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Lou Dobbs Moneyline
Dow Falls 14.95 to 10,401.72; Nasdaq Declines 11.23 to 2,017.84
Aired July 30, 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.
ANNOUNCER: From the heart of New York City, this is LOU DOBBS MONEYLINE. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.
In tonight's headlines: one of the lightest trading days of the year on Wall Street. Stock prices ending modestly lower, GE Capital agreeing to buy Heller Financial, paying more than $5 billion, expanding its commercial finance operations. And shares of Adobe Systems today falling 6 percent. That after the graphic software maker warned it may miss its quarterly sales forecast.
Let's check in now with our reporters for a quick look at what they're working on tonight -- Christine?
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a trio of top names on Wall Street issues troubling forecasts on the market, but stocks end the day barely changed.
JENNIFER WESTHOVEN, CNN CORRESPONDENT: Lou, the Nasdaq came within 9 points of breaking below 2,000 again, before rebounding a bit into the closing bell.
TIM O'BRIEN, CNN CORRESPONDENT: Businesses around the globe are bracing for yet another attack of Code Red, the Internet worm that attacked hundreds of thousands of computers last week.
PETER VILES, CNN CORRESPONDENT: One part of the economy where you will find double-digit inflation: health care. And that is slamming corporate America when it is already at its most vulnerable.
DOBBS: All of that and more coming up on MONEYLINE tonight.
Our top story: retreat on Wall Street. Stocks today fell across the board, but losses were modest, as was trading volume. Volume light, in true summer form. Even downbeat forecasts from three high- profile strategists failed to elicit a dramatic reaction. As one money manager put it today: "I think the biggest thing on investors' minds these days is how busy are the golf courses?"
Christine Romans joins us now from the New York Exchange -- Christine? ROMANS: Hi there, Lou. You're right, an awful lot of talk about the golf game here today. Overall, the market looking feeble -- couldn't rally. couldn't sell off, couldn't make up its mind. Not a lot of volume, either, traders saying you couldn't draw very many conclusions from any of today's action.
Look at the Dow Jones' Industrial Average, down just shy of 15 points, just above the 10,400 level. Retail stocks were firm here, drug stocks rose. IBM and Merck were higher, tobacco products as well. You had GE and 3M, the big losers, there. But a lot of folks talking about three calls today from top Wall Street strategists, shaving their expectations for profit growth from S&P 500 companies.
Among them, Doug Cligott over at J.P. Morgan. He issued a note today saying, "new quarter, same sad results." He recommends a cautious approach, and when you look at what he's done, he has cut expectations for S&P 500 profit growth as well as the S&P 500 index by the end of the year.
Also, Tom Galvin, from Credit Suisse First Boston, coming out and saying that high energy costs, a strong dollar and weak overseas economies causing him to pull down his expectations for profit growth for S&P 500 companies this year.
And UBS Warburg's Ed Kerschner as well, out today with a similar note. Lots of traders talking about these three.
It's interesting. Some traders were saying, Lou, that, look, there are three notes like this out today and the market closed barely changed. The bears say, you know what, there wasn't a lot of participation here today. We'll wait to see what happens tomorrow -- Lou.
DOBBS: I think they're both right, Christine.
The Nasdaq today fell just 11 points, in one of the lightest trading days of the year. But the weakness, widespread. Just 34 of the Nasdaq 100 ended the day higher.
Jennifer Westhoven now from the Nasdaq marketsite -- Jennifer.
WESTHOVEN: Hi, Lou. Well, the Nasdaq dipped today, too, pretty tight ranges, though, when you take a look at a chart there. Not too much on the upside or on the downside. It closed the day down about 11 points at 2,017.
One of the things to mention is Adobe. Now, it came out with ad sales warnings, but the other thing that it highlights, that analysts are talking about is the fact that it's not just earnings season you have to watch out for. You've got to watch out for these mid-quarter updates. With regulation FD out there, you hear a lot of updates and warnings coming out of those. So that is something to look out for.
Meanwhile, chip stocks, one of the key sectors that analysts have been looking at. It had been rallying early in the week, if you take a look at it. Today that rally petered out, the stocks closing up just about a half a percent, and a mixed performance coming in some of those stocks. They have been very closely looked at. though, and KLA- Tencor, which was one of the gainers among the chip stocks that we were looking out today, that one is due to post earnings tomorrow. There you see it, up about 2.5 percent. Still a balance, though, Rambus closing down.
Now, another key area where analysts are looking for signs of a rebound, in the telecom area. Now, you were just talking about the Nasdaq 100. If you take a look at the top percent gainers in the Nasdaq 100, five of them, telecom stocks. And I want to mention Metromedia Fiber specifically. It's right in the middle. There has been a lot of talk about whether or not they're going to be able to meet one of their loan covenants coming up. That stock has been downgraded by Jack Grubman recently. It has been very volatile, and it just shows you, sentiment very mixed here, but people really looking for a bottom -- Lou.
