SUSIE GHARIB: The big talk on Wall Street today was about what the Fed will do tomorrow, and what happens to the Hewlett Packard-Compaq merger. The Dow tumbled 128 points, closing below the 10,000 mark, and the NASDAQ fell about 30. Now shares of Hewlett lost more than 2 percent today, and Compaq plunged almost 15 percent. As Suzanne Pratt reports, investors are betting that the $24 billion deal will fall apart.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: With the fate of the Compaq-Hewlett Packard merger now in doubt, investors used today to take a closer look at the stocks of both companies. Shares of Compaq fell $1.62 amid concern that the deal is dead. Since August 31, the last trading day before the agreement was announced, Compaq stock has lost about 20 percent. Experts say investors are worried that as a stand-alone company, Compaq will face many hurdles. And those concerns will be reflected in the shares.

ANDREW NEFF, BEAR STEARNS: I don't see a lot of movement either way. We see that Compaq will probably be in a $7 to $10, $7 is its book value. It's a cushion at the bottom, $10 seems like some upside.

PRATT: Meanwhile, HP shares lost about a half a dollar, as investors bet that prospects for the printer and PC maker are better than they are for Compaq. Since early September, HP stock has treaded water.

GEORGE ELLING, COMPUTER ANALYST, DEUTSCHE BANC ALEX. BROWN: In Hewlett's case, they do have a strong presence in a lot of key markets. They're the dominant factor in printing. It's an annuity stream business. I think it's a very attractive business, and they have a huge customer base in computers. So I think that they have an opportunity over time to move back up.

PRATT: As for whether the deal will ultimately happen, it depends on who you ask. While there's been little enthusiasm on Wall Street for the pairing, a few experts think institutional shareholders will eventually come to their senses, realizing that a combined company has greater earnings potential. But others say the combo will never happen, at least not in its current form.

NEFF: Our sense about what happens here is that you're probably going to see some move to try and restructure the transaction to the institutional community and to the families, something possibly where they try and make an enterprise company and a PC company. That may be too complex, or they'll just go their separate ways.

PRATT: Experts say whatever happens next on this deal, it will probably happen fairly quickly. That's good news for shareholders of either stock, because more than anything, investors loathe uncertainty. Suzanne Pratt, "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.

12/10/01: The Economic Stimulus Package Has Congress Stuck In Park

SUSIE GHARIB: Key lawmakers are heading back to Washington this week for what's likely to be a make or break moment for the economic stimulus package. Analysts say after a weekend of political posturing, Congress is running out of time to get serious. Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: There were no negotiations today, as both sides continued to play the blame game. Republicans say Democrats are delaying legislation,insisting any deal on economic stimulus must be backed by a large majority of Senate Democrats.

SEN. TRENT LOTT, MINORITY LEADER: There are those that are not getting the assistance they need, and those that could be buying equipment and creating jobs that are not getting the assistance that they need, so delay is denial.

GERSH: Democrats fired back that House Ways and Means Chairman Bill Thomas canceled weekend talks to attend a fund-raiser in California. Analysts say it's not surprising to see the last-minute political chest thumping before the real deal-making begins.

RICHARD GRAFMEYER, TAX LEGISLATION DIR., ARTHUR ANDERSEN: This is Washington, and many times what appearances are up front aren't necessarily what's going on behind the scenes, and I think we'll know in the next few days, at least from the Washington perspective, whether people really want a deal, or whether they are going to run for the exits.

GERSH: Still, with 1.2 million more people out of work since the recession began, most observers are betting Congress will approve a large package of tax cuts and unemployment assistance before Christmas.

TOM GALLAGHER, POLITICAL ANALYST: Politicians are fundamentally risk adverse, so they don't want to be blamed for blocking the stimulus package. The economic outlook is still uncertain. You can't be confident of recovery next year, so I don't think either party wants to run the risk of being blamed by voters for a poor performance in the economy next year.

GERSH: But when it's time for the annual reading of "The Night Before Christmas" at the White House, there is no time left for another delay.

GALLAGHER: If they don't get serious in the next day or two, and I think it is down to that short a period of time, then there will be increasing talk of pushing this off to January, and then we can all probably assume those are code words for "let's forget about this and move on to other issues."

GERSH: Economists are still banking on the Federal Reserve to do most of the work in coaxing the economy out of recession, but believe a fiscal stimulus package, if it happens, would certainly help. 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.

