Return to Transcripts main page
Lou Dobbs Moneyline
Dow Climbs 43.46 to 10,910.44; Nasdaq Falls 27.77 to 2,128.86; Boeing to Move Headquarters to Chicago
Aired May 10, 2001 - 18:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WILLOW BAY, CNN ANCHOR: Boeing takes off, bound for its brand new home base.
This is MONEYLINE for May 10, 2001.
Which city won over America's biggest exporter? Sorry Denver, sorry Dallas. Boeing lands in Chicago.
A breakthrough for investors, but more importantly, for some victims of leukemia: the FDA OKs a powerful new drug from Novartis. We'll hear from the CEO.
And, has Kraft built a better Oreo? The first new version of America's favorite cookie in a decade.
ANNOUNCER: This is MONEYLINE. Reporting tonight from New York, Willow Bay.
BAY: Welcome to MONEYLINE.
We begin tonight with the much-anticipated decision by Boeing. The company whose name is synonymous with Seattle today christened a new era, choosing to move its headquarters to Chicago. The news is a big win for the city, and a stinging blow to the runners up: Denver and Dallas.
Lisa Leiter reports from Chicago on today's cliffhanger.
(BEGIN VIDEOTAPE)
LISA LEITER, CNN CORRESPONDENT (voice-over): Boeing's flight plan: Chicago, that decision came in a phone call to Illinois Governor George Ryan this morning from Boeing's chairman while in route from Seattle.
PHIL CONDIT, CEO, BOEING: He said, I've made my decision, we're going to Chicago. But in the end, it's my decision.
LEITER: The governor and Chicago Major Richard Daley rolled out the red carpet for its new corporate resident.
MAYOR RICHARD DALEY, CHICAGO: We're very excited and happy that you have selected the city of Chicago. LEITER: Boeing said choosing between Chicago, Dallas and Denver was difficult and no single factor made the difference.
JOHN WARNER, BOEING: All of those things that affect the quality of life, education, transportation, culture, recreation, climate. Many different factors. They all added up. It was a judgment call, looking at everything.
LEITER: Money may have also been a factor. Boeing could be eligible for up to $40 million in tax incentives.
GOV. GEORGE RYAN (R), ILLINOIS: These incentives are coming because Boeing is bringing new revenues to Illinois that would not otherwise have been available.
LEITER: The governor sighted an Arthur Anderson survey, saying Boeing will contribute $4 1/2 billion to the local economy over the next two decades.
Boeing said it will be settled into this downtown skyscraper along the Chicago River by September 4. And while the company plans to bring only 500 jobs to the Windy City, it also brings a lot prestige.
(on camera): Chicago has been waiting for news like this for 30 years. The last Fortune 500 company to move its headquarters to downtown Chicago was energy equipment company FMC in 1972.
Lisa Leiter, CNN Financial News, Chicago.
(END VIDEOTAPE)
BAY: Taking a look at Boeing stock today, it gained nearly a dollar, ending at 65.95, just a few dollars away from a 52-week high.
A bigger winner on Wall Street today, Novartis after the government gave its OK to a promising new cancer drug, Gleevec. The FDA approved the once-a-day pill that's been highly successful in treating a rare form of leukemia. The drug targets leukemia cells and leaves normal cells intact, what officials describe as a huge advance over damaging chemotherapy.
(BEGIN VIDEO CLIP)
TOMMY THOMPSON, HHS SECRETARY: If this does not sound like the same arduous chemotherapy regiment that one of your friends or loved ones have received in years past, that's because it is not. This oral drug is based on the concept of molecular targeting, and we believe such targeting is the wave of the future.
(END VIDEO CLIP)
BAY: Officials seemed impressed with the drug, and so did investors. Novartis stock gained $2.65.
Later on MONEYLINE, we'll talk about Gleevec's potential with the company CEO, Daniel Vasella.
Novartis was a big mover today in what was, otherwise, another lackluster session on Wall Street. While the Dow did snap a three- session losing streak, the Nasdaq slipped into the red.
The Dow up more than 100 at one point today, ended up less than half that at 10,910. The Nasdaq also rallied early on, but lost its footing, ending down 27 at 2,128. The S&P edged lower, ending at 1,255.
So why couldn't the markets maintain those early rallies? Susan Lisovicz joins us now from the New York Stock Exchange -- Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: The market stumbled because just as April was a month characterized by big moves, May has been defined by its narrow trading range. Despite positive news from different parts of the economy, one analyst said there's still no Brave New World awaiting investors.
(BEGIN VIDEOTAPE)
LISOVICZ (voice-over): Consumers ramped up their retail spending in April, and that cued investors to do the same at Thursday's opening bell. With the Federal Reserve's meeting on interest rates just three trading days away, Wall Street also found encouragement overseas from a surprise interest rate cut by the European Central Bank.
Both the Dow and Nasdaq logged early gains in the day on optimism also fueled by bullish comments about chip equipment makers, and the latest job market data, showing fewer Americans filed for unemployment benefits after a sharp gain the week before, but hopes for a return to April's big moves faded quickly.
LARRY WACHTEL, PRUDENTIAL SECURITIES: The market is simply not ready to make a major move, because it has made a major move. So the good news helped you move higher and then people looked around and said, I'm not going to chase this thing, because we've already moved a substantial way from the bottom.
LISOVICZ: That move took the blue chips within 21 points of the 11,000 level before the Dow advance faltered. And the Nasdaq rally fizzled completely, with the tech-heavy index closing down more than 1.25 percent.