DOBBS: Jennifer, thanks. One of the biggest losers on the Dow today, General Electric. GE Capital announcing it's buying Heller Financial, paying $5.3 billion. That works out to a 50-percent premium over Heller's closing price Friday. Heller provides small and mid-sized businesses worldwide with secured loans, equipment financing, leasing and asset management. GE stock today down more than $1 a share. Heller soaring $17 a share.
Topping tonight's "MONEYLINE Movers," Aviron, plunging nearly $14 a share, one of the most actively traded stocks on the Nasdaq. A FDA panel refused to recommend the company's nasal spray flu vaccine, saying the company hasn't proven its safety. Some members of the advisory panel may have been concerned that one child who was given flu mist transmitted that flu virus to another child. The vaccine is the lead product for Aviron. It would have been the company's first product on the market.
Lincoln National gaining more than $1.50 a share. Swiss Reinsurance, acquiring a unit of Lincoln National for $2 billion in cash. That makes it the largest U.S. life reinsurer. Tommy Hilfiger shares, adding almost a dollar today. The fashion group reporting better-than-expected first-quarter earnings, that, despite an 11 percent drop in sales. Shares of Tommy Hilfiger are trading 18 percent below their 52-week high.
My guest tonight says we're in the early stages of a recovery, but he says the markets must first work off all of the excesses that were built up over the past two years, particularly in telecom.
Howard Ward, portfolio manager at Gabelli Funds joins me now.
Howard, good to have you with us.
HOWARD WARD, GABELLI FUNDS: Thanks, Lou. Good to be here.
DOBBS: What excess?
WARD: What excess? Well, Lou, we had this very strong bull market for last half -- really, for most of the 1990s, ending in this soaring dot-com bubble. Nasdaq went from 2,000 to 5,000 in four months. Thirteen months later, back at 1,650. We're now 20 percent above that. The excesses in telecom, the inventory excesses, are being worked off. The excesses in stock market valuation have been largely worked off.
DOBBS: But are we going to be years before the excesses in telecom are worked off truly?
WARD: I don't think so, Lou. I think what we've seen is, if you look at the expectations for capital spending in the telecom area for 2002, versus 1998, a period of wiping out the bubble, you would have about 10.5 percent compound annual growth in capital spending from 98 to 2002 for the 15 largest carriers that represent 90 percent of all capital spending. So I think we're back in our growth path very soon.
DOBBS: Howard, as we look at this market right now, we're seeing very little in the way of movement, either to the upside or down side. We could be thankful for the little movement to the down side. In this environment, is the investor well-served to simply hold back his or her money and let's see what happens here?
WARD: I think real investors that have an appetite for some volatility, that can afford to invest their money for a period of years -- not six months, maybe not 12 months, but 18 months and longer -- I think they should take advantage of this weakness. There are some excellent buying opportunities available, a lot of leading companies' share prices are down anywhere from 50 to 85 percent. And I think it's -- it's OK to wade into a portfolio, as long as you're diversified.
DOBBS: OK, Howard, we have your picks on the -- in the market, if we could see those now. Viacom, AOL Time Warner, EMC and Cisco Systems and Nokia. I'm looking at that, that's a pretty even move, around. Why those?
WARD: These are all leaders. They're all stocks that have been damaged, with the decline in advertising, really, in the case of AOL and Viacom -- two stocks, I might add, that are actually already up this year, in the case of AOL, over 20 percent. In the case of EMC, Cisco and Nokia, three leading technology companies, each serving a specific need. Each, far and away, the market leaders in what they do, in areas which I think will come back relatively quickly.
DOBBS: And also, companies that have had to really issue some pretty strong warnings, in the case of Nokia and Ericsson as well,
WARD: Well, Ericsson, we're not recommending, but in the case of Nokia and Cisco, yes, the earnings have not come through this year and that's why the stocks are down 80 percent, and that's why I think there's some real value there for the longer term investor.
DOBBS: In terms of this market, where does it go? Let's just talk about the market for a minute through the rest of this year. You talked about an appetite for volatility. How much will we see?
WARD: Well, you know, last year we were fighting the Fed, which was tightening, energy prices that were rising, and this scary blowoff in the Nasdaq. This year, the Fed is aggressively easing, energy prices are declining, the Nasdaq is already 20 percent above its low. April was the best month in history for the Nasdaq.
So I think that we are setting the stage with cash levels very high, with negative sentiment widespread for both the economy and the stock market, I think we'll see a nice rally developing over the next six months. So I suspect investors -- if they've held on, I would encourage them to continue to hold on, and we might end up with a positive return in those sort of large cap growth stocks that I specialize in by year-end.
DOBBS: Yes. Howard, thanks a lot for being with us.
WARD: My pleasure.
DOBBS: Well, MONEYLINE has learned that Microsoft may try to use its billions of dollars to block a cable tie-up between AT&T and AOL Time Warner, the parent of this network.
