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Lou Dobbs Moneyline
Nasdaq Falls for Fifth-Straight Session; President to Announce Decision on Embryonic Stem Cell Research; How the Rich Stay Wealthy
Aired August 09, 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.
LOU DOBBS, HOST: Good evening. In tonight's headlines: A flat finish for the market on Wall Street. The Nasdaq falling for a fifth straight session. The Dow posting a slight gain. The president about to announce his long-awaited decision on government funding for stem cell research.
We'll be taking you live to Texas for the story, and also tell you the business side of the stem cell decision. And much of the nation suffering through yet another day of miserable heat. We'll report on its impact from the Midwest to the Northeast. We are going to fist check in with our correspondents for the stories they are working on.
And from Chicago, the Reverend Jesse Jackson and Toyota's executive James Press on the automaker's multibillion dollar minority program today announced.
And from the NEW YORK Stock Exchange, Christine Romans.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, the Dow reverses course after drifting in negative territory most of the session.
GREG CLARKIN, CNN CORRESPONDENT: The Nasdaq is now down 6 percent in as many sessions as investors still wait for some sign of good news from the technology sector.
ALLAN CHERNOFF, CNN CORRESPONDENT: A brilliant marketing move by discount retailers is paying off. Consumers cashing tax rebate checks at the retailers aren't going home empty-handed, and that's driving sales. I'll break down the numbers.
KITTY PILGRIM, CNN CORRESPONDENT: How do the super-rich stay rich in a falling a market? And what can we can learn from them about how to handle our money. I'll have a report.
DOBBS: Thanks. All of those stories and more coming up. Two sources now say that President Bush has settled on a stem cell compromise. John King joins us now with the breaking developments -- John.
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Lou, details very difficult to come by as the president prepares a nationally televised address to the American people tonight. But as you noted, two sources known to be involved in these deliberations, telling CNN the president will modify his campaign position, in which he flatly opposed any federal funding of embryonic stem cell research.
Instead, we are told the president will come out for a compromise that these sources say will allow funding in limited cases. These sources saying they do not expect this to be a great deal of federal money. They know that it will anger some on the Republican right, Christian conservatives as well as the Catholic church.
but they say that the president will explain his decision to the American people tonight, make the case that this is necessary for research purposes, but that he believes he has struck a reasonable compromise that will allow this funding only in very limited cases and that will include, we're told by these sources, guidelines to make sure, in the president's view, that this research does not go off into areas that he does not support, such as cloning human cells for such research or creating embryos simply for such research.
We are told the decision is limited to existing stem cell lines. That we are led to believe would be stem cells -- embryos -- already at fertility clinics left over from such treatment that would be thrown out if the president did not go ahead with this decision -- Lou.
DOBBS: John, any judgment from your sources on whether there would be required permission from those clinics from the donors before that research could be undertaken?
KING: We believe that is the case, Lou, from our sources, and from the recommendations the president has received from those on his team who favor such research. There has been a debate within the administration, but one of the proposals by his Health And Human Services secretary, Tommy Thompson, has been that the donors would have to give permission in those cases.
DOBBS: John King, thank you very much. John King, senior White House correspondent.
That decision, as John King pointed out, could be one of the defining moments of the Bush presidency, pitting science against beliefs, the religious beliefs of some. Kelly Wallace is standing by in Crawford, Texas, traveling with the president -- Kelly.
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, lots of activity here in Crawford, as a whole slew of reporters, and photographers and producers await the decision now coming about 2 1/2 hours from now.
The president, we understand, settled on going forward with his decision yesterday. And that he spends several hours working with one of his top advisers, Karen Hughes, crafting the speech that he will deliver to the nation tonight. He will be doing the speech, Lou, from what's called the Governor's House. And this is the old ranch house on his property, not too far from where I'm standing, about seven miles away, and that is the place where the Bushes lived before or until their new home was built. As John noted, aides saying this decision, not only the most important of the Bush presidency so far, but also a decision that they're going to take a lot of time to explain fully to the American people. So you're expected to hear the president talk about the scientific questions he addressed, the questions of ethics and morality. And also of course the president saying all along that this decision goes way beyond politics.
But, Lou, as you know and as John pointed out, definitely likely to be political ramifications here. Opponents of this research who say it's the same thing as destroying a human life, likely to be very, very upset indeed. You are likely to hear from moderates and others who support this research who would likely to be pleased if in fact the president decides to go forward with this limited federal funding of this research on stem cells obtained from human embryos.
So a lot of activity here, Lou, on what the White House has been calling a working vacation for the president and a White House spokesman, Scott McClellan, saying clearly with the activity today, you can see there is an emphasis on working, the working part of that vacation. Lou, back to you.
DOBBS: Kelly, thank you. Kelly, if I may, any sense from those advisers to the president that this may be a compromise taken by the president that in the end will please neither side of the debate?
WALLACE: Well, you know, again, this is being so tightly held that senior Bush advisers are not the ones really talking about this, that this information coming from elsewhere. The White House, though, definitely aware that what the president decides to do is likely to make some unhappy. So you bring up a good point.
