4 points.

Well, the bulls taking charge today and they went out and bought up some stocks. The Dow rising 125 points. Advancers beating out decliners by a nearly 3 to 1 margin, 66 issues setting new highs versus just 12 new lows.

Enron (ENE) topping the active list, falling $0.27. Enron's eroding price prompting shareholders to turn up the heat on Dynegy (DYN) to either renegotiate its $9 billion offer for Enron, which is now more than twice Enron's market cap, or terminate the deal. Both sides are scheduled to meet this weekend.

Lucent Technologies (LU) advancing $0.35.

Xerox (XRX) rising $0.55. The shares were up 26 percent this week alone.

AOL Time Warner (AOL) gaining $0.29.

Compaq (CPQ) edging up $0.13 on the day.

G.E. (GE) moved up $0.62.

Meanwhile NorTel Networks (NT) climbing $0.11.

And Nokia (NOK) settling $0.53 higher.

ExxonMobil (XOM) rising $0.56.

And Corning (GLW) advancing $0.38.

It was all positive signs pretty much today.

Among the widely helds, ALCOA (AA) rising $1.01.

Bristol-Myers (BMY) losing a $0.05. Raymond James cut its rating on BMY after regulators cleared the way for a generic version of its glucophage (ph) diabetes drug.

Federated Department Stores (FD) gaining $1.10. Retailers hoping to salvage a bad year this holiday shopping season, as you heard earlier.

And the financials all did well today. Goldman Sachs (GS) rising $2. Its latest restructuring program is progressing well.

Merrill Lynch (MER) advancing $1.51. Merrill will sell its Canadian brokerage operations to CIBC for $300 million to $400 million.

And RJR Tobacco (RJR) flipped a touch. Yesterday it said it will buy Sante Fe Natural Tobacco for $320 million. The move tops a rival bid from Rothman's of Canada (ph). No word yet if Rothman's will top RJR's offer.

Royal PTT Neider (KPN) gaining $0.56, actually, $0.86. The company has been on a mission to cut thousands of jobs over the next four years.

Infineon Technologies (IFX) jumping $2 on optimism for a recovery in computer chip prices some time late next year.

Shares in Russian telecom firm Vimpel-Comm (VIP) gaining $3.33. That's in reaction to news it's mulling the issuance of dollar denominated euro bonds on the international bond market.

Mobile TeleSystems (MBT), another Russian telecom company, planning a euro bond issue, shares rising about the same amount.

Pohang Iron & Steel (PKX) rising $2.21. Shares in the South Korean steel producer had a difficult year because of plummeting steel prices and U.S. import restrictions, but it's expected to do better next year and there's also consolidation going on in the steel sector.

Barclays (BCS) falling $5.40 on concerns about its exposure to Enron's troubles.

The Nasdaq Composite climbing about 28 points on the day and volume dwindling 565 million shares. 2 stocks up for every 1 that was lower.

Amgen (AMGN) up $2.44. The stock was up more than 10 percent in the past week, since the company said its new anemia and arthritis drugs would boost earnings by 20 percent.

Intel (INTC) gaining about $0.25 on the day. The chip stocks all doing well.

Microsoft (MSFT) advanced $0.67.

Cisco Systems (CSCO) edged up $0.44.

QUALCOMM (QCOM) gaining $1.53. China Unicom (CHU) said it will launch its new phone network in January and that will use QUALCOMM's technology, the CDMA technology.

Bro