Retail stocks, however, maintained their strength on positive forward guidance from the Gap, and sales that more than doubled expectations at Kohl's. Semiconductor equipment shares, including Applied Materials and Novellus, failed to hold onto their gains after an upgrade from Morgan Stanley Dean Witter. Market watchers say cautious optimism has replaced euphoria.
ARTHUR CASHIN, UBS PAINEWEBBER: We think some of these things might have been overextended. As we've said time and time again, what used to sell at 210 and now sells at 15, doesn't necessarily have to go to 200 again. It may just get back to 20.
(END VIDEOTAPE)
LISOVICZ: Despite incentives to buy, investors returned to a pattern we've seen a lot this week, a total lack of conviction. One trader said it felt like the summer doldrums, and to get used to it -- Willow.
BAY: Oh, dear, Susan Lisovicz at the Big Board, thanks.
Investors didn't see the incentive to buy, but consumers clearly did last month. And a first guest said today's solid report on retail sales is crucial, as long as consumer spending holds up. The U.S. economy could still have its soft landing.
Joining me now, Joshua Fienman, chief economist at Deutsche Bank.
Josh, welcome.
JOSHUA FIENMAN, DEUTSCHE BANK: Thanks, Willow.
BAY: Why do you think retail sales held up the way they did?
FIENMAN: I think the consumer has pulled back from the really strong growth rates we were seeing last year. They haven't thrown the towel completely. I think they're still underpinned by a tight labor market, although it is getting looser, and income gains that are still fairly solid.
BAY: How realistic is it to expect consumer spending to stay, you know, solid, given -- given what is a weakening job market, given that we report practically every day, companies laying off more workers.
FIENMAN: That's the biggest risk to the U.S. economy, that the labor market is losing steam very rapidly and that could feed back onto consumer spending and psychology. So, I think that's the biggest risk that the Fed certainly wants to guard against.
BAY: Where would you place the odds that consumer spending will stay OK at this point?
FIENMAN: I think it will be the most likely outcome, because we have interest rate cuts that are in the pipeline, we have tax cut that's coming. The inventory correction is largely behind us.
BAY: You think the Fed cuts and the tax cuts will at least keep consumers somewhat confident.
FIENMAN: Exactly.
BAY: What do you make of today's labor numbers?
FIENMAN: Well, that was mildly encouraging. Jobless claims, which have been on a steady uptrend, reversed that course a bit. There's only one week too early to say whether it's a new trend, but it's encouraging anyway that we didn't get another increase in jobless claims. BAY: One of the things that the market liked today early was a rate cut by the European Central Bank. First of all, how much will this help slowing growth in Europe?
FIENMAN: Well, I think it's part of a set of cuts that we will likely see from the ECB over the coming months. And it will help. Europe has been slowing.
BAY: But they were growing...
FIENMAN: They were growing less to begin with. Exactly.
BAY: Where are they headed?
FIENMAN: I think they're headed probably for a couple more quarters of sluggish growth, before the ECB's rate cuts get into the system, and...
BAY: And you expect the ECB to be aggressive.
FIENMAN: Not as aggressive as the Fed, but somewhat more aggressive than they've been.
BAY: Does the ECB's action take some pressure off the Fed, it's not carrying its weight entirely on its shoulders or not?
FIENMAN: Not really. I think the Fed's major concern is what is happening right here in the U.S. The ECB's move won't really have an impact there. So, I do expect the Fed to do more.
BAY: What do you expect specifically of the Fed. First of all, starting with Tuesday?
FIENMAN: I think the Fed will move again on Tuesday, maybe another 50 basis points.
BAY: And then after that?
FIENMAN: Maybe another 25 or 50 before they are done, before they start to see signs...
BAY: 25 or 50...
FIENMAN: In June, say.
BAY: In June. And then, after that?
FIENMAN: Then I think they may move to the sidelines. Because I'm hopeful that by then, the economy will show some signs of improving, the tax cut may be enacted, and they'll feel that they've done enough.
BAY: OK, fairly optimistic thinking. Thanks, Josh.
FIENMAN: Thank you, Willow. BAY: Next on MONEYLINE, a nightmare for drivers and for politicians. Surging gas prices, just one of the challenges the White House faces as it hashes out an energy policy.
It may look like a garden party, but it's actually a gathering of top executives. A live report from Business Council Meeting in Greenbriar.
And later: make way for the next generation Oreo.
(COMMERCIAL BREAK)
BAY: The House today retaliated against the United Nations voting to withhold back dues owed to U.N. until the United States is reinstated on the Human Rights Commission. The measure which passed the House overwhelmingly is meant in response to being kicked off that U.N. commission last week.
The House vote which passed 252 to 165 will hold up a $244 million pavement of back dues. The White House opposed the move because of concerns it might damage relations with world body.
The Senate also took a major step today approving the 2002 budget that was passed yesterday. Jonathan Karl followed the action on Capitol Hill and he joins us now with all the details.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Willow, that budget vote clears a major hurdle on the path towards enacting the tax cut that's at the center of George W. Bush's domestic agenda. And this vote was made possible by that handful of Democrats who defied their party leaders and handed the Republican president a significant victory. Chief among those Democrats was their ring leader, John Breaux of Louisiana.
(BEGIN VIDEO CLIP)
JOHN BREAUX (D), LOUISIANA: Is this budget a perfect document? Of course not. But does it advance the cause of governing in a democracy that is almost evenly divided among the two parties? I think the answer is, yes it does.
(END VIDEO CLIP)
KARL: The five Democrats who voted for the budget included in addition to John Breaux, Ben Nelson of Nebraska, Max Baucus of Montana, Max Cleland of Georgia, and Zell Miller also of Georgia. There were only two Republicans who voted no. They were Lincoln Chafee of Rhode Island and Jim Jeffords of Vermont.
