SUSIE GHARIB: Good evening, everyone. Wall Street ended a shabby week on an upbeat note. The Dow rose 44 points, and the NASDAQ gained 6. But despite today's positive finish, investors are still nervous about the same old worries: the economy and earnings. And they got plenty of warnings this week from blue chip companies. As Suzanne Pratt reports, experts say investors have good reason to worry.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: In about two weeks, many US companies will close their books on the fourth quarter and say good riddance to a year that most would like to forget. According to First Call, fourth quarter profits for S&P 500 firms are likely to decline on average about 22 percent from a year ago. That follows a similar drop in the third quarter and marks the fourth straight quarter of negative earnings growth, but not the last.

CHUCK HILL, RESEARCH DIRECTOR, FIRST CALL: The first quarter will certainly be down as well. That will make five. The second quarter could go either way. It's too close to call right now.

PRATT: Even though it may appear to many on Wall Street that the worst is over, some experts say that's not the case. They explain that fourth quarter 2000 was so weak that the current quarter is benefiting from an easy comparison. To top it off, a near record pace of earnings warnings in the fourth quarter also suggests a profits recovery is still far off. So far, 486 companies have red-flagged upcoming profit statements. That's roughly the same for this time in the first, second, and third quarters of this year.

HILL: If we're going to be looking at an upturn even as soon as the second quarter of next year, then I think you've got to soon start seeing some deceleration in the level of warnings, because you don't go from record levels back to normal overnight.

PRATT: As for what investors are counting on in terms of a profits recovery, most are hoping for one to start sometime in the spring. Experts say that timetable is already factored into stock prices and worry investors are being too optimistic.

BARRY HYMAN, CHIEF INVESTMENT STRATEGIST, EHRENKRANTZ KING NUSSBAUM: We do believe the market has gotten ahead of itself and it needs to take a breather here until the mid-first quarter of 2002, when we can start looking forward to really more definitive economic and earnings numbers.

PRATT: Corporate America has not experienced four straight quarters of negative profit growth since the '91 recession. And there haven't been five consecutive quarters since the recession of '69 and '70. 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.

12/14/01: Congress Argues Over Insurance In The Economic Stimulus Plan

SUSIE GHARIB: In Washington, negotiations will work through the weekend on Capitol Hill, trying to agree on an economic stimulus package. Part of that package includes health insurance for the unemployed. As Darren Gersh explains, it's one of the issues where Democrats and Republicans are deeply divided.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: A few months ago, computer programmer Dave Chandler was making $89,000 a year, but he was laid off in August. The paychecks have stopped coming, but the bills for the health insurance he and his wife count on, more than $7,000 a year, keep coming.

DAVE CHANDLER, UNEMPLOYED COMPUTER PROGRAMMER: It's more than my rent. But we need to have coverage. We can't let it lapse.

GERSH: Under federal legislation known as COBRA, unemployed workers like Chandler can keep their employer-provided health insurance as long as they pay all the premiums and a small administrative fee. But Consumers Union health policy analyst Gail Shearer says many workers are losing their jobs just as their health care costs are going up.

GAIL SHEARER, HEALTH POLICY DIR., CONSUMERS UNION: Health insurance premiums are increasing at a double-digit rate. When you combine all these factors, we're really concerned that we could see a great increase in the number of uninsured people.

GERSH: COBRA coverage is a key sticking point in the debate over an economic stimulus plan. Democrats are pushing for a tax credit to help unemployed workers pay 75 percent of their COBRA premiums. Republicans have offered a tax credit the unemployed could use to pay 50 percent of their COBRA premiums or to buy their own health insurance. Shearer worries giving tax credits to help the unemployed shop for individual policies will raise health care costs for employers.

SHEARER: What it will do is undermine the employer-based health care system and take healthy people out and let them buy individual policies, but really it's not going to help people who have chronic illness, people who are older.

GERSH: But health care policy analyst Joe Antos says even with a subsidy, employer-provided insurance may still be too expensive.

JOE ANTOS, HEALTH POLICY ANALYST, AMERICAN ENTERPRISE INSTITUTE: If you have more flexibility, many people are going to be able to find better alternatives in the private market.

GERSH: Just 7 percent of unemployed workers are eligible for and take advantage of COBRA insurance coverage. To help the rest, Congress is considering expanding Medicaid or making emergency grants to states. 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.