If he decides to do just very limited funding, it's not likely to please particularly Democratic lawmakers such as Senate Majority Leader Tom Daschle, who has already said that if the president didn't come out and fully support federal funding, that he was going to push ahead with some legislation in the U.S. Congress and believes he has more than 60 U.S. senators to support that -- Lou.
DOBBS: And important among those groups. Thank you very much, Kelly Wallace from Crawford, Texas with the president. Principle among those concerned obviously the conservative constituents of the Bush Administration.
For that viewpoint we are going to Jonathan Karl on Capitol Hill -- Jonathan.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Lou, up here on Capitol Hill, the Republican leadership in both the House in Senate was virtually unanimous in urging Bush to come out against any federal funding of embryonic stem-cell research. I have spoken to aides to some of those that have come out most vocally including Tom Delay, Dick Army and J.C. Watts, in the House and they are expecting that their bosses will come out and express disappointment with the president's decision, but not to hit him hard on this. They understand the political reality here and the political reality was that there was 61 senators in the United States Senate that were on record saying that they were in favor of funding for this kind of research.
The president would have faced a battle in the Senate, a battle that he almost certainly have lost. There's also another factor that's interesting. We've been told by two sources that an internal Republican poll taken last week showed that even the Republican base, the religious conservative were actually by a slight narrow majority were in favor of some funding -- limiting funding -- of embryonic stem-cell research.
So this is an issue that you'll see some of those on the right criticize the president, but there is not expected to be a very harsh criticism at least from the leaders here on Capitol Hill.
DOBBS: And Jonathan, even the Vatican, which is strongly opposed to stem-cell research, the most recent survey that I recall seeing, showed 72 percent of Catholics in favor of stem-cell research.
KARL: That's right. And that mirrors what the Republicans are seeing in their own polls, not just among Catholics but among other church-going conservative. So they are expecting this to be something that the president will not be hit very hard. But you have to remember, the rhetoric up here was very, strong.
Tom Delay, Dick Armey and J.C. Watts saying that we should not rely on what they called an industry of death to find our medical cures.
DOBBS: Jonathan, thank you very much. Jonathan Karl from Capitol Hill.
Ahead of the president's announcement, investors on Wall Street were buying up shares in companies engaged in stem cell research. Indeed they have been for some weeks.
All of this on speculation that the president will ultimately endorse at least a limited federal role in financing such research. Peter Viles has the report.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): For a stock market lacking in conviction and action, the president's decision on stem cell research provided a little of both: The conviction was that he will endorse at least a limited federal role in the research. The action was a spike in stem cell stocks. The day's winners: StemCells, Aastrom Biosciences, Geron, and Cryo-Cell International.
California-based Geron is already a leader in privately financed research.
UNIDENTIFIED MALE: We are not going to be seeking substantial NIH funding to supplant the monies that we are already expending on this technology. It simply makes our ability to collaborate creatively with arguably the most sophisticated biomedical community in the world much more easy to do.
VILES: But stem cell stocks are not for the faint of heart, or for fundamentalists. Take a second look at today's winners. StemCells barely showed any revenue last year.
Aastrom lost 9 million, Geron: 45 million. Together, the four companies are worth $646 million, but had only $10 million in combined revenue last year.
ALEX ZISSON, J.P. MORGAN: it is still so early in the development of this technology. It would be like investing in car companies in 1908, or Internet companies in 1992. It's just so early you don't really know what the landscape is going to look like. You don't know what technologies are going to supersede the ones that are around today. And you really don't know what companies are going to be around at the end of the day, or even when the end of the day is.
VILES: This is a story biotech investors know all too well. The group was swept up in the Nasdaq bubble and peaked in March of 2000. This is a chart of Applera-Cel Genomics, almost identical to the rise and fall of Geron.
(END VIDEOTAPE)
VILES: That said, the possibility of federal funding, widely seen as a positive for companies now conducting private research, even if the fruits of that research may not come to market for three to five years -- Lou.
DOBBS: And Pete, even a limited compromise on the part of the president here would offer up some symbolic leadership that would perhaps spur further private investment, would it not?
VILES: Sure. These stocks generally trade on emotion, there are really no fundamentals. And the emotion coming out of a compromise that leads to some funding I would think would be positive for this group, Lou.
DOBBS: OK, Pete. Thank you very much. Peter Viles from New York.
Well, today, as we reported, the Dow managed to eke out a small gain, after trading lower for most of the session, the Dow closing up just 5 points in moderate trading. We are going to turn right now to Christine Romans at the New York Stock Exchange to bring us up to date -- Christine.
ROMANS: Hi there, Lou. Well, indeed, the Dow climbed back from an 88 point deficit in the early going to close higher but only by about 5 points. It wasn't a resounding rejection of yesterday's performance, indeed. Volume, though, pretty good here. Folks are saying they like the fact that we were over a billion shares overall. Take a look at the brokerage stocks, though. Those got slammed here today for the fifth day in a row. The American Stock Exchange Broker/Dealer Index under water to the tune of the 2.5 percent here. Today, folks are saying that the brokerage stocks acting sort of as a proxy for some concerns over the macroeconomic picture here overall. People are worried that sloppy stock markets might mean that brokers earnings might be pinched. Look at the chart. It's been weak for some time there.