Among the to Democrats denouncing today's vote as a disaster included the junior Senator from New York.
SEN. HILLARY CLINTON (D), NEW YORK: We're taking a U-turn back to the 1980s. And mark my words, we'll be back here, maybe under the same president, or maybe under a different president, having to fix the fiscal situation we're throwing our country in today. KARL: The budget resolution makes room for a tax cut of $1.35 trillion over the next 11 years. That's about $250 billion short of the ten-year tax cut that George W. Bush had originally proposed. But nonetheless, Republicans up here on Capitol Hill today portrayed today's vote as an unmitigated victory for the president.
(BEGIN VIDEO CLIP)
SEN. RICK SANTORUM (R), PENNSYLVANIA: This is a great victory for President Bush. The fact of the matter is, this would not be happening today had President Bush not gone out there and communicated to the American public the importance of doing this.
(END VIDEO CLIP)
KARL: And the Democrats, those five Democrats who voted yes may have been less concerned about the pressure from their party leaders than they were the pressure from their own constituents. All five come from states that voted overwhelmingly for Bush last November -- Willow.
BAY: Jonathan Karl on Capitol Hill, thank you.
Another item rising to national prominence: energy policy. With gas prices on the rise and a power crisis in California, Secretary Of Energy Spencer Abraham today headed to Capitol Hill. Kitty Pilgrim has the story from Washington.
KITTY PILGRIM, CNN CORRESPONDENT: Willow, it may not just be an energy crisis. It may also be a political crisis, and lawmakers are realizing that, if they don't address the high energy prices plaguing the nation.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): California got a cool breeze today, but Washington was feeling the heat. At the nation's capitol a flurry of activity, aimed at addressing the budding energy crisis, and potential political fallout if a solution is not found quickly. The topic invades the president, even in the most unlikely photo op.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm worried about energy prices.
PILGRIM: Senators Byron Dorgan from North Dakota, and Dick Durbin of Illinois, both Democrats, Thursday proposed a House and Senate task force on energy.
SEN. RICHARD DURBIN (D), ILLINOIS: No sooner did the warm weather arrive than the gasoline prices started to go up. In the last month the price of gasoline has gone up over 50 cents in the city of Chicago.
SEN. BYRON DORGAN (D), NORTH DAKOTA: The use of energy is not optional. It's mandatory for every family, every single day, and many of them can't afford what is happening to prices for home heating, for natural gas and electricity, and especially gas at the gas pump.
PILGRIM: The U.S. government says the average gas price in the country topped $1.70 per gallon for the first time, with Memorial Day weekend the traditional kick off to the summer vacation season, only a little more than two weeks away.
A deeper and broader solution will be compiled by Vice President Dick Cheney's task force, a report due out next week. It will focus on increasing energy supply, as well as conservation. Energy Secretary Spencer Abraham spent the day at the Senate Energy and Natural Resources Committee and projected what recommendations for action might be in the task force report.
SPENCER ABRAHAM, ENERGY SECRETARY: In some cases, I think it would be recommendations that call for action that can be taken by various agencies and departments in the government already, and in some cases it might be areas where the president could act by his own executive orders.
(END VIDEOTAPE)
PILGRIM: Now both parties are aware that it will take some time to change the basic infrastructure such as refining capacity and change conservation practices. But in the meantime, however, voters may take their frustration out in the voting booth -- Willow.
BAY: Kitty, how do members of Congress know that this is becoming an issue, a frustration for voters?
PILGRIM: Well it's a glaring point. The Gallup Poll the most recent one showed that 60 percent of people that they polled thought it was serious, the energy crisis was serious. Forty-seven percent said it was causing financial hardship and 58 percent said they would drive less this summer because of high gas prices. So it's becoming painfully obvious, Willow.
BAY: Kitty, thanks.
You can see the full interview with Energy Secretary Spencer Abraham on WOLF BLITZER REPORTS. That's at 8 o'clock p.m.
Coming up, we'll go live to Greg Clarkin at the Nasdaq marketsite, for a breakdown on a second straight losing session.
(COMMERCIAL BREAK)
BAY: In tonight's "Tech Watch": a closer look at today's Nasdaq action. The tech-heavy index started out with a 40-point gain, but investor enthusiasm didn't hold up. Our Greg Clarkin is there with the story -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: Hi, Willow, what we did see today was a fairly quiet day of trading. In the morning, the Nasdaq popped nicely. It was up more than 40 points at one point. Around mid-day, it gave back those gains and then drifted into negative territory and kind of finishing up the session in lows. Now, no big sector moves today. What we did see was some stocks, specific companies, specific news driving stocks. Let's take you back here to the wall and give you sample of some of those.
Let's start with the chip equipment companies. Today, six of those big names were upgraded by Morgan Stanley. A lot of those stocks popped nicely, then gave back some of those gains. As witnessed by the finishing results here, the Philadelphia Semiconductor Index, it was up just a fraction. But look at Lam Research, that was one of the beneficiaries of very kind words of Morgan Stanley's analysts there this morning. That stock hung on to its gains, finishing with 7 percent gain on the day, up $1.96.
Moving down to the software area: Oracle. Salomon Smith Barney's analyst trims their earnings-per-share estimates. Based, they say, on conservative comments from the company's management, they take them from 15 cents a share down to 13 cents a share, and that took some wind out of the stock. It was down about 4 percent on the day. The software index dropped about 2.3 percent. Willow, back to you.
BAY: Greg Clarkin at the Nasdaq. Thanks, Greg.