12/14/01: California's New Power Payment Plan

SUSIE GHARIB: Well, what a difference a year makes. In California a year ago, electricity prices were soaring, supplies were dropping and the state was hit with rolling blackouts. Things are quite different now. But as Pat Anson reports, consumers are still paying the price.

PAT ANSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: A year ago, Californians were being urged to conserve electricity by turning off their Christmas lights.

UNIDENTIFIED MALE: Ho ho ho! Merry Christmas!

ANSON: This year the lights are back on again, but the Grinch that darkened the holidays last year still lingers, in the form of long-term power contracts. The contracts are forcing the state to buy high priced electricity it doesn't need and resell it at a loss.

DOUG HELLER, FOUNDATION FOR TAXPAYER & CONSUMER RIGHTS: This is a comedy of errors, and I don't think Laurel and Hardy could have done better. Because at every point we have fallen on our face. We have stepped on the rake and the only difference between this and watching some old comedy is that it's going to cost Californians $50 billion to $60 billion in higher electricity rates.

ANSON: At the height of the power crisis, the state signed over 50 long-term contracts with energy suppliers, paying an average price of $75 a megawatt hour. The state is now reselling much of that power for about $16 a megawatt. Conservation, increased supply and the elimination of a power trading system that many feel was being manipulated have turned the power crisis into a power glut.

DOUG CHRISTOPHER, ANALYST, CROWELL, WEEDON & COMPANY: I would agree there was some element of manipulation in the trading element of the power business. We've never had a power shortage in California. If anything I think that we'll see that we have over the next three to five years more than enough power.

ANSON: Next spring when electricity demand falls in California, the state estimates nearly 60 percent of its power purchases will have to be resold at a loss. The surpluses will continue for the next several years, reaching their peak in 2004. The state is now trying to renegotiate the power contracts, but so far no supplier has agreed to lower its prices.

CHRISTOPHER: You've got power companies that made billions of dollars off California's pain and they did it by convincing our leadership in the state that if we didn't pay the money, we were in a lot of trouble. It's like a mafia relationship.

ANSON: Holiday lighting in California consumes an enormous amount of electricity, about the same amount of energy produced by a nuclear power plant. The irony for Californians is that whether they use that power or not, they'll still wind up paying for it. Pat Anson, NIGHTLY BUSINESS REPORT, Los Angeles.

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.

12/14/01: Market Monitor-Thomas J. Herzfeld, President of Thomas Herzfeld Advisors

PAUL KANGAS: My guest market monitor this week is Thomas J. Herzfeld, President of Thomas HerzfeldAdvisors. That's a Miami Florida based firm which specializes in closed end funds. And welcome back, Tom.

THOMAS HERZFELD, PRESIDENT, THOMAS HERZFELD ADVISORS: Thank you, Paul.

KANGAS: You know, every time that we invite you to come on the program you always say that you would prefer to come in the month of December. Why is that?

HERZFELD: It's a seasonal phenomenon. The discounts on closed end funds get very wide in December due to year end tax selling.

KANGAS: Tax selling drives them down to discounts?

HERZFELD: Yes.

KANGAS: What kind of discounts are we looking at? What is the benchmark percentage below net asset value that starts attracting you to buy these things?

HERZFELD: Narrower this year than in the past. We're looking at 15 percent discounts versus an average of 10. A year or two ago we might have been looking at 25 discounts versus 20.

KANGAS: Now for some of our viewers that may not be familiar with closed end funds, just give us a brief description as to how they vary from regular mutual funds.

HERZFELD: Quite similar to mutual funds except they trade on the stock exchange like ordinary stocks.

KANGAS: And then they have a set capitalization, a set number of shares out. They don't constantly sell new shares like regular mutual funds?

HERZFELD: That's where the word closed end comes from. It's a closed structure.

KANGAS: OK. All right, now, last year when you were with us in December, of course, you picked out some real winners. Now, the proviso is, though, that you don't hold these things very long, do you?

HERZFELD: We're aggressive traders and we hold them for a month or two.

KANGAS: Whenever they move to a premium or something better than what you paid for them?

HERZFELD: If the discount narrows, we sell them. If the premium expands, we sell them. But we're traders.

KANGAS: Well, let me give some examples. You recommended MVC, which is meVC Draper Jurvetson Fund (MVC), last year when you were with us on December 22. It was around $10. You said it would probably get up in January or February, maybe at a 25 percent rise from there. And it did.

HERZFELD: Yes, it did.