Also take a look at Nortel Networks, this one was the most actively traded stock here on the Big Board today. The company closing down, its stock down about six cents here in very active trading. It's privately selling up to $1.5 billion in a seven-year convertible senior notes that are up from about a billion that we've been hearing about late yesterday. That could be an active stock again tomorrow.
And take a look at one of the big deals we've watched here today: Solectron, this is the world's largest electronics contract manufacturer, buying Canada's C-MAC Industries for $2.7 billion. Solectron shares were very active here today at the Big Board -- Lou.
DOBBS: Christine, thanks. Christine Romans from the Big Board.
The Nasdaq under pressure as well throughout the session, and indeed posted its fifth straight loss, now down nearly 21 percent on the year. Greg Clarkin at the Nasdaq marketsite brings us up to date -- Greg.
CLARKIN: And Lou, you know, it was a loss, but a lot of traders looked at this as actually a victory. The Nasdaq, after all, lost just 3 points, and it held at the key support level, right about 1,965 or thereabouts.
If you look at a chart of today's trading, you'll see it dip below that, and at one point getting down to as low as 1,941, but it bounced nicely off that, off the intra-day low, and came right back to settle at about 1,965.
No big sector moves, even today, outside of the stem cell companies. We didn't see the chip stocks, which a lot of folks, you know, just love or hate on any given day -- they were mostly flat.
But take a look back here at the wall. Let me show you a couple of movers that we did find for you. Sun Microsystems, down 2.8 percent. There are some concerns now over a possibility of a partnership with Hitachi being more limited than some folks expected. It rose yesterday on that partnership, today gave back a little bit.
Verity, down 24 percent, the software company coming out and blindsiding investors with a profit warning. They have a conference call for Monday, scheduled to clarify.
Again, Lou, the Nasdaq down just 3 points, a lot of folks looked at that as favorable performance today -- Lou.
DOBBS: And you managed to stay awake throughout the entire session, Greg. Thanks, Greg Clarkin.
Now, taking a look at stocks moving in after-hours action. Jennifer Westhoven is standing by at the Instinet trading desk, where, Jennifer, I presume things are just hopping at this hour?
JENNIFER WESTHOVEN, CNN CORRESPONDENT: Well, actually, Lou, they are, because when we were -- got ready for this hit, all of the stem cell companies -- Peter reported that they had surged during the day -- they were all building sharply. We had stem cells at that point up more than 10 percent in after-hours trading.
But ever since CNN has reported the news about President Bush, of course citing two sources saying that President Bush will allow some funding for some kinds of cloning for that stem cell research, we've actually seen some of these stocks give up their gains. Stem cells, for instance, is right back where it started.
And of course, there have been many analysts out there sounding just like Alex Zisson just said, saying this is a very high-risk area, you've got to watch out. But very amazing to see those gains just evaporate.
Picks are doing very well after the (UNINTELLIGIBLE), up more than $2 a share. Lou, back to you.
DOBBS: Those stem cell stocks, presumably investors selling on the news. Jennifer, thank you very much. Jennifer Westhoven from the Instinet desk.
Price-conscious consumers helping many discounters post stronger- than-expected sales for the month of July. But specialty retailers not doing as well. Allan Chernoff is here and has the story for us -- Allan.
CHERNOFF: Lou, you know what they say: When times get tough, the tough go shopping, and these days they are going shopping at the discounters. During July, same-store sales rose at Wal-Mart, Target, Costco, K-mart and J.C. Penny. Many shoppers avoided more expensive chains like Federated and Saks, and specialty retailers had their troubles: Ann Taylor, Gap, and Sharper Image, which suffered a huge decline because its razor scooter is no longer cruising out of the store.
But it's not just the economic uncertainty that's helping discounters. They're aggressively cashing in on the tax rebate, literally, by cashing the rebate checks. Wal-Mart says those who walk in with a check from the IRS are spending one-quarter of it at the store. And at the company's Sam's Club chain, they're spending 80 percent of the rebate. K-mart and Home Depot are also cashing government checks.
Now, retailers as a group did not perform all that well today in the stock market, but there's no doubt: the place to make money in this sector has been the discounters. K-mart, on the path to recovery, has seen its stock climb 57 percent this year. And J.C. Penny, up 152 percent. Price-conscious consumers are delivering price appreciation for investors -- Lou.
DOBBS: Not bad in a slow economy where everybody else is struggling.
CHERNOFF: That seems to be where they're going.
DOBBS: Now, why in the world Sam's Club and Wal-Mart and -- they're basically tied up together. Why would one have more people spending more of that rebate in one store and not another?
CHERNOFF: Baffling! I couldn't answer the question, I'm not sure if the executives of the company can.