We have some breaking news that we'd like to tell you about, so we're going to go now to Gina London who is going to tell us about some developments in the McVeigh trial -- Gina.
GINA LONDON, CNN CORRESPONDENT: Willow, we've just confirmed here in Denver, where I'm a correspondent for CNN, that the District Court for District of Colorado, the court has been notified that the U.S. attorney sent a letter to Tim McVeigh's lawyers, saying that the FBI had just uncovered some information, some evidence that was not released during the trial.
Now, this is the court that actually did hear McVeigh's trial, of course, when he was sentenced to die, which is scheduled for May 16. We have not yet confirmed from his attorney, Nathan Chambers, here in Denver that they're going to file a motion on this, that there is a situation here where they may actually ask for a stay of execution.
BAY: So, Gina, the court discovered from the FBI that the FBI had withheld evidence?
LONDON: The FBI, as I'm understanding it right now, is not saying necessarily that it was withholding evidence, that it may have accidentally overlooked some. But in either way, it still does result in the same situation where if there's evidence that wasn't presented that's still in existence, we could have reason for a stay of execution.
BAY: At this point, do we know anything about the nature of the evidence?
LONDON: No, we do not yet know at this time if the evidence is perhaps duplicate documents that were already presented, or is it something new. We have heard, rather, that it is not anything that is favorable to McVeigh's case, but yet it still is something that could be enough for his attorney to actually ask for a stay of execution.
Now, this motion would be filed, we understand, here at this district court, where Judge Richard Matsch, who was the federal judge that actually heard the case, would actually be presiding over it.
BAY: So, at this point, we're waiting for a response from Timothy McVeigh's lawyers?
LONDON: That's absolutely correct.
BAY: And what options do they have available to them? Is it simply filing for a stay of execution?
LONDON: I don't know the legalities of it, as a matter of fact, Willow, but I do understand that is certainly one of their option. We have a call, as I mentioned, into him, and we should know more soon.
BAY: And a call into the FBI, are you expecting to hear anything from them?
LONDON: As well, we have a call into them as well, trying to get confirmation of what we're hearing right now, trying to find out what precisely was the evidence that may have purposely or accidentally been withheld, and also trying to find out what is the next course of action from McVeigh's attorneys.
BAY: Gina London, thank you very much for bringing this to us. Of course, you'll continue to keep us up-to-date as these developments come in.
We're going to go now to CNN's senior legal analyst Greta Van Susteren. Greta, what do you make of this?
GRETA VAN SUSTEREN, CNN LEGAL ANALYST: Well, it's extraordinary, Willow. These documents should have been turned over (UNINTELLIGIBLE). There are statements -- when FBI agents interview people, they take notes from them and they're supposed to be turned over so that the defense has a chance to review them and use them in cross-examination of any witness who may testify at trial.
Now, obviously, we're on the eve of this execution, and so Judge Matsch will have to make a decision, but it's not an insignificant one that these documents suddenly materialized on the eve of execution. So, this is certainly a significant development.
It may turn out that there's nothing in these documents, but when you're talking about the ultimate penalty and the judge having to make a decision, he's going to have to make -- and he's going to have to look at these documents and see that they're important. It would not surprise me if he issued an order putting -- suspending the execution date.
BAY: So, Greta, we're waiting now to hear some sort of response, first of all, from Tim McVeigh's lawyer. What is that process? What should we expect there? VAN SUSTEREN: Well, just to give you a little hindsight -- I actually watched this trial on behalf of CNN, I covered it and got to know the defense team. I know Rob Nigh, who is the lawyer handling -- I tried to call him a few minutes ago and talked to his secretary. He's getting hundreds of phone calls from the media.
What he needs to do is sort of, you know, step back, take a look at this and see what's best for his client, but he also got to consult with his client. It's not easy to get a phone call into the prison, especially death row in Terra Haute to consult with his client. He probably should travel to Terra Haute and speak to him in person, so he has a private, confidential communication with his client.
But you know, the clock is running down on this, Willow. So, you know, the lawyer is just trying to at this point figure out what's best to do, but he needs to find out what does his client want.
BAY: Now, it's interesting, you mentioned his client. At this point, what do we know, if anything, about Tim McVeigh's state of mind? Do we have any sense of how he's likely to react?
VAN SUSTEREN: No idea. I mean, we hear all sorts of rumors. People have interview him. There's a recent book that was written about Timothy McVeigh in which he consented to interviews with the authors of the book. He said that he's prepared to die.
I've spoken to Bill McVeigh, his father, who visited him early in April. Bill McVeigh implied to me that Timothy McVeigh was ready to die, that he wasn't going to take -- to make any steps toward stopping the execution. So, it seems like it was full steam ahead in terms of the execution, but it may just very well be that he thought that he had no other recourse.
If you had asked me 10 minutes ago whether or not I ever thought this execution would be stopped, I'd say no. If you ask me right now, it would not surprise me that a federal judge would step in and order there at least be a suspension of the execution date, so that a decision could be made after full reflection of exactly what has happened. So, you know, things have changed very quickly in this case.
BAY: Greta, we of course, have not heard any response from the FBI at this point, according to Gina London, but how unusual is this -- is it likely to be some sort of procedural oversight?
VAN SUSTEREN: Well, you're talking to an old-line defense attorney, Willow, and we have very different views of how often and how rare and how unusual this happens than former prosecutors do. Believe me...
BAY: Greta -- go ahead, I'm sorry, I had to jump in because we need to get to Major Garrett who is standing by at the White House. Thanks, Greta. Major.
MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Yes, Willow, CNN has obtained a statement from the Justice Department -- not released here at the White House, released by the Department of Justice. It reads as follows: "Once the government was made aware of the documents, they were turned over to the defense. They are not material to the case and have no bearing on the conviction. If the defense disagrees, they will contact us."
Now, government official tells CNN that the government is not aware at this moment that McVeigh's attorneys have asked for a stay of that scheduled execution -- Willow.
BAY: So, Major, at this point, those documents have been turned over to McVeigh's lawyers. They will go over it and see if they agree that they have no bearing on the case, or they are not material to the case, and then proceed?
GARRETT: Well, that's as it appears right now. The central contention of the Department of Justice is that these documents were discovered as not to have been properly given to the McVeigh defense team. They were, but that problem, that mistake, has no bearing on the case, and that the evidence that was not given to them originally as it probably should have, is not material to the conviction of McVeigh.
But the Department of Justice does leave it open to the interpretation of the McVeigh defense team, and that if it disagrees, it can contact the Department of Justice. If in fact, that contact is made, obviously several other legal steps would have to be taken to achieve a stay or to revisit the entire case itself -- Willow.
BAY: Major Garrett at the White House, thank you.
We're going to go back now to Greta Van Susteren. Greta, what does this response from the DOJ mean?
VAN SUSTEREN: It means almost nothing, Willow. Willow, I sat through that trial, and in my humble opinion, there's powerful evidence against Timothy McVeigh.
However, this is a separate issue, whether or not his trial was fair. Now, if these documents are material, meaning they're very significant to the defense, then of course, it's much different than if they're insignificant of if they're duplicates of documents that the defense already had.
But the issue of materiality -- I must tell you, I've never heard a prosecutor say that a document was material to the defense, that's just sort of standard pattern from a prosecutor. Materiality is sort of in the eyes of the beholder. Defense attorney often sees everything as material to the defense, and that's why it's important to the judge, who is presumably dispassionate, who can look and see if it truly is material.
Prosecutors say: "It's not material, you don't need it. Listen, if want, just contact us." Defense say: "Look, it's very important." Bottom line: they had an obligation to turn those documents over to the defense. And this judge, Judge Matsch, is not going to be a very happy judge tonight sitting in Denver, because he expected that both sides would turn over all documents according to the rules.
BAY: And so right now, at this point, is he looking over those documents to determine if they're material, or does he have to be asked to do so by the defense team?
VAN SUSTEREN: I don't know. I have not heard that he actually has them. It would not be unusual for the Justice Department, as a courtesy, to send those documents to the judge. Now, if there are thousands of documents, many pages, they are not going to roll a semi truck up to the federal courthouse. And expect them to go through there.
But I suspect, at a very minimum, there was a courtesy call made to the chambers of the federal judge, saying, look, judge, we have a slight problem, we have some documents. So, I suspect, at a bare minimum, there was a call made to notify Judge Matsch.
But the next formal step would be Rob Nigh or the defense team to talk to the client, see what the client wants to do, make a recommendation to the client, if the client wants to go to court to seek some sort of stay so that you can have a greater review of the documents, the next step would be for the defense attorneys to go back to Judge Matsch. He's the proper one, because he's the trial judge who sat on the case.
And then he would make a determination whether, as an emergency base, to put everything on hold, suspend the execution, and go through the documents. It could very well be he could do that, go through the documents and agree with the Justice Department that they're immaterial, and then we're back on the clock again, setting an execution date. That would not be so unusual.
BAY: If that is the scenario that unfolds from here, if these lawyers get their consent from their client and they go through this process, what then will the judge be looking for in these documents to make that determination if they're material or not?
VAN SUSTEREN: Whether or not it's material is whether or not it could possibly have changed the jury's verdict. There's any sort of chance that the jury could have decided otherwise on the issue of guilt, or maybe on the issue, whether the death penalty should be imposed at all. You know, he's going to be looking at it with a very critical eye.
Now, there's a separate issue that he may examine and that's misconduct. Misconduct on the part of the Justice Department, on the part of the prosecutors, on the part of the FBI. You know, there are occasions when prosecutors or FBI agents are negligent. Boxes get lost, things get set aside.
This was a tremendous investigation, this involved the death of 168 people in a multi-story building. So, there are many documents, many hundreds and thousands of interviews. But if it's just negligence, is a lot different than if they sort of tried to hide something. The judge will probably look to see whether or not there was any sort of misconduct. It seemed unlikely this was -- it seems unlikely there was misconduct. But he would look for it.
BAY: Unlikely for misconduct, but Greta, how likely is it, based on obviously, what very little we know, right now, that we could be looking at a new trial here. Is that possible?
VAN SUSTEREN: Yes. Look, Willow, anything is possible. You never say never in the practice of law. I was cautious to say that I sat through the trial in this case on behalf of CNN, listened to the evidence. I didn't make the decision. The jury made the decision. But there was powerful evidence. Plus, you've got the added problem. Timothy McVeigh has made a statement to two authors, admitting his responsibility.
That wasn't evidence, but nonetheless, that could very well come back and haunt Timothy McVeigh if ever he were to get a new trial. So, there are many problems that Timothy McVeigh has, even if he were to get a new trial. Nonetheless, even if he is a guilty man, he's still entitled to a fair trial. And that's where the critical eye of the court comes in. The judge wants to make sure that the process is uniform, that it's done according to the rules, in a standard fashion, even if the man is ultimately the culprit of the case.
And of course, Timothy McVeigh has admitted himself that he did it.
BAY: Greta, what happens in the scenario that the lawyers go to Timothy McVeigh and Timothy McVeigh says, do nothing with this?