Steve Young has the report.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): If AOL Time Warner combined its cable systems with AT&T's or acquired them outright, that would forge an industry broadband colossus, comprising nearly a third of U.S. cable subscribers. Microsoft doesn't flatly deny a report in "The Financial Times" that it plans to use its $32 billion of cash to stave off such an AT&T-AOL Time Warner deal. It says only that the story is, quote, "based on speculation."
LINDA BANNISTER, BANC OF AMERICA: Well, we think it is in Microsoft's interest to try to prevent AOL from becoming far and away the largest cable MSO. But we think it's highly unlikely that Microsoft would go ahead and make a bid for AT&T Broadband.
YOUNG: Maybe not a direct bid, but indirectly, by helping bankroll a sweetened bid from Comcast, whose first offer for AT&T Broadband was rejected as too low. No comment from AOL Time Warner or AT&T, but someone close to Microsoft's banker says it makes perfect strategic sense for Microsoft to block AOL, its biggest Internet rival.
Microsoft already has a billion-dollar Comcast investment, which it made in 1997.
TOM BURNETT, WALL STREET ACCESS/MERGER INSIGHT: They're not about to do anything that causes Congress to get really angry or tick off the courts. So we believe that the only way for Microsoft to act is in a kind of sub-rosa background where they end up funding or joining a consortium and using their cash and their savvy and their technology to perhaps join a successful effort to win control of the broadband assets.
(END VIDEOTAPE) YOUNG: Some other names mentioned as possible members in a consortium include Rupert Murdoch's News Corp, Barry Diller's USA Networks, and cable wizard John Malone, now freed from AT&T -- Lou.
DOBBS: I thought it was interesting the idea that they'd be talking about a sub-rosa background basis for Microsoft to operate on. That would be much like the basis on which AOL Time Warner was working in the Microsoft proceedings in Washington, wouldn't it?
YOUNG: Well, there were lots of folks representing AOL Time Warner down there in Washington.
DOBBS: How do you think this is going to work out? Do you think that Microsoft is going to end being a major player here, or Comcast seems absolutely committed to these assets and paying for them and acquiring them?
YOUNG: Most people within the company, outside believe that Bryan Roberts and Comcast can manage more efficiently. There's some question about whether they share that Mike Armstrong vision of telephony and everything on the cable. But we're told that Comcast wants the newest and latest Internet stuff, not the old-fashioned stuff that Armstrong invested in his broadband.
DOBBS: Do you think it's story of vision rather than price?
YOUNG: Well, vision seems to be out of vogue these days.
DOBBS: Well, certainly -- well...
(LAUGHTER)
I don't know if it's out of vogue or simply out of sight in some cases. But thank you, Steve. Steve Young.
Still ahead here on MONEYLINE, another computer bug set to attack, government and business issuing a Code Red warning tonight. And a red flag over health care costs: heading higher even before patients receive a bill of rights.
Wildfires are sweeping across the West, blocking off the entrance to a national treasure. Also tonight, a blaze of a different kind: the latest fad in corporate team building at 1,200 degrees Fahrenheit.
(COMMERCIAL BREAK)
DOBBS: Former President Bill Clinton received a rousing welcome to his new office in Harlem. About 3,000 people gathered for the celebration on 125th Street. That's where Clinton found office space after lawmakers balked at the high cost of Manhattan midtown rents. The event was organized, by the way, by the Upper Manhattan Economic Empowerment Zone. It was paid for, this gathering, by AOL Time Warner, CNN's parent, J.P. Morgan Chase, and a few local businesses.
The ex-president assured the largely African-American crowd that he would stand by them as they had for him. (COMMERCIAL BREAK)
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: You voted for me in 1992 and 1996, you voted for Hillary in 2000. You were there on the darkest days and the best days, and I want you to know I want to be a good neighbor in Harlem on the best days and the dark days for all of the people who live here.
(APPLAUSE)
(END VIDEO CLIP)
DOBBS: Not everyone in attendance was there to cheer. As usual, the president attracted a few detractors. Some protesters heckling Clinton as a missionary of gentrification whose presence would raise housing prices. The former president, by the way, put that part of Harlem back on Clinton time. He arrived one hour late.
Far from New York, wildfires are still blazing in one of the most scenic areas of the country, northwestern Wyoming. One fire forced the closure of an entrance to Yellowstone National Park, burning across hundreds of acres of steep, mountainous terrain.
Park spokesmen say the fire is probably near containment. It was probably started by lightning slightly to the south. Firefighters gained control of other blazes, that allowing evacuated residents near Jackson, Wyoming to return to their homes.
A new computer worm called Code Red infected some 300,000 computer servers and disrupted several government Web sites just last week, and this bug could soon reek havoc across the Internet, having been programmed to re-emerge tomorrow night in what could be a more ominous form.
Tim O'Brien has the story from Washington.