KANGAS: And the same thing happened with Van Camp (ph) and Municipal Trust, Latin American Equity Fund, Emerging Markets Telecom. All four did just exactly what you said. But when they get to a premium, do you short these things?

HERZFELD: We do short them. It's not always easy to borrow the stock. But if the premiums are excessive, we do sell them short.

KANGAS: But this is a pretty dependable cycle that you go through every year, is it?

HERZFELD: This kind of analysis is somewhat predictable and when the discount becomes excessive we buy them. When it narrows we sell them. When they go to premiums we short them.

KANGAS: Well, tell us about some that are selling at discounts that make them attractive in your opinion.

HERZFELD: Well, at this time now it's going to be a late season for year end tax selling. We're beginning to see some opportunities. I have three or four I could mention to you now.

KANGAS: Yes, please.

HERZFELD: We won't really publish our year end buy list until a week from now. But today these are the ones we were buying. We were buying MFS Special Value. You mentioned that on the air.

KANGAS: Just Thursday, I think it was.

HERZFELD: There was a press release from the Fund that I think was a bit confusing. I don't think the wire services got it quite right.

KANGAS: OK.

HERZFELD: The stock fell from $16 a share to below $10. I think there's --

KANGAS: Right, I remember that.

HERZFELD: I think the stock will bounce a few points now and then perhaps better into the --

KANGAS: What's the trading symbol, Tom?

HERZFELD: Mary, Frank, Victor, MFV.

KANGAS: OK. All right, let's have a number two.

HERZFELD: Well, the same one as last year, MEVC Draper Jarveston.

KANGAS: That's a high tech fund, isn't it?

HERZFELD: Well, they invest in Internet companies and the stock is trading at $9 with a net asset value of about $15 and there's $9 a share in cash in the company.

KANGAS: I suppose sometimes you wish that some of these companies would liquidate at net asset value. You'd make a big jump.

HERZFELD: Well, that -- many people trade on, for just that event.

KANGAS: OK.

HERZFELD: It's not always a solution. Sometimes you're better off trading them than just than having them liquidated.

KANGAS: OK. What's the symbol on MEVC?

HERZFELD: Mary, Victor, Charlie.

KANGAS: OK. we have time for two more.

HERZFELD: Well, two income funds, Nuveen Senior Income Fund, NSL. It's trading at its low of the year at about a nine percent yield.

KANGAS: So this is a bond fund, then?

HERZFELD: Yes.

KANGAS: OK.

HERZFELD: And ACM Income Fund (ACG). ACG is the symbol.

KANGAS: OK.

HERZFELD: They're just finishing a rights offering. I think the pressure's off.

KANGAS: OK, buy them in December and sell them in January or maybe February when they get to a nice premium.

HERZFELD: Exactly.

KANGAS: OK. Thanks very much, Tom. Appreciate it.

HERZFELD: Thank you, Paul.

KANGAS: My guest, Thomas J. Herzfeld of Thomas Herzfeld 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.

12/14/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Wall Street's blue chip stocks opened slightly lower in an extension of yesterday's 128-point drop in the Dow Industrial Average as the torrent of corporate earnings warnings unnerved many investors who had been hoping that an economic comeback was in the offing. At 10:30 this morning, the Dow was down 15.5 points but the NASDAQ Index was off only one point. The market spent the morning in a very narrow trading range as many investors moved to the sidelines to await more signals about where the economy might be headed. Today's report of no change in November consumer prices was about as expected and had little impact. Midway through the noon hour, the Industrial Average was down about a half point and the NASDAQ Index was up a third of a point. Given the dullness of the market, traders figured most of the selling had been wrung out for the moment, so they turned to the buy side in afternoon trading. There was also some optimism that we might make significant progress in the Afghan War over the weekend. These factors helped the Dow Industrial Average move to a closing gain of 44.70 points, putting it at 9811.15. The Dow rose twice and fell three times this week, but it still lost 238.31 points, that's 2.4 percent. The NASDAQ Index eked out a gain of 6.66 today ending at 1953.17. For the week, it fell 68.09 points, or 3.4 percent.

Big board volume today down a bit to 1.3 billion shares and about a 7 to 6 ratio of up volume over down volume.

The Dow Transport Index managed to gain just over 23 points.

Utilities down 1.28.

And the Closing Tick just barely bullish at +176.

Standard & Poor's 500 up 3.69.

A little over 1 3/4-point rise in the 100.