VAN SUSTEREN: Listen, these are good lawyers. He's got a good team of lawyers. And in all likelihood, the lawyers will respect his wishes and they will just, that will be the end of the matter and we will not -- nothing will be filed in court.
Willow, that's not so unusual either. Many times, people who are on death row facing execution, still many avenues of appeal. And defendants will say look, I don't want to do anymore appeals. I'm telling my lawyers to shut down. And that does happen. Timothy McVeigh did not file the final stages to try to seek a reversal in his death sentence. He's got up until two hours before he's scheduled to execute.
But clients sometimes say, forget about it. I don't -- I want to die or I give up.
BAY: While...
VAN SUSTEREN: Or even sometimes, "I did it."
BAY: While all this is going on with McVeigh and his team, does the DOJ have any recourse here? What is it that they are doing right now?
VAN SUSTEREN: They are trying to get the egg off their faces, Willow. Because this is hugely embarrassing to the Justice Department, hugely embarrassing to the prosecutors. These prosecutors were good prosecutors on the case. Good FBI agents on the case. And somebody has slipped up. And it's hugely embarrassing.
To their credit, I don't know what sort of provoked the notice to the defense team that these records exist. But certainly, to the credit of the Justice Department or whoever did it, made the decision that is certainly an admirable and honorable thing. Because, the chances are, nobody would have discovered these 302s. So, in many ways, my hat goes off to the Department of Justice.
BAY: Greta Van Susteren, thank you very much for walking us through all the details of this. Thanks.
MONEYLINE continues right after this.
(COMMERCIAL BREAK)
BAY: We begin on Wall Street.
Wall Street's solid opening lost steam by mid afternoon as techs fell into negative territory and continued to fall. Three motivating factors helping the session's strong open: the ECB's surprise cut in interest rates, Morgan Stanley's upgrade of the chip equipment sector, and strong sales figures from many of the nation's retailers.
Blue chips climbed more than 100 points early on, but closed well off those highs, up 43 points at 10,910. Chip stocks basically the only bright spot on the Nasdaq, the index finishing down 27 points at 2,128. And a fractional decline on the S&P, to close at 1,255.
One blue-chip loser today: IBM, which fell more than a dollar. The decline came as CEO Louis Gerstner met with Wall Street analysts in New York. The meeting focused on the hi-tech's future, and the downfall of the dot-coms.
But another hot topic of the day, the future of Lou Gerstner as IBM chief. Steve Young attended the conference, and joins us now with the details -- Steve.
STEVE YOUNG, CNN CORRESPONDENT: Willow, it all began with a research note from Goldman Sachs analyst Laura Conigliaro saying, when his contract runs out next March, IBM CEO Lou Gerstner may retire. Well, Gerstner told analysts he feels like Mark Twain. You know, reports of his death have been greatly exaggerated.
He thanked the analysts for coming to hear what he called the old has been at his eighth analyst briefing. But he didn't flatly guarantee he'll be CEO same time next year.
(BEGIN VIDEO CLIP)
LAURA CONIGLIARO, GOLDMAN SACHS: We are beginning to look towards that exit for Lou Gerstner. Whether he chooses to formally make that exit in March 2002 or maybe extend it to the end of 2002.
(END VIDEO CLIP)
YOUNG: Despite the technology bear market and the burst dot-com bubble, Gerstner said hardware sales, industry wide, have been growing more than 11 percent. He laced into unnamed technology companies he called "accomplices in this new economy mumbo jumbo."
He scoffed at those slight of hand financial reports from other tech companies he described as pro forma, pro rata, pro bono earnings.
Gerstner also said despite the departed dot-coms, real businesses will spend vast sums on network equipment to increase sales and lower purchasing costs. He also held to recent guidance for single digit sales and double digit earnings growth, but said he won't engage in price wars to gain market share.
(BEGIN VIDEO CLIP)
DANIEL KUNSTLER, J.P. MORGAN CHASE: If somebody decides, you know, to go ahead and make a move on pricing, the others, you know, have to follow, and very often that's the only way to gain any kind of competitive advantage is by accumulating, you know, market share.
(END VIDEO CLIP)
YOUNG: Gerstner said the take-away message is: Think of IBM as a services company and technology innovator. He said if other companies don't fit into one of those two niches -- quote -- "You're headed for commoditzation hell." Willow?
BAY: Wow. Sounds like quite a performance on the part of Lou Gerstner. Did it seem like a guy on his way out?
YOUNG: He pulled his punches. Andy Neff of Bear Stearns asked, he said IBM doesn't plan that far ahead. I think he likes where he is, but I think we're going to have to stay tuned.
BAY: Clearly fired up today. Steve, thank you.
In other corporate news tonight, Pepsico's $13.8 billion purchase of Quaker Oats could be in trouble. At issue, Quaker's popular Gatorade brand. The Federal Trade Commission is said to be concerned Pepsi will gain a choke hold on the sports drink industry once it owns Gatorade. Pepsi says the FTC has given no indication it will block the merger. The commission votes on the deal within the next several weeks. On the session, shares of Pepsi finished up just under a dollar. Quaker Oats dropped $1.50.
In tonight's "MONEYLINE Movers," Gap gained more than 3.5 on news of stronger than expected April sales. Gap also raised profit targets for the quarter.
Lam Research added nearly two. Morgan Stanley upgraded the chip equipment maker, saying its stock may rise as much as 40 percent over the next year.
One of the most active issues on the Nasdaq, Digital Island. That was up over 80 percent. The Web infrastructure firm won a major contract with Microsoft to deliver advertising on the MSN Network. That's news Digital Island can certainly use. Its stock is down 85 percent over the past year.
We're going to go now to Susan Candiotti, who is on the telephone. She has some breaking news for us from Washington. Go ahead, Susan.