(BEGIN VIDEOTAPE)
O'BRIEN (voice-over): Spreading faster than any computer worm in history, Code Red has already infected hundreds of thousands of Web servers and millions more worldwide are at risk when it is set to strike a second time tomorrow night at 8 o'clock Eastern. E-commerce and access to critical information between doctors and hospitals, for example, might be slowed or blocked.
The National Infrastructure Protection Center, an arm of the FBI, says the worm threatens to degrade the functioning of the Internet, endangering both the country's national security and economic well- being.
RONALD DICK, NATIONAL INFRASTRUCTURE PROTECTION CENTER: In such attacks, the victim computers are being used without the operators' knowledge to flood a Web site and overload it. We are taking this worm most seriously due to its ability to proliferate at a dramatic rate. O'BRIEN: Unlike a computer virus, a worm, such as Code Red, can spread on its own from one server to another without any action by system operators.
Personal computers using Windows 95, 98 or Millennium Edition are not at-risk. The servers that are affected are mostly for business, government, and private organizations using either Windows 2000 or NT and Microsoft's IIS software.
Connecting with an infected server may produce a message "Service Denied" or "Hacked by the Chinese."
DICK: If you have been infected, simply turning the infected machine off and then back on removes the worm from memory.
O'BRIEN: Microsoft had alerted system administrators that its software was vulnerable six weeks ago and immediately posted a free patch to cure the problem on its Web site.
IRA WINKLER, HEWLETT-PACKARD SECURITY EXPERT: This is a completely preventable problem. If people would administer their systems well, which means -- which includes updating their computers for known vulnerabilities...
(END VIDEOTAPE)
O'BRIEN: The FBI has no suspects. The people who create these computer worms can be anywhere in the world and they often do it just for kicks. The havoc they can reek is severe, of course, and accordingly so is the punishment if they're apprehended. And Lou, in the United States if they're apprehended, it can bring a lengthy prison term.
DOBBS: Tim, any sign that we're going to see the apprehension of any of these Web terrorists, perpetrators?
O'BRIEN: It's very tough to apprehend these people, and the FBI said they have no clues whatsoever right now. But it's the type of thing that they stay on for a long time. Because the damage can be very great, they don't give up. It's a case they keep open indefinitely.
DOBBS: OK. Thank you. Tim O'Brien.
The Fed has largely contained the threat of inflation from showing up in most places, but the cost of one necessity is still rising. Americans have seen their medical costs jump by double-digit percentages and those increases may now be accelerating.
Peter Viles on the rising cost of health care.
(BEGIN VIDEOTAPE)
VILES (voice-over): While Congress argues over the rights of patients, corporate America pays most of their bills. And those bills are rising at a breakneck pace. Consulting firm William Mercer estimates PPOs are seeking premium increases of 16 to 17 percent for next year; traditional indemnity plans, 20 percent; and HMOs, all but throwing in the towel in the fight to contain costs, seeking increases of 20 to 50 percent.
The Congressional Budget Office estimates the patients' bill of rights that passed the Senate would add another 4 percent to those increases, although some estimates are even higher.
DAVID SHOVE, PRUDENTIAL SECURITIES: Nobody really knows. There's two things here. One is the actual costs of the litigation. That's probably minimal. Not that many lawsuits come out of these things. The other thing is that the companies change the way they pay claims and they start paying them more liberally, and that does add fuel to the premiums. We expect that it's somewhere between 3 and 5 percent.
VILES: Employers generally pay 60 to 80 percent of health care premiums, and some companies that purchase self-insurance are already paying more.
BOB SHANNON, WILLIAM M. MERCER: What we're now seeing this year is that those same insurance companies are coming back and saying, we need to have premiums anywhere from $9 to $17 per participant in your plan to cover the potential litigation risk that might come about as a result of the patients' bill of rights.
VILES: All of that said, politics is a small factor in rising health care costs. Analysts cite the aging population, the popularity of new drugs for everything from arthritis to impotence, and the new- found pricing power of doctors and hospitals.
(END VIDEOTAPE)
VILES: With or without a patients' bill of rights, many HMOs have already changed their behavior and their pricing. That's partly because doctors and patients simply rebelled against the cost containment that is at the heart of the original HMO business model -- Lou.
DOBBS: Pete, thank you very much.
Well, turning now to the weekend box office numbers: "Planet of the Apes" breaking into the record books over this opening weekend. Moviegoers ignoring the bad rap from critics and helping earn the sci- fi remake a whopping $69 million, the most ever for a nonholiday weekend.
Rounding out the top five: thriller "Jurassic Park III" taking in $22 million, followed by the comedies "America's Sweethearts" and Legally Blonde," and No. 5 the Robert DeNiro heist movie, "The Score."
This summer is shaping into a winner for Hollywood. If sales hold up, this would be the biggest money-making summer of all. Ticket sales are down, but as many of you know, ticket prices are up, and that makes up for some lost ground. For some perspective on this summer's winners/losers, we're joined by "Entertainment Weekly" writer Dave Karger.
Dave, good to have you with us.