The MidCap 400 up just over 4 points.

Bridge Futures Price Index gained 3.09.

A gain of 1.88 in the New York Composite.

A gain of 1.62 in the Value Line.

Russell2000 Small Cap up about 2 2/3 points.

And the broadly based Wilshire 5000 gained about 34 2/3 points.

The bond market sold off rather sharply in reaction to that consumer price number, not the flat overall rate, but a 0.4 percent rise in the core rate which excludes food and energy. Another negative was a record drop in business inventories in October and a smaller-than-anticipated 0.3 percent decline in November Industrial production, all of which hinted the recession may be close to a bottom and so, too, interest rates.

Tax free and corporate issues lost anywhere from 3/8 to 5/8 of a point on average.

And the Treasury market was pretty hard hit.

The 5-year notes down 16/32.

The 10-year notes down 28/32.

The 30-year bond dropped 1 3/32.

And the Lehman Brothers Long-Term Treasury Bond Index down just over 3 1/4 points.

KANGAS: Not too much damage to the markets today, Susie. As a matter of fact, that late rally helped things out considerably, up 44 and nearly 3/4 of a point on the Dow and advancing issues had a nice 17 to 13 lead over decliners. But four new yearly lows, four more new yearly lows than new highs.

Lucent Technologies (LU) topped the active list on 29 1/2 million shares, down $0.41. UBS Warburg Brokerage widened its estimate of the company's 2002 loss from $0.36 a share to $0.46 a share in the red.

Calpine (CPN) down $2.85. Moody's Investors Service cut the company's unsecured debt to junk bond status today.

General Electric (GE) moved up $0.60.

Qwest Communications (Q) rising $0.53, a little rally there after weakness in the last few days.

Pfizer (PFE) down $0.06.

A $0.07 gain in NorTel (NT).

Citigroup (C) down $0.76.

AOL Time Warner (AOL) moved up, or fell down $0.31 even though Goldman Sachs said at this price it's a compelling "buy."

Bristol-Myers (BMY) moved up 1 full point after Prudential Securities upgraded it from "hold" to "buy."

And J.P. Morgan Chase (JPM) down $1.05. That was the biggest point loser in the Dow Industrial Average.

Circuit City (CC) had a good day, up $2.16 after Bank of America upgraded it from a "market perform" to a "buy" rating.

Darden Restaurants (DRI), which owns Red Lobster and all of Darden Restaurant chains, came in with very good second quarter earnings, $0.30, up from last year's $0.24, and $0.02 above the Street estimate.

Disney (DIS) down $0.63 a share. Merrill Lynch cut earnings estimates there.

Home Depot (HD) up $1.81. That was the best point gainer in the Dow.

ITT Industries (ITT) fell $0.89. The company is going to lay off 3,400 workers. That's eight percent of the workforce.

And finally, McDonald's (MCD) gained $1.07 after the company said it sees fourth quarter earnings right in line with estimates at $0.34 a share.

Maritrans (TUG) up $2.05. The board of directors has approved a Dutch auction tender offer for up to two million of the company's shares at a price between $11 and $12.50 per share.

James Hardie Industries (JHX) rising $1.50. That stock's been strong since Wednesday when the company announced that it acquired its rival building materials firm, Semplank.

And then FTI Consulting (FCN) up $3.01. The company Wednesday declared a 3 for 2 split. No other news I saw since then.

Pediatrix Medical (PDX) rising $3 a share. The company has settled a securities class action suit for $12 million in cash and then went on to reaffirm its 2002 earnings guidance at $2.30 a share to $2.40 a share.

Mirant (MIR) down $2.65. Liquidity concerns there, although the company said it expects to end this year with about a billion dollars in cash and a credit line up to that amount.

And Dynegy (DYN) down $1.64. Same worries about liquidity there. And, indeed, after the market closed, Moody's downgraded some of this company's debt.

Nasdaq trading, a gain of 6.66 in the Index today, but for the week, as you heard, down 68 points. Trading volume down a little below 1.9 billion shares and just about a stand-off between gainers and losers, 46 more on the up side.

Amgen (AMGN) topped the active list, down $4.16. As we mentioned, after the close yesterday the company was reportedly in talks to acquire Immunex (IMNX) and apparently they are and the price is somewhere around $18 billion. A lot of investors feel that's too much.

Intel (INTC) was up $0.70.

Microsoft (MSFT) gained $1.17.

Cisco Syste