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SUSIE GHARIB: Problems continue to pile up for ailing energy giant Enron

bankruptcy filing on Tuesday. And late today Enron's accountants Arthur Andersen said that DeLoitte & Touche will expand the scope of its ongoing peer review of Andersen to include the Enron situation. Now, in another development, Enron is now battling with Dynegy, its former suitor, over control of one of Enron's most valuable assets. Dynegy claims that it gained ownership of the Northern Natural Gas Pipeline Company as part of its original merger deal with Enron. And warned Enron that it will not allow the pipeline company to be part of any bankruptcy filing.

GHARIB: For more now on that pipeline dispute between Enron and Dynegy, we turn to Dynegy chairman and CEO Chuck Watson. He joins us live from Houston. Mr. Watson, it's a pleasure to have you on the program this evening.

CHARLES WATSON, CEO, DYNEGY: I'm happy to be here. Thank you.

GHARIB: Let me begin by asking whether you are going to be able to acquire the pipeline company if Enron files for bankruptcy, which seems imminent?

WATSON: Absolutely. We believe that the documents that we put together were designed just for this very instance. There were, intended to be bankrupt proof. We believe they are. So, we think we have good title to that pipeline. It will be transferred over to us.

GHARIB: If Enron fights you on this, will Dynegy be able to collect the $1.5 billion that it put into Enron as the time of the proposed merger? Will you get the money back?

WATSON: Sure. The whole idea of putting the 1.5 billion in was to protect it from this just this sort of instance. The terms of the deal are that we'll either get the pipeline, or Enron does have the right to call back the pipeline and pay us the 1.5 billion plus interest. So, we'll either get the pipeline or we'll get $ 1.5 billion.

GHARIB: Investors are very concerned that this whole dispute is going to escalate into a very big legal battle. And that's one of the reasons why Dynegy stock was down again considerably today. Is there reason for them to be concerned about any litigation here?

WATSON: Well, we haven't heard anything from Enron at all even on the pipeline, much less the termination of the agreement. So, I think a lot of that's speculation and I think at this point we'll just have to see the - we believe that from the time that we did the merger obviously there were significant changes in the company. It would be hard to imagine somebody questioning whether or not that constitutes for them material adverse change. But, you know, we'll see. I think it would be very unfortunate for Houston and the industry if we ended up getting into some sort of a squabble over that but I like Dynegy's position.

GHARIB: How concerned are you that Fitch, the rating the service, has kept Dynegy on its credit watch with a watch negative rating? Are you concerned about that?

WATSON: None of the agencies have changed anything since the time we announced the merger on Dynegy. So, we'll have a chance to talk to them over the next couple of weeks and I'm quite certain they will understand the difference between the Dynegy model and merchant, the merchant business, the merchant marketing business as opposed to Enron. You are always concerned when you are on negative watch. That is not anything different than we knew three weeks ago when we announced the merger. We were strong into this merger. We are just as strong coming out.

GHARIB: Have you heard from any of the other rating agencies? Moody's? Standard & Poor's?

WATSON: No.

GHARIB: OK. You know, one of the issues has come up is considerable scrutiny about the accounting practices used by Enron and their questions about whether companies in the business have used these off balance sheet accounts. Can you reassure Dynegy stock holders that these practices have not been used at diperingy?

WATSON: We've done that over and over again since the whole thing came out. These are creative and unique partnership agreements that they entered into and I'm not sure I understand them enough to replicate them. So, Dynegy's pretty well assured our shareholders we don't have anything near like that.

GHARIB: With the demise of Enron, Mr. Watson, there's been a huge void in this marketplace. What opportunities do you see for Dynegy in terms of your own market share?

WATSON: Well, in fact in the future, physical market, we've seen an uptick already in our volumes for December. We're just finishing today a bid week for the December volumes in the physical business. And this is an area where Enron wasn't a major player in that regard. They're mostly a financing player and a market maker, and whole bunch of commodities and that's partly what got them in trouble. In the gas and power business, though, in the U.S., I don't think this will have any impact on the industry. The rest of the merchants stepped up in this business. There's numerous of them. They kind of all stepped up and assimilated the Enron position. So, I don't think this is going to have much of an impact at all in the physical business.

GHARIB: OK. Well, this is surely going to be an ongoing story. I wish we could have spoken with you a little bit more. We appreciate you being on the program tonight.

WATSON: Thank you very much.

GHARIB: We've been speaking with Dynegy chairman and CEO Chuck Watson.

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.