DAVE KARGER, "ENTERTAINMENT WEEKLY": Thanks a lot.
DOBBS: Dave, first, let's go to what's happening this summer. Ticket sales are up. Are you really saying fewer people are going to the movies?
KARGER: Yeah, just by a little bit. I mean, it is true that as far as box office receipts are concerned it is looking to be the biggest summer of all time. But that's also like saying more people are eating more just because they go to fancier restaurants.
I mean, I went to see "Planet of the Apes" over the weekend: four tickets, $40. I thought I had already prepaid for my popcorn. I mean, the ticket prices are not only $10 here in New York: It's in Boston, it's in Los Angeles. And that is adding to why the receipts are so high.
This was the No. 1 weekend, this past weekend that just ended, of all time as far as box office receipts are concerned.
DOBBS: And in terms of the movies themselves, this is a record weekend. We were supposed to see a lot of records, "Pearl Harbor," "A.I." What's going on?
KARGER: Yeah. The trend that we're seeing this summer is huge opening weekends followed by dramatic dropoffs in the second weekend. And that's because, as you kind of alluded to, the first weekend audience is the audience that ignores the reviews. The first weekend audience of a film doesn't care if "The New York Times" film critic likes the movie or not. But it's the subsequent audiences are the word-of-mouth audiences. And what we've seen this summer, every movie almost, with the exception of "Shrek" -- "Pear Harbor," "Fast and the Furious," "Tomb Raider," "A.I." "Jurassic Park" -- had big opening weekends and then more than 50 percent dropoffs in the second weekend.
DOBBS: You mentioned "Shrek." "Shrek" is the biggest hit of the summer, right?
KARGER: By far, 250 million so far.
DOBBS: And in terms of the trends overall that you see going forward, let's talk about it in business terms. Which studios are doing the best?
KARGER: Well, this summer you've really seen things being dominated by Universal. They had "Jurassic Park III," they had "The Fast and the Furious," they had "The Mummy Returns." They had three of the biggest films of the summer coming off of, you know, kind of a slow time for them. So they needed some hits.
DOBBS: And "The Mummy," which we heard so much criticism about, blowing by just about everything else.
KARGER: Yeah, including "Pearl Harbor." If you had said to me that "Shrek" and "The Mummy Returns" would be bigger money-makers than "Pearl Harbor," the Disney film, I would have been very, very surprised to hear you say that, but that's what ended up happening.
DOBBS: Well, that's what makes me a lousy movie critic. I enjoyed "Pearl Harbor" thoroughly. I enjoyed "Shrek." And of course, "The Mummy Returns" is one of the all-time great greatest classic movies.
(LAUGHTER)
Good to have you with us.
KARGER: Thanks.
DOBBS: Thank you.
Still ahead here on MONEYLINE, the economic impact of immigration reform. We'll head to ground zero of the rising debate, California's farm belt. Also tonight, a new corporate strategy to light a fire under their workers' feet. It's team building. And a down day in the market after last week's volatility. We'll talk with one of the world's largest single investor about how he's surviving the market gyrations.
(COMMERCIAL BREAK)
DOBBS: In tonight's headlines, one of the largest deals in G.E.'s history: GE Capital buying Heller Financial, paying for $5.3 billion.
Lean times for Tyson Foods: the poultry producer reporting fiscal third-quarter profits sharply below year-ago levels. Profit pressures also weighing on the market today as another round of companies warned that the worst of times may not be over.
Now, a quick check on what our reporters are working on tonight -- Christine?
ROMANS: Lou, a lazy summer day on Wall Street. Trading was extremely light on both the Big Board and the Nasdaq.
DOBBS: Tonight, I'll be talking with the only public official on the board of the New York Stock Exchange, and arguably the world's largest single investor: New York state comptroller Carl McCall joins us tonight.
We'll take a look at the impact on California if the Bush administration were to grant residency to a million illegal immigrants.
And out of the office, on to the coals. The new way to keep business men and women on their toes: that's right, team building by fire-walking. Stocks closed a touch lower today, several disappointing quarterly reports from companies also warning they don't expect a turnaround anytime soon. The Dow today got started on the higher side, but drifted in and out of positive territory before closing down nearly 15 points.
A similar session for the Nasdaq, which also weaved in and out of the plus column. As these indexes are want to do. It finished off 11 points.
Taking a look at some widely helds tonight, Merck and Microsoft both higher on the day: 3M, Dupont, and United Technologies finished lower on the day. Market breadth positive, advancers beating out decliners by an eight-to-seven margin.
Taking a look now at what traders are expecting tomorrow, Christine Romans joins us again from the New York Stock Exchange -- Christine.
ROMANS: Hi, there, Lou.
Well, the futures right now trading just as we saw the market trade today. No real direction, although, if this biased holds for the S&P 500 futures, we could see 8 or 10 points on the upside for the Dow tomorrow. But we have a big lineup of events tomorrow.