DOBBS: But either way, I guess they'll take the money?
CHERNOFF: They will certainly be glad to take it.
DOBBS: Allan, thanks a lot. Allan Chernoff.
Toyota today announcing a multibillion dollar plan aimed at stepping up its commitment to minority suppliers and employees, that 10-year deal brokered in part by civil rights leader Reverend Jesse Jackson, who had threatened to boycott Toyota over a promotion he felt was offensive to black customers. The reverend joins us now from Chicago, and with him James Press, who is the chief operating officer of Toyota Motor Sales. Gentlemen, good to have you with us.
REV. JESSE JACKSON, RAINBOW/PUSH COALITION: Good to be with you.
JAMES PRESS, COO, TOYOTA MOTOR SALES: Good to be with you.
DOBBS: If I may begin first with you, Jim. This announcement by Toyota unexpected, it is a very large commitment. Tell us about it.
PRESS: Sure. It's an $8 billion commitment over 10 years, and it represents a long-term commitment that we have to assure that minority businesses and our own business both could grow together.
DOBBS: Now you -- you had been threatened by Reverend Jackson, some -- at one point, talking about extortion, in point of fact, as he was condemning Toyota for its promotion and its advertising. What role did that play, his influence?
PRESS: Well, first of all, I don't ever remember the word "extortion." I think what he did is he held a mirror up in front of ourselves to let us see exactly what we were doing.
We had a great program, a continuous program that we felt good about. But the reality is, our company has two principles: respect for people and continuous improvement. He allowed us to see that there more we could do to both gain business and help diversity and inclusion.
DOBBS: Well, this is an extraordinary commitment, and I want to turn, if I may, Jim, to Jesse Jackson, and ask, Jesse, at this, you've got to be extraordinarily pleased with this response on the part of Toyota?
JACKSON: Well, I am, because it really represents the chance for market expansion. After all, when you pull down the walls, what's behind the wall, except market, money, talent and location? And that's the key to growth.
You look at urban America, you talk about underserved market, unutilized talent and untapped capital. Lou, there is no talent shortage, there's an opportunity shortage. So, you are now talking about people who want to invest in Toyota to become dealers, to become ad agents, to become employees.
DOBBS: Jesse, are you surprised by the -- as you and I were talking here a couple of months ago, I could remember you being visibly upset and annoyed in very questioning of Toyota's commitment to diversity. Are you surprised by the level of commitment that's evidenced by this amount of money today?
JACKSON: Well I'm delighted by it, because this really is Toyota's investment in its own future. You know, we rise or sink together. It represents the development for those who are locked out, it represents growth for Toyota, and so everybody becomes a winner.
The idea of using black and Latino ad agencies adds to their creativity, it adds to their market. The idea of using black and Latino dealers in Toyota and Lexus means that they'll have a greater concentration, a penetration into the marketplace. So, yes, I am pleased, and this really raises the bar for the automotive companies.
DOBBS: Jim, back to you. How difficult was it for you and for your fellow executives at Toyota to come to this decision?
PRESS: It really wasn't difficult. The issue is business. We want to sell cars and trucks, we want to increase our owner body, there's a great market of opportunity -- and at the same token, we can do the right thing. So, it really makes sense.
JACKSON: Lou, we did not know how good baseball could be until everybody could play. We don't know how good business can be until everybody can play.
There's a whole body of market, money and talent waiting to be a part of America's economic expansion.
DOBBS: I'm sorry, we're out of time. But we do see one thing: what business can do when you and Jim -- your organization and Toyota get together. Gentlemen, congratulations; thank you very much, Jim Press, Jesse Jackson.
Well, the conventional wisdom on Wall Street suggesting semiconductors the first to lead us into the market malaise, and they will be the first to lead us out. Right now there is a glaring difference of opinion, however, on the state of the chip market. Over the past week that sector has been described as: "Jump aboard, it's plain sailing," to "Watch out, it's a mine field."
Steve Young takes a look at the great chip debate and what you really -- really -- should believe.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): It's been nuclear winter for chip stocks since last November. But it's hard to tell glancing at one of the industry's key thermometers. The Philadelphia Semiconductor Index stood at about 617 six weeks ago. This is the stock's index now: hardly a change.
But underlying that: tremendous volatility, churn and change of mind. Here's a different snapshot of the silicon business in the same six week slice: Advanced Microdevices took the biggest hit. it's arch-enemy Intel was flat. Motorola was the biggest gainer. LSI Logic was up 12 percent. And the mother of them all, Applied Materials, who's multimillion dollar machines crank out the chips for most companies, took a 9 percent dive.
Back in early April when the stocks had fallen down to 520, Jonathan Joseph was first to go bullish on the whole chip sector.
JONATHAN JOSEPH, SALOMON SMITH BARNEY: We really pointed that the upturn probably wouldn't be until the August, maybe September time frame, and that it's at that time that the stocks would gradually begin to work better.
HANS MOSESMANN, PRUDENTIAL SECURITIES: We like three: LSI Logic, a very good diversified play; Intel; and Micron -- we think DRAMs is the ultimate cycle play. We'll see that recover over the next several months.