11/30/01: Japan's Beef Concern Is Costing The US Major Bread

SUSIE GHARIB: More trouble tonight for Japan's beef industry. A third case of mad cow disease has been found. Safety concerns have sent Japanese beef sales tumbling. And that's causing problems for American beef producers, since the U.S. exports more beef to Japan than to any other nation. From Tokyo, Lucy Craft reports.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Via beef tastings, ad blitzes and other public relations, American beef producers are spending millions of dollars in a campaign to convince skittish Japan consumers it's safe to eat meat in the wake of a national scare over BSE or mad cow disease. The stakes couldn't be higher. Japanese last year bought almost half of all U.S. beef sold abroad, to the tune of nearly $2 billion.

SUSUMU HARADA, U.S. MEAT EXPORT FEDERATION, TOKYO: We are now facing at least a 20 or 30 percent decline in terms of sales since mid-September. It is such great damage. We have never had such a damage before. It is very serious.

CRAFT: Ironically, Japan's two BSE outbreaks occurred locally in Japanese dairy cows. And unlike Europe, Japan has not suffered any cases of human illness from eating infected beef. But fearful Japanese consumers are playing it safe, abstaining from imported as well as domestic red meat.

PAUL MOLLOY, PUBLIC DIPLOMACY, AUSTRALIAN EMBASSY: Although BSE has not been found in either the United States or Australia, they are BSE free markets, the Japanese consumer has lost confidence in beef as a product and that affects not only the local product, but also imported product, as well. This is a depressing situation not only for the Japanese producers, but Australian producers and U.S. producers, as well.

CRAFT: American and Australian beef exporters are not the only casualties of Japan's BSE scare. Restaurants, especially low margin fast food chains featuring hamburgers and other beef dishes, were already hurting this year because of overcapacity and price deflation. The mad cow scare has compounded their woes. McDonald's Japan recently slashed its profit estimate for this year by over one quarter. Yoshinoya, a fast food beef restaurant, has managed to lure back its primarily male clientele only with drastic price cuts. U.S. an Australian spokesmen say beef consumption could stage a recovery as early as next year, but concede such hopes may be overly optimistic.

MOLLOY: In recent years there have been other tainted food scandals. Those food scandals have taken, have depressed consumer confidence for periods of six months to 12 months. We don't know in this case when the market will recover. Certainly it seems as if it's at the bottom at the moment, but how long it will remain there it's hard to tell.

HARADA: It will take at least three to four years, judging from the past experience. However, if there is any other outbreak, you know, this estimation, we might have to change this estimation or projection.

CRAFT: Eating beef is a relatively new custom for Japanese consumers, who traditionally have focused their diet around eating fish. The potential nightmare facing U.S. beef producers is that mad cow disease will permanently alter Japanese eating habits, sending consumers to alternative protein sources such as fish or chicken. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.

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.

11/30/01: Market Monitor - Bernie Schaeffer, CEO of Schaeffer's Investment Research Incorporated

PAUL KANGAS: My guest market monitor this week is Bernie Schaeffer, Chairman and Chief Executive Officer of Schaeffer's Investment Research Incorporated, publisher of the popular monthly "Option Advisor" newsletter, which sponsors a very popular Web site. And welcome back, Bernie. Great to see you.

BERNIE SCHAEFFER, CHAIRMAN, SCHAEFFER'S INVESTMENT RESEARCH: Great to be here, Paul.

PAUL KANGAS: Your specialty, of course, is option trading and success in that arena hinges upon correctly forecasting the direction of the stock within the life period of the option, obviously. Now, on your last visit with us about a year ago you gave us some examples of profitable option trading. For example, you liked the biotechs and drug stocks and you recommended three month call options on again Genentech (DNA), Holders Trust (SMH) and Merck (MRK) and Abbott Labs (ABT), and they all did beautifully in that three month period. You must have cleaned up rather nicely. And what you didn't like, you said it was a two way market, was the high flyers. You said buy put options three months on Cisco (CSCO), Sun Micro (SUNW), Oracle (ORCL) and EMC (EMC). EMC, for example, was 82 at that time. Of course it's down to 17 now. But another profitable group. And I compliment you on those great calls.

SCHAEFFER: Thank you, Paul.

KANGAS: Now, having that as a credibility factor, what is your short-term outlook now for the market?

SCHAEFFER: The pressure is on now.

KANGAS: Yes.

SCHAEFFER: Well, actually, short-term I think we could have a ways to go further to the upside, particularly in that very same technology sector.

KANGAS: That you didn't like a year ago.

SCHAEFFER: That I didn't like a year ago. I'm not, again, I'm talking more in terms of for traders, for people who have a shorter term time window. For example, if you're an options trader, there are stocks in the tech group that you might want to buy two month call options on, let's say, that expire in January of next year.