Economic news taking center stage here: consumer confidence, a July report. A June report on personal income and spending, and a Motorola analyst meeting, traders and analysts all talking about these things here today. Saying that they might be nice stimuli for the markets sometime tomorrow. A lot of folks have been gearing up for what the consumer spending numbers will say about the economy.
Also, we're going to get some more earnings coming through here. Although traders have been pointing out that the big market movers are mostly out of the way, still, we'll get Verizon. KLA Tencor will be an interesting one to watch. This was up today, with some of the other chips. Priceline.com and CVS Pharmacy.
Overall, folks are saying today was a really lousy way to start a new trading week. They are saying that they hope tomorrow there will be more participation -- Lou.
DOBBS: More participation -- and yet, did I hear you correctly, Christine. We could anticipate an 8-10 point rise in the Dow tomorrow? Is it really going to be that exciting down there?
ROMANS: That's a resounding rally, if it happens, judging from today's activity.
DOBBS: Keep us posted, Christine. Thanks.
In other corporate news, discount retailer K-Mart is teaming up with bluelight.com to offer unlimited Web access for $8.95 a month. K-mart says the service is the cheapest around, and users can earn further discounts by shopping on the bluelight site, in which of course K-mart owns a majority stake.
Drivers are seeing some relief at the gas pumps, the average price of gasoline dropping a nickel a gallon over the last two weeks, to about a $1.42 cents nationwide. That, according to the Lundberg Survey. Prices have fallen 30 cents a gallon since late May, as refiners overproduced to compensate for tight supplies in the spring.
In addition to the elimination of nearly 40,000 positions, Lucent Technologies is taking further steps to cut costs by $4 billion. The days of free coffee and water coolers at the troubled telecom equipment maker are gone. That $4 billion, they will get back by saving money.
Other penny-pinching measures include: skimping on regular landscaping of its New Jersey corporate campus, and they will dim the lights in office space. Lucent is limiting offices to one fluorescent bulb per cubicle, instead of the usual four.
Well, he is arguably one of the world's biggest equity investors, but he is not George Soros or Warren Buffett. He is, in fact, New York state comptroller Carl McCall.
McCall was featured in "Fortune" Magazine as one of the world's biggest investors because he is the steward of the New York State Pension Fund. And as of March of this year, that fund worth $127 billion, more than doubling since his election in 1993.
Carl, good to have you with us.
CARL MCCALL, NEW YORK COMPTROLLER: Good to be here.
DOBBS: You have only doubled the fund. What are you -- that was a pretty good period there.
MCCALL: It was a good period, and of course, you had to know where to put your money during the period. But it was good. It was good for New Yorkers, it was good for our retirees.
DOBBS: True.
MCCALL: We were able to give them a raise in their pension benefits, and we saved the taxpayers in New York a lot of money, because over the last three years the state and all of its municipalities did not have to make any contribution to the pension fund because their returns were so good.
DOBBS: That's a terrific performance, Carl, by any standard. In this environment, what are you doing differently? Because it's now, as we probably both noticed, a different environment?
MCCALL: It's a different environment. But we're in this for the long term. We're thinking about making sure the money will be there for people who work for us who will retire in 10, 20 years. So we are pretty well holding up our courts.
We are in this recognizing that a strategy that is based on being a long-term investor. We're not looking for quick profits, we want to stay in the market and go through its ups and its downs and diversification. We have a well-diversified portfolio, and we are patient.
DOBBS: Patience is a great thing in an investor. Particularly these days. Tell us how you are allocating your money?
MCCALL: Our asset allocation is about 45 percent of our assets that are in the domestic equity market. About 34 percent is in fixed income. We've got about 10 percent in private equity which has been very good for us. About 5 percent in real estate. So that kind of diversification has been great.
And particularly, what we do with our fixed income assets is we try to match them to the expected retirement dates of our -- of our public employees. We have the long-term fixed income investments to try to match what our liabilities will be going forward.
DOBBS: Give us your sense of what this market is doing, and what we should expect.
MCCALL: Well, it's hard to know what to expect. You know, I'm a believer in the market. It is -- certainly we're seeing great volatility, and it's gone down. But look, we had a great run, and I think we lost a little bit of discipline. I think that what we saw was over-evaluation in many of our companies.
I think that what happened to our high-tech stocks was a real disaster. And I think as a result of this, we will see companies that are now tightening their belts, they are laying people off, which is always a problem. But I think it means that these companies will be more productive in the future, and as a result of that, I think we will see some growth from the company that are now in decline.
DOBBS: Carl, you just mentioned that 10 percent of your money allocated into private equity, it's been an extraordinarily tough time for...
MCCALL: We haven't seen that. I think we will see it, because what we will see is that the excerpt strategies from many of the private equity investors -- it will be based on IPOs. And this is not a good time for that.
But let me tell you what I see in terms of most of our private equity investors. They're holding onto their money. They're not making the big bets now. They are basically waiting for good deals -- and I would rather see them hold onto the money, than try to put out the money at a time when I think it's not prudent to do that. So I still have a lot of confidence in our public equity investors.