YOUNG: But there are still far more bears than bulls among the chip analysts, worried, among other things, about Intel's price war with AMD.
DAN NILES, LEHMAN BROTHERS: This will obviously have a pretty negative impact on average sign prices, revenues and margins.
YOUNG: The last bad chip slump was a 17 percent loss over a 13- month period in mid-1980s. That loss may already have been matched in the current 10-month slide.
(END VIDEOTAPE)
YOUNG: Now here's a sign of ambivalence: Analyst Mona Eraiba believes chips for PCs will snap back first. OK Mona, I ask, what's your rating on Intel.
Lou, she didn't say buy, she said "accumulate."
DOBBS: Accumulate. Well, in the parlance of Wall Street, should we take that to be just a sort of soft buy?
YOUNG: A very soft buy.
DOBBS: OK Steve, thanks a lot. Well still ahead here on MONEYLINE: how the super-rich are riding out this economic slowdown. We'll take a look at the investment strategies of the wealthiest Americans and see what we can learn for our own management needs. Also, a brutal heat wave broiling much of the country. We'll be checking out how corporate America is scrambling to pay for power and how those utilities are providing power. Also tonight: a deadly blast in the city of Jerusalem; a suicide bomber claiming more than a dozen lives. We'll have the latest for you on that.
(COMMERCIAL BREAK)
DOBBS: A powerful mail bomb tore apart a busy pizzeria in Jerusalem, killing at least 15 people dead. A Palestinian suicide bomber carried the device in a bag slung over his shoulder, setting off the blast just about lunchtime in the busy section of West Jerusalem. The Islamic Jihad has claimed responsibility. Jihad saying it is retaliating for an Israeli raid on the Islamic group Hamas nine days ago. Israeli officials say that at least six of the dead were infants. Another 13 people remain in critical condition tonight.
Turning now to energy in tonight's powering America, another day of record heat sent temperatures into triple-digits from the mid- Atlantic through New England through the Southwest.
Hillary Lane now on the struggle for utilities and corporate America to keep up with the demand for power.
(BEGIN VIDEOTAPE)
HILLARY LANE, CNN CORRESPONDENT (voice-over): Xand Corporation provides Internet services and infrastructure to companies from "Reader's Digest" to Pepsi. But for three record-hot days this week, they've been in the business of supplying power.
LEE WEINSTEIN, PRESIDENT & CEO, XAND CORPORATION: They pay companies like us that have these kinds of facilities to go on to generator power and take the load off the grid, and they pay us based on the amount of load that we take off of the grid and the amount of time that we take off the grid.
LANE: For firing up his backup generator, Weinstein nets upwards of $1,000 a day, plus a retainer for maintaining the generator in the first place. New York state's energy clearinghouse estimates the state has saved more than $3 million over the three hottest days this week under emergency programs like this one.
When temperatures top 100, like in Boston today, operators have little choice. Power's so much in demand it's a sellers' market.
STEPHANIE STANTON, ENERGY NEWS LIVE: They will buy from anybody that they can to actually cover their loads; and they could pay prices up to $1,000 per megawatt hour, which is the cap price in New England.
LANE: And rather than pay up, some businesses, and the state governments of New York and New Jersey, are opting to shut down and send workers home early.
(END VIDEOTAPE)
LANE: But then those workers go home and fire up their air conditioners. And after several days of that sort of behavior, many are likely to feel sticker shock when those electric bills come at the end of the month. And maybe that is where some of those tax rebate checks will come in handy -- Lou.
DOBBS: A good idea. Hillary, thanks very much. Hillary Lane from a very hot New York City.
It was not hot weather but, rather, storm clouds in Florida today that forced NASA to scrap the launch of the space shuttle Discovery. They will try again, perhaps, tomorrow. The primary mission of the shuttle, of course, to replace three crew members aboard Space Station Alpha.
Still ahead here in the next half hour of MONEYLINE, we'll tell you how the wealthiest Americans are keeping up with market volatility. the focus will be on the investment strategies of the super-rich and how we can all learn something. Also, the markets search for direction on renewed concerns about consumers. We'll be talking with leading fund manager Guy Pope about where to put our money.
(COMMERCIAL BREAK)
ANNOUNCER: LOU DOBBS MONEYLINE continues. Here again, Lou Dobbs.
DOBBS: Stocks today ended little change, more data today suggesting the economy remains stagnant. The Dow did manage to close with a small gain, edging up five points. The Dow tonight at 10,298. It had been Down much of the session, led by mixed news about retail sales and a bigger-than-expected jump in weekly jobless claims.
The Nasdaq, posting its fifth straight day of losses, ending just four points shy of a four-month closing low. But the Nasdaq fell only nominally, down three points, settling at 1963.