SUSAN CANDIOTTI, CNN CORRESPONDENT: Willow, as you may have already heard, it turns out that the FBI has said, according to sources familiar with the investigation, discovered through one of its archivists, regarding the Timothy McVeigh Investigation and trial, that they had additional information collected from various FBI field offices around the United States that were involved in the investigation, that some of that information never made it into the hands of defense attorneys for now-convicted Oklahoma City bomber, Timothy McVeigh.
The FBI admits now that it found some original items. However, sources familiar with that information insist that in it there is -- quote -- "nothing of major significance." Sources maintain that the information is redundant, and used as an example people who, for example, more than one person who saw -- alleged to have seen Timothy McVeigh in a particular location, for example.
Or giving another example: FBI agents who took notes and filled out a form, which is then filled out summarizing the information to the defense. But in some instances the original notes had not been turned over. Once this was discovered, the FBI notified the justice department lawyer in charge of this, and in turn, the information was passed on to Timothy McVeigh's defense attorneys.
So far we have no information, no reaction from Timothy McVeigh's lead attorney, Rob Nigh, in Oklahoma. As to whether he will file anything with the court -- so far nothing has been filed -- to see whether he can be granted a stay of execution based on this new information.
BAY: So, Susan, it seems -- it appears, from what you're telling us, as if the FBI detailed some of this information, but did they detail any reasons why it never made it to McVeigh's defense attorneys?
CANDIOTTI: The explanation is more or less that it was an oversight. In many instances -- that they had the information but sometimes, for example, the example that I gave you, notes that were never turned over. But they took the notes and made a summary of the notes, and those were turned over to the defense attorneys.
But oftentimes in a trial, unless the defense has reason to suspect information from these summaries -- unless they question them, then they don't normally request from the court to ask for the original notes of an FBI agent. That's just one example.
Now the question is whether there's any -- could be any exculpatory evidence contained in information that the defense attorneys have never seen. That, apparently is what is being decided now by the defense attorneys. and they must decide, in effect, but they have to have agreement from their client, Timothy McVeigh, as to whether they want -- whether he wants his attorneys to move -- to attempt to get a stay of execution.
BAY: Susan, did you -- do you have any sense as to why this is just coming to light right now? Any sense of the timing of this?
CANDIOTTI: The timing is all very recent. The letter to the defense attorneys just went out yesterday, and evidently it has been within recent days or weeks. And it would appear, according to one of the sources that I spoke with, that it was in the exercise of putting together all of the case files on this particular McVeigh trial and collecting all the information from all the field offices to archive it. That's when the discovery was made.
BAY: So it was during the process of basically pulling all this together and making a catalog of it that these original items, as the FBI is calling them, were unearthed.
CANDIOTTI: That's what sources say. That's correct.
BAY: And that normally a defense attorney would accept the summaries, and if not, then choose to ask for those original items?
CANDIOTTI: That's correct. Under normal circumstances, defense attorneys work from summaries. But remember, Willow, that's just one example of this information that authorities defend as being redundant information. That's just one thing. There are other items as well.
That was turned over now to the defense attorneys and we do not have access -- do not yet have information on what some of that other information, alleged evidence, might be. So until we can talk to the defense attorneys about this to find out how they attempt to pursue this information, well, at that time we'll know more.
BAY: Susan Candiotti, thank you for bringing us this news. And of course, you'll keep us posted should more details come in. We're going to go now to our senior legal analyst, Greta Van Susteren.
Greta, Susan just told us that the FBI has said that there are -- what they called -- "original items" that have been discovered in the process of collecting and documenting all of the details of this case that they have unearthed. Does this tell us anymore? Does this add another piece to this puzzle?
VAN SUSTEREN: Well, let me put myself in the shoes of the lawyers on behalf of Timothy McVeigh. Even if I couldn't get to Terra Haute in the next 24 or 48 hours to find out exactly what he wants me to do, what would I do as a defense lawyer? Say: "Oh, well, so what, I didn't look at these original documents. I'll just let it go"?
I mean, he can't do that. These defense lawyers have to look at these documents. They have to be satisfied themselves that this would not have in any way impaired the verdict against their client. So these lawyers have to go through these documents. They cannot accept the judgment of the justice department saying that these documents are not material. They have an affirmative obligation of a first-hand investigation of these documents. It's hugely important to the defense. It may turn out that they are totally irrelevant, but at this juncture, these lawyers have absolutely no choice be to make sure they pour over every single word of every document, because they cannot let their client go to a lethal injection having looked the other way.
BAY: But, Greta, I'm curious. Susan described a scenario in which defense attorneys will oftentimes rely on these summaries without asking for the original items. Is that the case?
VAN SUSTEREN: That is indeed true sometimes, Willow. But when your client is about four days away from dying and you have a mechanism by which you can save your client, relying on government summaries is not a practice that any defense lawyer would encourage who is worth his salt. But indeed, there are cases in which you rely on summaries. I mean, even in trials both sides agree to summaries, oftentimes, to present to a jury for consideration.
But believe me, on the eve of something so final as a lethal injection, and knowing these defense lawyers -- I know how hard these prosecutors worked on these cases, which is perhaps why I come to this story with no sense that anyone did anything sinister -- these prosecutors did a really good job. And knowing these defense lawyers, I suspect these defense lawyers are going to pour through every single document by themselves.
BAY: And knowing what we do about how this happened, that these original items were unearthed during the process of, as I gather, creating some sort of archive for this case -- is that a typical process? And do things from time to time turn up as a result of this process?