DOBBS: The Social Security Commission barely -- barely formed and starting to look at the issues, and comes out with a preliminary, preliminary report, if you will, sort of defining the issues, and a fire storm erupts.
MCCALL: Well, I think it should. It looks to me like this commission seems -- is going to come out with the kind of report that the president wants, and I am a little weary of that, particularly a report that would mandate investments by individuals. Individuals making their own investments in the market. I don't think that's right.
DOBBS: Mandate...
MCCALL: Mandated in terms of the choice. That's right.
DOBBS: Right?
MCCALL: I understand that the bill that was introduced in the House last week would do just that. I think that the commission ought to take its time. First of all, we are not sure when this problem will really erupt. We hear a date of 2015. Our person that I have a lot of confidence in, Frank Newman, the former CEO, Bankers Trust, showed me a report that he did an analysis that indicated that we will not have a real problem until about 2020.
I think we should take our time, we should find the best way to work ourselves out of this. And I think the Social Security system ought to continue to provide a basic guaranteed income to individuals, and the idea of private investment ought to be on top of that. We ought to encourage people to invest their money, but not their Social Security funds.
I think any investments in Social Security in the market, which I support, ought to be done as we do it: with experienced, skilled people making those investments rather than individuals who are left to invest their own money.
DOBBS: Are you nervous about 2 percent?
MCCALL: Well, no percent by individuals. But I could go to 10, 20 percent, if it's done by someone else. I am all for putting the money in the market. Let's let the experienced, skilled people...
DOBBS: Two percent, Carl?
MCCALL: I go above 2 percent.
(LAUGHTER)
DOBBS: OK, thanks a lot. Carl McCall.
MCCALL: Good to be here.
DOBBS: The Bush administration is considering ways to grant legal residency to millions of illegal immigrants in the United States. Nowhere would that have a bigger impact than in California, where nearly half of all the nation's illegal immigrants live.
Casey Wian has our story.
(BEGIN VIDEOTAPE) CASEY WIAN, CNN CORRESPONDENT (voice-over): Agriculture officials estimate at least 60 percent of the farm workers in Ventura County, California are illegal immigrants. It's a delicate balance of mutual economic dependency for workers and farmers that may soon be upset by Bush administration plans for immigration reform.
El Concilio helps immigrants navigate the complicated Web of U.S. immigration laws. Supervisor Alicia Flores supports amnesty for immigrants here illegally.
Some people, they've been living here for over 10 years and they're still living in the shadows. People are looking for a better life. They're not criminals, for trying to look for a better job.
WIAN: Farmers here are also favor granting some sort of legal status to illegal immigrants, but worry about side effects. In 1986, when immigration reform gave amnesty to millions of farm workers, many migrated to better jobs in other industries, so farmers say a temporary guest worker program is a better idea.
REX LAIRD, VENTURA COUNTY FARM BUREAU: We would like to see a process by which people could come into the country legally, work, enjoy the benefits of health care and decent, safe and sanitary housing, and then return back to Mexico. A lot of people do that now, but they don't have the benefit of legal status here in the United States.
WIAN: Garment contractors say legal residency for immigrants could ease the labor shortage facing companies trying to follow the law.
JOE RODRIGUEZ, GARMENT CONTRACTORS ASSOC.: That would be helpful rather than hurtful. We are suffering from unfair competition from people who engage in the underground economy.
WIAN: But costs are likely to increase for businesses needing low-skilled workers and residents hiring gardeners and domestics.
BILL FREY, MILKEN INSTITUTE: You'll still have a lot of folks here who you can count on to help in all kinds of ways, but you're going to have to pay more for those services, and I think that's going to show up very dramatically.
WIAN (on camera): Complicating matters for the White House, both political parties are split internally on the issue of immigrant amnesty, and business, labor, agriculture, health officials, law enforcement and immigrants rights groups all have their own agendas.
Casey Wian, CNN financial news, Oxnard, California.
(END VIDEOTAPE)
DOBBS: Still to come on MONEYLINE, dancing with fire. How the ancient ritual of walking on a bed of red hot coal -- take our word for it -- it's an ancient ritual. It's helping corporate America breed success in the 21st century. And hopes for a recovery in the software business dashed by a revenue warning.
(COMMERCIAL BREAK)
DOBBS: Software stocks keeping downward pressure on the Nasdaq today. The weakness led by Adobe Systems, which makes desktop publishing software, warning sales for the year could come in lower than expected, but says it will meet profit estimates. Adobe previously forecast full-year sales growth of 7 percent, but didn't give a new figure.
Analysts saying today Adobe's guidance further clouds the outlook for the software business. Revenue from Asia, particularly Japan, decreased further than expected this month. I suppose we should say decreased more than expected this month. Adobe is also dealing with another problem in the region: piracy.