KANGAS: How about some specific examples?

SCHAEFFER: Well, specific, I would go, number one, with the Index, the QQQ Index.

KANGAS: Yes.

SCHAEFFER: That's one way to play.

KANGAS: The Cubes?

SCHAEFFER: The Cubes.

KANGAS: Or the Qs. They're known both as Cubes and Qs.

SCHAEFFER: Right.

KANGAS: OK.

SCHAEFFER: The most popular equity type option on the market today.

KANGAS: Right. OK.

SCHAEFFER: Other stocks that might benefit from this further rally in tech would be Juniper Networks (JNPR), Symantec (SYMC) and NVIDIA (NVDA). Those would be my four favorites.

KANGAS: Three month options, call options?

SCHAEFFER: Actually, two months.

KANGAS: Two months.

SCHAEFFER: I would go out no further than January.

KANGAS: OK. And what would you estimate the cost as a percentage of the stock price?

SCHAEFFER: It varies. The Index is the cheapest. It would be about seven percent.

KANGAS: OK.

SCHAEFFER: And if you go to the most volatile of the stocks, Juniper would be about 14 percent.

KANGAS: So you like these things near term. But what's your long-term outlook?

SCHAEFFER: Long-term I'm concerned. I think we have a combination, I'm not a fundamentalist, but I think we have a combination of overvaluation right now, very optimistic hopes for next year as far as earnings and the economy are concerned, but also from a sentiment standpoint, which is always the clincher for me, we have a lot of bullish expectations among money managers, among brokers and among individual investors who are still kind of hanging on there to their tech funds.

KANGAS: Too much bullishness is bearish, right?

SCHAEFFER: Too much bullishness is bearish. The risk becomes more to the downside than to the upside.

KANGAS: So once we get through with this little rally that you say is still going to happen, what would you buy in the way of puts?

SCHAEFFER: Well, I would look for puts, I'd go a little bit further out in time since I'm expecting the move to be longer-term.

KANGAS: Right.

SCHAEFFER: I would go three to six months out. The stocks that I would look for, the mega caps like G.E. (GE) and AOL Time Warner (AOL). I would also look at the financial services sector, some of the bigger names there, Schwab (SCH) and J.P. Morgan (JPM). Go out to at least March in Schwab and in AOL.

KANGAS: The premiums are going to be a little more expensive there.

SCHAEFFER: A little bit more, but actually if you out to March in Schwab, April in AOL and June in the other two, you're going to average about 10 percent premium relative to the stock price.

KANGAS: What, in terms of the Dow, do you think is the downside risk?

SCHAEFFER: I think the Dow has down side risk back to its 1998 lows, which was in the 7,500 zone.

KANGAS: Bull market.

SCHAEFFER: I think we could retest, certainly, the lows that we experienced in the last couple of months.

KANGAS: All right, so a two way street, up for the near term, down for the long?

SCHAEFFER: Right.

KANGAS: Bernie, thanks very much.

SCHAEFFER: My pleasure, Paul.

KANGAS: My guest Bernie Schaeffer, Chairman and CEO of Schaeffer's Investment Research.

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.

11/30/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Stocks on Wall Street opened narrowly mixed as an attempt to follow through on yesterday's solid rally was subdued by the report that the nation's third quarter gross domestic product was revised downward to a 1.1 percent decline from last month's estimate of only a 0.4 percent contraction. At 10:00 a.m., The Dow Jones Industrial average was up two points but the NASDAQ Index posted a ten-point loss. The Home Depot Inc.(HD) stock, with about a $3 gain, gave the blue chips a boost after the retailing giant announced its growth will slow in the coming years, but the forecast wasn't as grim as analysts expected. Also helping was an upgrade of the home building group by Salomon Smith Barney. By 12:30 p.m., the Dow moved to a 32-point gain and the NASDAQ Index was up four points. The market then began trading in a very narrow range amid the cross currents of end of month institutional portfolio shuffling and the usual pre- weekend evening up operations. The Dow Industrial average went on to close with a gain of 22.14 points at 9851.56. This week the Dow rose three times and fell twice for a net overall loss, nevertheless of 108.15 points.

The NASDAQ closed fell 2.68 points to close at 1930.58, but for the week the Index was up 27.38 points.

Big board volume today down just a touch from yesterday, 1.34 billion shares traded, and a 7/6 ratio of down volume over up volume.

The Dow Transport Index was up 26.18.

Utilities edged up 0.19

And the Closing Tick modestly bullish at +3.49

Standard & Poor's 500 loss 3/4 of a point.