12/10/01: David Jones Of Aubrey Lanston Predicts Rate Reduction #11

SUSIE GHARIB: Our guest tonight expects the Federal Reserve to cut interest rates by a quarter percent tomorrow. Joining us live from Midtown Manhattan: David Jones, chief economist for Aubrey Lanston. Hi, David.

DAVID JONES, CHIEF ECONOMIST, AUBREY G. LANSTON: Nice to be with you, Susie.

GHARIB: Nice to have you on again. When you were on the last time before the last meeting in November, you said that you were expecting a half a point cut by the Federal Reserve. You were right about that. And you said that that would be the last cut for the year. Now you're talking about a quarter point cut tomorrow. What's changed in your thinking? What happened in November?

JONES: I should have quit while I was ahead, Susie. It's clear this economy is still much weaker than certainly I expected, most anyone else expected. We've had a number of Fed officials who have talked about the fact there is no evidence that the recession is ending, no evidence that recovery is beginning. I think the Fed simply has to go with the news, which is negative on the economy. I think we'll see a quarter point at the December meeting, and I think we may see another quarter point cut down to 1.5 percent. I never dreamed we could get that low, perhaps in early January.

GHARIB: Do you think that the Federal Reserve policy makers will change their statement that they send out accompanying the cut? Will there be anything different than what they've been telling us the last couple of meetings?

JONES: I don't think so, Susie. I think they'll still say that the balance of risks are weighted toward conditions that could generate economic weakness, a story they've been telling us since last December. And really not much has changed. It's true we've seen some data a little bit stronger in terms of factory orders. Some of the purchasing managers' numbers are a little stronger. But those employment data we just saw for November were terrible and so far this economy has bogged down. The best the Fed has been able to do is just keep us from getting even deeper in recession.

GHARIB: What's going on that the economy is not turning around? You just heard the story that Darren Gersh reported out of Washington about the stalling on the economic stimulus. Do you think if we had gotten an economic stimulus package by now things would be better with the economy?

JONES: If ever we needed an economic stimulus package from the budget side, it's now, and it's, I would almost call it a national disgrace that Congress is bickering again in a very partisan way over this issue. We need some tax cuts for middle and lower income people. We need an accelerated depreciation or some kind of an investment tax credit for spending on new equipment. I don't care if we throw out this question on the corporate minimum tax. Maybe we should leave that for another time. But we need a combination of tax cuts and spending to complement monetary policy to give us a chance to start recovering by the second quarter of next year.

GHARIB: David, if we don't get an economic stimulus package, what kind of recovery, what happens to all the forecasts for the recovery by the second half of next year?

JONES: Well, I, even with both fiscal and monetary stimulus, I see a kind of a U-shaped, or, I should say, a W-shaped recovery. We may have a decent second half 2002 because businesses will start restocking inventories after drawing them down. But we may not see significant corporate investment in new structures and equipment until the second half of 2003. That would be the second leg of the W.

GHARIB: All right, David, real quickly, we just have a little bit of time left. Can you give us your 2002 forecast? Where do you see Fed funds rate next year by the end of 2002? And at what rate do you think the economy is going to be growing?

JONES: Well, I think we'll be seeing about a two percent level for the Fed funds rate, the same as right now. But, of course, as I said, I'm looking for another couple of quarter point cuts. I think the Fed would take back those cuts later next year if we do start to see recovery. But two percent is a still very low funds rate. They may keep that for some time to come. And I think we're talking about two percent growth next year, perhaps, maybe 2 ½. That's a very weak growth rate for hopefully a recovery.

GHARIB: All right, so by your forecast still difficult times ahead?

JONES: That's right.

GHARIB: Thank you very much, David. We appreciate you talking to us and coming in for this.

JONES: Thank you, Susie.

GHARIB: We've been speaking with David Jones, Chief Economist for Aubrey Lanston.

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.

12/10/01: REIT's Are Building Big Profits For Investors

SUSIE GHARIB: This could be the year of the REIT. Despite a troubled economy, many real estate investment trusts are turning healthy profits and their stocks are trading at all time highs. As Diane Eastabrook reports, some industry watchers are confident that REITs will continue to roll.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: By the middle of next year, this construction site will be the Chicago International Produce Market. By 2003, this empty field near O'Hare Airport will house an 800,000 square foot air cargo facility. Both projects are being developed by Centerpoint Properties (CNT), a suburban Chicago real estate investment trust or REIT. While these ventures may seem risky in a slumping economy, Centerpoint believes they aren't.