(BEGIN VIDEO CLIP)
BRUCE CHIZEN, CEO, ADOBE SYSTEMS: For Adobe and other software companies, the rest of Asia is quite a challenge because of piracy issues. Unfortunately, a lot of people use our products like Photo shop and Acrobat. They don't necessarily pay for it.
Fortunately, in some countries like Japan, where the government supports anti-piracy efforts, we do see the benefit, and that's why our business is so large. In countries like China, there are piracy rates of anywhere upwards of 93, 94, 95 percent.
(END VIDEO CLIP)
DOBBS: Adobe shares among the most actively traded on the Nasdaq today, falling more than $2 a share. Other stocks in the group also weaker. Microsoft up a fraction. The Goldman Sachs Software Index falling nearly 2 percent today. The index losing nearly two-thirds of its value over the past year.
Coming up, a different kind of corporate challenge, turning up the heat to build a more cohesive office environment. Team building. Bonding. Hot.
(COMMERCIAL BREAK)
DOBBS: From company picnics to outward bound expeditions, corporate America has tried all kinds of techniques trying to promote team spirit, building trust and inspiring employees. Tonight the hottest new strategy.
Bill Delaney has the story from Boston.
(BEGIN VIDEOTAPE)
BILL DELANEY, CNN CORRESPONDENT (voice-over): A group of otherwise seemingly, absolutely, incontrovertibly sane business people with their shoes off. Shouting "cool moss" to take their minds off walking barefoot on 1,200 degree Fahrenheit burning coals. You may well ask: why?
MARK MAGNACCA, HISTORY DEVELOPMENT GROUP: It's about being able to tap into your intuition, and it's about being able to tap into that other part of your brain that we don't typically use, and take a leap of faith.
(APPLAUSE)
DELANEY: Former successful investment counselor Mark Magnacca has taken the ancient ritual of firewalking to people who usually do their walking in wing tips and pumps.
Like this group at a suburban Boston Hotel. Garry Turner's a sales director who decided to try a firewalk.
GARRY TURNER, SALES DIRECTOR: I tell you, I am a little scared about it. One of the big things that sales people have to deal with all the time is fear. Fear of rejection, fear of losing, fear of the unknown.
DELANEY: The idea being, to begin seeing day to workaday fears in a whole different light, by confronting the very primordial and quite sensible fear of barbecuing the soles of your feet.
(on camera): The bed of burning coals that fires up as a pyre like this has never seriously burned anyone, say the people who lead these firewalks. One mystery, though, why some firewalkers do blister a bit, and others just don't.
CROWD: Cool moss! Cool moss!
DELANEY (voice-over): Whether you get a so-called hot spot, it seems, may be kind of up to you.
(on camera): You don't completely understand how this works?
MAGNACCA: I don't. People who have gotten one of these hot spots, many times they will say, I lost my focus halfway across. [applause]
DELANEY: Garry Turner made it all the way without a hot spot. Like walking on hot popcorn, he said.
TURNER: I guess it's got something to do with upstairs, you know. If you think about it, you can overcome it.
CROWD: Cool moss!
DELANEY: Burning coals may be a way for some to begin sticking their necks out a bit more without worrying quite so much about getting burned.
Bill Delaney, CNN, Boston.
(END VIDEOTAPE)
DOBBS: Up next, your e-mails and "Ahead of the Curve."
(COMMERCIAL BREAK)
DOBBS: Tomorrow, investors can expect reports on consumer confidence for the month of July. That report is forecasted to show decline slightly from June. Personal income and spending for June, also expected to match May's rise. And quarterly results from priceline.com, Verizon and CVS will be released tomorrow.
We had a big response to our story on the growing number of foreign high-tech workers in the United States who are here on temporary visas and who are now out of work. A lot of your messages were sympathetic to what are called H-1B visa holders, but Richard writes: "What about the plight of the American workers they are displacing? Aren't we entitled to the American dream, too? I have to commute from Los Angeles to Houston to find computer work at the lowest pay in over 10 years. The foreigners I work with are some of the nicest and hardest working people I've ever met, but that doesn't entitle them to take my job away."
With so many high-tech workers now out of work, Bob says: "The H1B program is no longer needed and should be phased out."
And onto the markets and today's analyst downgrades of the S&P 500 earnings. Leo casts a critical eye on one of the Street's most prominent bulls, Abby Joseph Cohen of Goldman Sachs: "For 2001, I believe she's predicting 1650."
Actually, Leo, now it's 1550. "I haven't heard much from her recently. I wonder why." Well, Leo, so do I. The S&P 500 now at 1204.
And Stephen writes about our story about Bridgestone's long- distance golf ball, the Lady Precept: "Lou, greatly appreciate your financial news, but your golf advice really pays off quickly. Try the new Precept ball... What a difference."
Stephen, glad your game is improving. Send us your e-mail at moneyline@cnn.com. Don't forget to include your name and state. We always enjoy hearing from you.
That's MONEYLINE for this Monday evening. Thanks for being with us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" is coming up next.
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