Nearly a 1/2 point drop in the 100.

The MidCap 400 down 4 1/3 points.

While the Bridge Futures Price Index rose 3.36.

A loss of 0.48 in the New York Stock Exchange Composite Index.

The Value Line off 0.70.

The Russell2000 Small Cap Index down just over 2 1/2 points.

And the Bradley Based Wilshire 5000 off 13 1/3 points.

That downward revision in third quarter GDP gave bond prices a boost today as did a five- point decline in the Chicago Purchasing Managers Business Activity Index which gave still more assurance that the Fed would likely cut interest rates at least another 1/4 percent on December 11th .

The market faded near the close, however, as tax-free and corporates showed little change on the day.

While the treasuries rose except for the longer end.

The 5-year notes up 7/32.

The 10-year notes edged up 2/32.

And a loss of 25/32 for the 30-year bond.

While the Lehman Brothers Long-Term Treasury Bond Index edged up 0.58.

It had been a down week for the Dow overall, but for the month of November it was up 776.42 points, or 8 1/2 percent. That's for the month of November. Today, well, just a very narrowly mixed market, 28 more new, more issues down than up and 50 more new highs than new lows for the year.

Enron (ENE) once again topped the active list today on 88.6 million shares, the stock down $0.10 or 28 percent, as you heard earlier. A lot of shares but not much money these days.

General Electric (GE) lost $1.23.

Equity Residential (EQR) was very active and up $0.38. This stock was added to the Standard & Poor's 500 Index after the close of trading today. It's a REIT.

Compaq Computer (CPQ) up $0.55.

Solectron (SLR), fifth in volume, dropped $0.02 a share.

AOL Time Warner (AOL) down $0.48.

While Cendant (CD) moved up $0.44.

And then Home Depot (HD) ended with a gain of $2.64 after trading as high as $47. As I mentioned, the company confirmed speculation that its long-term growth will slow, but not as much as expected. It was the best gainer in the Dow, incidentally.

Johnson & Johnson (JNJ) down another $0.23. It lost $1.50 yesterday on a Morgan Stanley downgrade from "outperform" to "neutral."

And then Dynegy (DYN), tenth in volume, down another $3.30.

Bear Stearns Companies (BSC) lost $2.30. The company says it had $69 million of exposure to Enron.

Delta Air Lines (DAL) matching yesterday's gain of $1.04 when Alex Brown came out with a "strong buy" recommendation.

D.R. Horton (DHI), a home builder, up $2.01. Salomon Smith Barney upgraded this stock from "outperform" to "buy" with a $37 a share target.

IBM (IBM) participated in the rally in the blue chips, up $1.16.

Kimberly-Clark (KMB) up $2.33. The company's very optimistic about its outlook for next year.

And then Merrill Lynch (MER) edged up $0.60. Heard On The Street column in today's "Wall Street Journal" says the company's CEO quietly discussed the company's sale or merger with Goldman Sachs, Deutschebank and Bank of America (BAC) over the last summer.

Hancock Fabrics (HKF) one of the best percentage gainers, up $1.95. The company's November same store sales up a very respectable nine percent.

Winnebago Industries (WGO) up $3.74. A company spokesman linked that strength with positive comments from A.G. Edwards Brokerage.

Toll Brothers (TOL), another home builder, up $3.55. Salomon Smith Barney upgraded it from "outperform" to "buy."

And Massey Energy (MEE) up $1.57. Its fourth quarter earnings, $0.10, way up from last year's $0.02 and $0.03 above the Street estimate. The company very optimistic for 2002. It sees $1.90 to $2.20 in earnings.

Eott Energy (EOT), this is a unit of Enron, and Lehman Brothers downgraded it from "buy" to "market perform." UBS Warburg downgraded it from "buy" to just a "hold."

And Gerber Scientific (GRB ) off $1.10. Second quarter earnings higher, $0.10 versus $0.08, but the company says it's difficult to predict the short-term outlook. And yesterday its president and CEO, Michael Cheshire, resigned.

VNasdaq trading, a 2 2/3 point loss today but for the month of November, this Index was up 240.37 points, or 14.2 percent. Volume down a bit from yesterday to today. 18 stocks down for every 17 higher.

Microsoft (MSFT) topped the active list, down $0.63.

Cisco (CSCO) up $0.55.

Intel (INTC), a $0.34 gain there.

Oracle (ORCL) dropped $0.16.

And then Sun Microsystems (SUNW) a gain of $0.43.

Broadcom (BRCM) fell $2.04.

And then Dell Computer (DELL) an $0.87 g