Taking a look now at some widely helds: Wal-Mart, closing down 36 cents. The world's largest retailer reporting today that its same- store sales rose six percent in the month of July. United Technologies one of the biggest gainers today. It closed up $1.27. On the big board, market breadth was positive. Advancers beat out decliners by a nine-to-seven margin. On the Nasdaq, decliners beat advancers by a roughly five-to-four margin. So it was a mixed, rather flat performance.
For a look now at what investors and traders may expect on Wall Street tomorrow: Christine Romans.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, how do you follow up on a five point Dow rally? Well, we're going to have data an hour before the opening bell tomorrow that could give some indication. It's the July producer price index, it's inflation data. When the economy was bubbling this was a number that struck fear in the hearts of some folks. Nowadays it's seen as a little less concerning to the Fed. But July PPI is seen down about 0.3 percent overall, the core rate up just a tenth of a percent.
That's the expectation that almost perfectly matches what was actually seen in June. Barring anything ugly out of that, folks are starting to talk tonight about the fact that maybe the market might be due for a bit of a pop, Lou. They like the fact that some volume has come back into the market. They're going to be looking to see if that volume could continue tomorrow. But remember, Fridays have been very fickle on Wall Street. It is still summer time. We'll see if we can some good activity here tomorrow or if things start to really wind down for a long weekend after about lunchtime, Lou.
DOBBS: You're talking about a pop. I guess after a five-point day a pop would be, what, about 15,20 points?
ROMANS: Some folks are happy about some of the support levels that held here. So they're saying maybe we could be due for a little bit of a rally tomorrow, to see if we can get above some other levels.
DOBBS: Christine, thanks. Christine Romans.
The Nasdaq slipping slightly today, as I mentioned. Looking to see now if tech stocks can hold the line tomorrow, Greg Clarkin.
GREG CLARKIN, CNN CORRESPONDENT: Lou, first and foremost, traders tomorrow will be looking to see if there's any kind of a profit warning that came out of the blue today, such as Verity -- that software company really blindsiding investors. So that will be on the front burner tomorrow. And then also, watch the volume. As Chris mentioned, we've seen real, real slow Fridays and Mondays. That's a usual summertime trend but it has been exacerbated by the bear market. So a lot of folks will be watching that volume figure.
When you get that light volume, you do have the potential to get some real sharp market moves and a piece of bad news could really swing things lower. Now, I guess, Lou, the line of the day has to go to a veteran trader who I spoke with about the light volume this summer and how quiet it's been. We're speaking to him about early afternoon hours or so when the Nasdaq was down maybe 12, 15 points. And he says, "You know, it's been so quiet around here we can hear the salaries dropping." So that is kind of the tone that we're getting off trading desks.
It has just been tremendously quiet for these folks and that is something that kind of worries them when you get to a Friday and a Monday period. Lou?
DOBBS: Well, it's good in all of this that at least humor perseveres.
CLARKIN: Exactly.
DOBBS: Thanks, Greg. Greg Clarkin. Topping tonight's MONEYLINE movers, Cablevision dropping $2 a share. The cable operator, owner of several professional sports teams and programmers narrowing its second quarter loss, boosted by the sale of cable assets. Separately, Cablevision allowing AT&T to sell $1 billion of its stake in the company. Western Wireless down more than $3 a share, the wireless phone service provider posting a wider-than- expected second quarter loss, and lower-than-expected subscriber growth.
Verity losing more than $3 a share, that after issuing its second warning in as many months; the Internet software maker now expecting a loss in its fiscal first quarter instead of a profit, citing delayed and canceled orders. Shares of Verity have plunged more than 77 percent this year. In tonight's MONEYLINE FOCUS, Guy Pope. He warns the markets may retest their lows for the next few months before showing some signs of a recovery, but he does expect the Fed to at least cut interest rates for the seventh time this year. Guy joins us from Portland, Oregon. Guy, good to have you with us.
GUY POPE, COLUMBIA FUNDS: Hi, Lou. It's great to be here.
DOBBS: You don't see much happening here for some months?
POPE: No. Since mid-May, really, the market has just been churning lower, and wish I could be more optimistic, but I'm not. The economy is very weak, and basically that leads to negative earnings and the surprises are all negative on the downside.
DOBBS: You talk about about testing lows. Are you really talking about the possibility we're going to see new lows here?
POPE: Potentially. I don't know for sure. But it appears -- it wouldn't surprise me if we tested the lows that we saw in the late March time frame.
DOBBS: When you say test them, what do you think the risks are, here? You obviously don't believe this market is going to move much higher, drop down to those lows of March and April. How bad do you think, potentially, it could get?
POPE: Well, if we retested those lows on the S&P 500, that would another seven percent from here, and then hopefully it would stablize from there. I don't know for sure, but I think that's my downside at this point. I do think that the market could turn more optimistic in the Q4 to Q1 timeframe, and really the driver is that by then, hopefully, we will see signs that the economy is improving. Investors will then anticipate better earnings ahead and will begin investing in anticipation of those higher earnings and cash flows.
DOBBS: Let's talk about your thoughts on what investors should be doing with their money, and let's talk rather broadly in terms of strategy, here. Are you suggesting being -- strategically being defensive or offensive? Looking for opportunity or trying to avoid risk, here?