VAN SUSTEREN: Well, this is a bigger case than almost any criminal case I've seen, and when these documents show up -- and the prosecution in a routine case says, you know, they just showed up. I mean, even, look at the billing records for Hillary Rodham Clinton when they showed up at the -- in the family residence at the White House, the Republicans in the city were rolling their eyes. You know, when documents suddenly surface out of nowhere. So, I mean people are always suspicious.
But sometimes documents do just sort of surface. And I can tell you that in a case as important as this, the prosecutors want to be extremely careful that they complied with all the rules. But the truth is that when you have a case this large, things like this can happen. Now, we don't know if it was an accident, we don't know if it was deliberate, but when you have so many documents it does not surprise me that it happens. And you know, at least, from a legal standpoint is that I'm delighted to see the Justice Department and the FBI turn them over a couple days before the execution. I would have rather seen it done a couple years ago though.
BAY: Greta, at this point, obviously the defense attorneys are trying to get some sense if what this information is but they also, as you have pointed out, they also will be consulting with their client. But at this point does it matter that Timothy McVeigh has already made it clear that he wants to and is prepared to die? VAN SUSTEREN: It doesn't right now. Here's one scenario. The lawyers know that the ultimate decision is made by the client, Timothy McVeigh. But they also know they want to have time to talk to him. They won't just fly out there tonight, because they have not seen the documents themselves.
So, it would not be unusual for them to go to the judge and say, Judge, we have not spoken to our client. We can not let our client die Wednesday, 7:00 a.m. Indiana time by lethal injection until we have gone through these documents. We would like a chance to go through these documents. Then we will take the information we have, and maybe the documents to our client in Indiana.
We will consult with him. And at that time he will give us marching orders, whether or not we should seek some sort of order or whether or not we should simply ignore it and the judge can then reset an execution date. That would not be an unusual scenario.
BAY: Greta Van Susteren, thank you very much. As CNN learns more we will bring it to you and MONEYLINE will continue right after this.
(COMMERCIAL BREAK)
BAY: In tonight's "Sector Focus": Tech stocks. Up next, our guest who's still bullish on them, Ned Riley. Ned, welcome.
NED RILEY, STATE STREET GLOBAL ADVISORS: Good evening.
BAY: You're expecting more aggressive moves from the Fed. Does that mean that your optimism about tech stocks has increased?
RILEY: Well, it's about the same as it was about three weeks ago, four weeks ago. I think the Federal Reserve clearly needs to cut interest rates further. The economic backdrop is not very positive as we're well aware. And we know the profits of tech companies are going to be down the next couple of quarters. But I think now it's a matter of value, Willow, and I think a lot of these companies still possess long term value. And I think the analysts must ignore the next couple of quarters.
They are beating this one to death. I think they should start focusing on the longer term aspects of networking, PC manufacture, software semiconductors and the like. And I think the longer term prospects are quite bright for the industry.
BAY: You think that the longer term prospects are quite bright, but does that mean that you think investors should be in there right now scooping up some of these values?
RILEY: I do, Willow. Actually, I think trying to time the exact bottom for these stocks is almost impossible. And when you get an opportunity like this where a lot of these retrenched 60, 70, and 80 percent, I'm not saying price alone is value, but if you start to look at the long term growth characteristics of many of these companies, this industry in and of itself is probably the fastest growing industry over any other in the S&P 500.
And for investors to try to guess at what price to earnings ratio they're going to buy these stocks I think is an academic exercise. I think , yes, they should be looking at it, but they should be looking for diversity too, Willow. Unfortunately many investors in the past have focused on one or two stocks. They should be well diversified within all of the fields that I mentioned: networking, semiconductor, software. And I'd suggest, pick the leaders in the field and those would have the best cash position. And I think those are the survivors going forward.
BAY: Well, let's talk about some of the names that you like: Intel,for example.
RILEY: Intel is a company that has been through this one before, Willow, and clearly Intel is in a very competitive position right now and a very competitive environment. But I think coming out of this cycle Intel is still going to be the leader in its field. I still think with it's cash position today, it's going to survive any short- term problems. And longer term, Intel probably has (UNINTELLIGIBLE) growth rate somewhere between 12 and 13 percent.
I think the value in the stock is clearly going to be realized before the earnings start to turn. So if investors wait for a turning point in earnings, it'll probably miss most of the move.
BAY: Now, it's interesting, Ned, Cisco, Intel, Microsoft: names that you like, you don't buy into the argument that the leaders -- history says leaders of the past aren't the leaders of the future?
RILEY: I'm glad you asked that question, Willow because unfortunately more people are starting to report that they won't become the leaders in the future. I believe strongly that the analysts as well as portfolio managers are underestimating not only the earnings leverage coming out of this cycle...
BAY: Ned, got to cut you off, sorry.
RILEY: Understand, Willow. Thank you.
BAY: Up next, Ahead of the curve. Stay with us.
(COMMERCIAL BREAK)
BAY: Taking a look at some of what could move the markets tomorrow: the Producer Price Index for April brings the last big report on the economy before the Fed meets on Tuesday. Economists are looking for a jump of 4/10 of a percent overall.
Also tomorrow, the University of Michigan Consumer Sentiment Report, expected to show a drop for May. Finally from us tonight, the XFL which was launched to huge fanfare is throwing in the towel. The upstart football league founded by the World Wrestling Federation failed to hold on to viewers and proved a manor disappointment to joint owner NBC. One of the XFL games received the lowest ratings ever for a program on a major network. Looks like football fans just didn't believe the hype.
That's MONEYLINE for this Thursday. I'm Willow Bay in New York. "CROSSFIRE" is next, and here is Bob Novak.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