JOHN GATES, PRESIDENT & CEO, CENTERPOINT PROPERTIES: We tend not to take speculative risks. We do not build empty buildings. So we will not begin anything until these projects are pre-leased and we know who is going to pay them, who is going to occupy them and how much they're going to pay.

EASTABROOK: Analysts say Centerpoint is an example of how the real estate industry has changed in the past decade. They say as more private real estate development firms became public REITs, managers cleaned up corporate balance sheets, paid off debt and stopped overbuilding property. Analysts say that kind of discipline is now paying off. The Morgan Stanley REIT Index is up 12 ½ percent this year, while both the S&P 500 and the Dow Jones Industrial Average are in a slump.

WILLIAM CAMP, REIT ANALYST, A.G. EDWARDS: REITs are showing positive returns and growth in earnings. Even next year, going into a, you know, a slowdown in the real estate markets, we are going to see positive growth in, across the board in REITs.

EASTABROOK: Camp currently favors Industrial, apartment and storage REITs. He thinks hotel and retail REITs could struggle in a stagnant economy. Tony Manno manages a REIT mutual fund and says many REIT stocks are pricey now, but he's confident he will find buying opportunities in the coming months.

ANTHONY MANNO, MANAGING DIRECTOR, SECURITY CAPITAL RESEARCH & MANAGEMENT: We concentrate on 20 to 25 names that we believe will produce the highest rates of return and we see some very attractive opportunities there today.

EASTABROOK: Last year many REITs saw their stocks run up in price in the fourth quarter only to watch them fall back again in January when large institutional investors sold off shares. Analysts say that could happen again next month and could provide an excellent buying opportunity for retail investors. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

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.

12/10/01: Commentary: The True Timing Of A Recession

SUSIE GHARIB: Tonight's commentator has a perspective on recession that not everyone wants to hear. Here's John Makin, resident scholar of the American Enterprise Institute.

JOHN MAKIN, COMMENTARY: When the National Bureau Of National Economic Research announced recently the recession began last March, many commentators took it as a virtual guarantee that since the average post-war recession lasts about a year, this recession would be over at least by next March. That's probably not right, but it is understandable in the terms of the economic history of the past 20 years. From 1982 to 2000, virtually a generation, there were only six months of recession in a long bull market. Little wonder that most Americans have concluded that the normal state of the world is growth and a rising stock market. That is probably why last year at this time when the slowdown began, it was expected to be over in six months time. September 11 has clouded the picture, since those who called for a second half recovery say that it would have occurred were it not for the terrorist attacks. That's not really correct. We were on track for a recession with or without September 11. The attacks just caused a sharp plunge in activity. The subsequent bounce back from that plunge has been mistaken for a sustainable recovery. A steady rise in unemployment and falling consumption will probably mean a recession that lasts at least until the second half of next year. Assuming that an early end to the recession is inevitable when it is not only increases volatility in the stock and bond markets and causes households to spend money they don't have. Over the last three months, spending growth has far exceeded income growth. The spending surge without income is a clear message that the bullish generation needs to be a little more cautious about assuming that recessions are over as soon as they are recognized. I'm John Makin.

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.

PAUL KANGAS: Stocks on Wall Street opened modestly lower as investors, for the third straight session, locked in some of the nice gains made over the last two months, due to concern that the market had gotten a bit ahead of itself in relation to an economy still fraught with problems. At 10:00 a.m., the Dow Industrial Average was Down 26 1/2 points, the NASDAQ Index posted just a 5-point loss. After a feeble rally attempt failed, stocks spent the rest of the morning and early afternoon in a slow downward spiral, caused partly by selling linked to year-end tax considerations and portfolio adjustments. At 2:00 p.m., the Dow sank to a 93-point deficit, NASDAQ was down 18 points. The market slide accelerated for the rest of the session, on growing concern about asbestos litigation and the Enron (ENE) debacle. The Dow Industrial Average fell to a closing loss of 128.01 points, or 1.3 percent, now standing at 9921.45. The NASDAQ Index fell 29.14 points ending at 1992.12.

Big board volume down just a touch from Friday, almost 1.2 billion shares traded and almost a 3 to 1 ratio, a little a 3 to 1 ratio of down volume over up volume.

The Dow Transport Index down nearly 29 1/4 points.

Utilities off 4 1/10 points.

The Closing Tick practically neutral at -47.

Standard & Poor's 500 off 18 1/3 points.

S&P 100 down just over 10 1/2.

A 7 1/3-point drop on the MidCap 400.

Bridge Futures Price Index down just about a point.