POPE: That's a great question. And the way we're approaching it right now, we're taking a barbell approach. We're looking for -- first and foremost, valuation. We're being very valuation sensitive. And we're looking for two things: One is companies that can execute in this difficult environment, but also trying to find some loaded springs, if you will, companies that will really see a nice earnings pop that -- once the economy reaccelerates.
DOBBS: Let's, if we may, Guy, take look at the recommendations. You were last with us back in May and you recommended at that time two stocks. 3M, which has lost about lost nine percent, and Bank One, up about three percent. And you view on those stocks at that time was that the managements of those companies would be an interesting bet. Do you still feel the same way?
POPE: Yes, absolutely. We own them both. Both are being -- their results and and improvement in results that I expect are kind of being overshadowed right now by the economy, but the initiatives that I see them puting in place, I think, are going to pay dividends for shareholders going forward. So I'm very encouraged on both names.
DOBBS: We have about 10 seconds left, 10 to 15. Do you want to add any other recommendations to that list at this point?
POPE: Just two names that I've been focused on lately, Chubb Insurance and American Express. I would be patient, very patient on American Express. They've had a difficult year this year. I think it's one of those loaded springs that you want to accumulate below 40 and can have a nice year in 2002.
DOBBS: Thank you very much, Guy Pope. We appreciate it. Coming up next here, lessons from the economic elite on how to survive uncertain terms. We'll be joined by Mort Zuckerman.
(COMMERCIAL BREAK)
DOBBS: Money: It is one thing to make it, it's quite another to keep it. But how in these teams are the very wealthy investing? How are they preserving their wealth and perhaps more importantly than all of that, what can the rest of us learn about the affluent and keeping that money?
Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): The kind of money where you don't to have care. Myths about the super-rich abound. Some are true, some aren't. Myth number one: The wealthy are immune to short-term moves in the market. A recent survey found affluent investors' holdings on U.S. stocks decreased in value by 13 percent on average since the beginning of the year.
Of those who sold stock, more than a third put it in cash, 22 percent invested in bonds and 1/5 invested in real estates: 18 percent in private equity.
These days typical asset allocation of the wealthy: in stock investments, 26 percent is in Blue Chips, 11 percent in small caps, 23 percent of assets are in bonds, 16 percent are in cash equivalents, 9 percent are in real estate.
Also, the truly wealthy are more diversified than the average new investor in the last ten years, who typically piled into stocks. But money managers say the average investor is catching on.
JACK SHARRY, PHOENIX INVESTMENT PARTNERS: If you recall just a couple of years ago, value was dead and diversification was the wrong way to go. That's back in spades, that being diversified, and appropriately so, makes sense.
PILGRIM: Money managers to the monied, like Arthur Gray, say the truly affluent are less likely to play the market.
ARTHUR GRAY, CARRET & CO.: There comes a time when you have to rest your money. You're not looking to make money, but you are looking to preserve it. You know we are in a bear market, and there is an old Wall Street saying that says, in a bear market, everyone loses. And he who loses least, wins.
(END VIDEOTAPE)
PILGRIM: Well the good news for the even moderately wealthy investor is, he's not alone. He is now being a considered a prize client by money management firms. Minimums are being lowered and managed accounts are now being pushed by many firms. Managed accounts surged 20 percent last year even as assets and mutual funds declined slightly -- Lou.
DOBBS: So the bottom-line message there is?
PILGRIM: Diversify and hold tight.
DOBBS: I love seeing the T-bills and notes in the asset allocation. Because there is a great story about Groucho Marx walking through the New York Exchange and the traders asking the specialists on the floor, "Mr. Marx, what do you invest in?" And he said, "Well, I just invest in T-bills. And they sort of sagged with disappointment and said, "Mr. Marx, you can't make any money on T-bills." And he says, "Well, you can if you've got enough of them."
Kitty, thanks a lot. Kitty Pilgrim. Still to come on MONEYLINE, a man once described as famous for being famous. He's also got some candid and often very witty views on politics, the economy and anything else that crosses his mind. He also knows a lot about economics. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Coming up next here on MONEYLINE, a media magnate, a mogul if you prefer, who has a lot to say about business, politics, the media and this economy. Mort Zuckerman joins me next.
(COMMERCIAL BREAK) DOBBS: Mort Zuckerman earned his money, made his fortune, if you will, in the real estate market. He is also a publishing czar, a media magnate, I think I can sat median mogul as well. He owns "U.S. News And World Report" as well as the "New York Daily News" and joins us now.
Mort, good to have you with us.
MORT ZUCKERMAN, CHAIRMAN & EDITOR-IN-CHIEF, "U.S. NEWS AND WORLD REPORT": Good to be here, Lou.
DOBBS: Let me ask you to begin with your sense, because your interest goes across a very cross-section of this economy, your take on where we are economically.
ZUCKERMAN: I think we're -- the economy has not hit the bottom, I don't believe the stock markets have hit the bottom. I think we are in an unprecedented economic downturn, that is unprecedented at least since the end of World War II. It's one that was led by an investment bust following an investment boom. It's also an economy that is going down simultaneously with Japan going down and Europe going down, so that our exports are going down, so capital investment is going down, exports are going down, and consumer spending is weakening. And I...
(CROSSTALK)
DOBBS: So, you actually see this as worse than the period of the mid-'70s?
ZUCKERMAN: Absolutely. I think we are heading in for the rockiest time -- I think this patch that we're going through in the next six months is going to be a very, very seriously difficult economic time for this country.
DOBBS: Categorically, a recession?
ZUCKERMAN: Well, you know, it all depends. We've gone from a GDP growth of 8.3 percent to -- the last measurement was 0.7 percent in a period of six quarters. That's probably the fastest decline in growth in GDP that we've had in a very, very long time. It may not be an actual contraction -- although I think we are going to head into that -- but it feels like one, because it's like going from 80 miles an hour down to 10 miles an hour in a very short period of time.
DOBBS: And the stork market?
ZUCKERMAN: Well, I've been bearish on the stock market for a while, and I don't think we've hit the bottom. I still think the multiples are too high. They are into the high 20s. Typically, they've been at lower levels. They may be justified in being higher than 15, which is roughly what their average is, but I still think the market is very vulnerable and that's going to have a big impact on a consumer and business.
DOBBS: What does it pertain for real estate? ZUCKERMAN: Well, real estate, strangely enough -- at least commercial real estate, which is that part that I'm familiar with -- is in an unusual position, an unusually good position, because there is no excess supply. Real estate went through a depression in the early part of the 1990s, and that really scared off -- and rightly so -- a lot of lenders, so that they did not finance a lot of real estate, and therefore we have virtually no excess supply in most markets.
It doesn't mean there isn't a slowdown in real estate, but there is nothing like the kind of downturn we've had either in the beginning of the '90s, the '80s, the '70s or the '60s.
DOBBS: Your advice to investors, to those who are either in the market or in real estate?
ZUCKERMAN: I'd be very cautious for a while. I mean, I think nobody can really predict how bad or how good the economy will be, and I think there's so much risk it is time to be very conservative and very cautious on every level on one's personal financial life.
DOBBS: I'm normally cheered when we have the opportunity to talk. Nonetheless, it's good to see you. Mort Zuckerman, as always thanks.
ZUCKERMAN: Thank you.
DOBBS: Coming up next here: your e-mails and "Ahead of the Curve."
(COMMERCIAL BREAK)
DOBBS: Tomorrow, the producer price index report for the month of July, economists expecting prices to fall overall. Stock to watch tomorrow: Philip Morris. A California judge late today cutting a punitive award for a long-time Marlboro smoker Richard Boeken from $3 billion -- that's right, $3 billion -- to 100 million. The judge also ordering a new trial, unless Boeken agrees to accept that amount by the 24th of August.
Time now to look at some of your thoughts. Al Rickett of Mississippi poses a question asked by many of our viewers. He writes: "If we are so short of oil, why are we exporting oil to China and Japan from the Alaskan oil fields?"
Well, Al, the oil market is an open market, of course, a global market. And as crazy as it may sound, it is often more economical to ship oil to Japan rather than to a refinery in the continental United States. A refinery in Philadelphia can buy oil more cheaply from Nigeria or Mexico because of the transportation costs. Bear in mind, Alaskan exports amount to only about 0.5 percent of total U.S. consumption.
In our story last night on President Bush being peeved at "Talk" magazine after they poked fun at him and his daughters, Kanti Shah writing, quote: "A public official should expect good or bad publicity, or else should get out of office. I'm going to subscribe to the magazine."
And we had a huge response from all over the country to that e- mail from Brian, an MBA student, who said he found it demeaning to work in a restaurant. Well, here's a snapshot of what many of you had to say. From Lee Williams who said he earned his MBA years ago, quote: "Brian needs a solid dose of reality therapy, perhaps at McDonald's or Jiffy Lube. He needs to experience what it means to earn a living."
From Rob: "If more people recognized the dignity of work, any work, we would have a better society."
Ed Wong in California writes: "I've been able to make it up to the position of millionaire. One of my first jobs was as a dishwasher. Hard work pays off, no matter how humble the beginning."
And Bruce Donsker writes that his son is an MBA graduate and lost his job the day before he was to start. He writes: "He is now working for $8 an hour selling clothes in the evening so he can look for a job during the day. And I am proud as hell."
Andrew in Hawaii says he's a law student, owes more than $60,000 in loans, and he tomorrow -- he writes: "Tomorrow, I start waiting tables part-time. Am I degrading myself? Give me a break! Every American who works for a living is a respectable citizen, period."
You are, of course, absolutely right, Andrew, and we wish you all the best of luck in that new job.
Thanks to all of you for your e-mail, and please e-mail us anytime, at MONEYLINE@CNN.com.
And for tonight, that is MONEYLINE. We thank you for joining us. I'm Lou Dobbs. Good night from New York.
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