A loss of nearly 9 on the New York Composite.

Almost a 5 1/2-point drop on the Value Line.

Russell2000 Small Cap Index lost just over 7 points.

And the broadly based Wilshire 5000 losing almost 162 points, or 1 1/2 percent.

The bond market ended a three-session losing streak with a solid rally which was partly an overdue technical rebound, but which was also caused by safe haven buying in reaction to the steep sell-off in the stock market and a drop in oil futures. Also helping was an overriding optimism that the Federal Reserve will decide to cut interest rates by at least a quarter percent at tomorrow's meeting.

Tax-free and corporate issues rose a quarter to a half point on average.

And the Treasury market gained across the board.

The 5-year notes rising 11/32.

The 10-year notes up 15/32.

The 30-year bond gained 20/32.

But interestingly, the Lehman Brothers Long-Term Treasury Bond Index was down 4 2/3.

Well, it was so long 10,000 Dow, at least for today, as the Industrial Average fell 128 points, down to the 9,921 level. The broader market definitely lower, by a 21 to 9 margin negative, and 69 new yearly highs, 48 new lows.

Halliburton Company (HAL) stock topped the active list on 44.8 million shares. And you'll recall last Friday that stock tumbled $8.85 on a $30 million jury award against the company in an asbestos case. But today Haliburton says asbestos claims will not have a significant impact on the company's financials or operations. It has substantial insurance coverage and it's going to appeal these cases and could win. Frost System repeated a "buy" recommendation on the stock.

Compaq Computer (CPQ), you heard the news there, down $1.62.

Calpine (CPN) fell $3.58. It traded as low as $15.90. Morgan Stanley downgraded it from "strong buy" to "neutral." After the market closed, however, the company hosted a conference call to address what it calls the inaccuracies it says were in a "New York Times" article about it today.

AOL Time Warner (AOL) down $1.98. Robertson Stevens Brokerage cut fourth quarter and 2002 earnings estimates.

Pfizer (PFE) dropping $1.76. Bayer's new importance drug called Verdenifil (ph) has apparently produced results that match or exceed Pfizer's Viagra pill.

General Electric (GE) down $0.35.

Viacom A (VIAb) down $4.09. The company says it has no news, negative news about any potential asbestos liability it might have but Kaufmann Brothers Brokerage downgraded it from "strong buy" to "accumulate" anyway.

Hewlett-Packard (HWP) down $0.52.

NorTel Networks (NT) a loss of $0.56.

And Georgia-Pacific (GP) down $1.52. That stock was down $4.80 last Friday on asbestos liability concerns.

AES (AES) down $1.75. Lehman Brothers downgraded it from "buy" to "market perform."

ChevronTexaco (CVX) off $1.10, reflecting a weakness in oil prices today. January futures in New York down $0.67 a barrel.

General Motors (GM), weak auto group, down $1.25.

News Limited (NWS) off $0.41. The company denies reports that it might make a hostile buyout bid for Germany's big media company called Kirsch Group.

And Sealed Air (SEE) down $4.22. The story here, concern about recent insider selling and also asbestos liability.

Stanley Works (SWK) up $2.17. First Boston upgraded it from "hold" to "buy."

UICI Incorporated (UCI) up $1.20, a financial services business. A big percentage gainer on the New York. The company had no news. It could be a technical rebound. It was down sharply last week.

Mohawk Industries (MHK) up $3.13. The carpet maker increased fourth quarter earnings guidance from $0.74 to $0.90 to $0.95 a share. Standard & Poor's upgraded it from "accumulate" to "buy."

Acuity Brands (AYI) down $2.28, the biggest percentage loser in the big board. Now, this is the company that is the result of National Service Industries (NSI) spin-off of its lighting fixtures and specialty chemicals units. The stock had a run-up from late November until just recently, as high as 14. Could be a little profit taking.

Reliant Resources (RRI) down $2.14. Morgan Stanley downgraded it from "strong buy" to "neutral," the casualty of the Enron (ENE) story.

And Fleetwood Enterprises (FLE) off $1.21. A second quarter loss of $0.38, way up from the $0.10 loss last year. Revenues tumbled 21 percent.

GTECH Holdings (GTK) down $3.45 despite higher third quarter earnings of $0.79. The company also said a $75 million stock buyback. Standard & Poor's blamed the weakness on potential earnings dilution from a convertible bond issue.

Nasdaq trading, down a little over 29 points. Volume well down from Friday at 1.67 billion shares. For every 13 stocks