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Lou Dobbs Moneyline
America's New War: Dow Declines 10.73 to 8,836.83; Nasdaq Falls 18.34 to 1,480.46
Aired October 01, 2001 - 18:00 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, CNN ANCHOR: Good evening, everyone. Nearly three weeks to the day after the terrorist attacks, and we have yet to see a military response from the United States. But apparently, that is about to change. The USS Kitty Hawk has deployed to the Persian Gulf. It joins three other carriers and their task force already there.
Meanwhile, efforts to choke off Osama bin Laden's money continue. We'll have a report for you on the progress in freezing his funding. And gun sales in this country are soaring. We'll tell you how the most heavily armed nation in the world is adding to that armament. Worries about military uncertainty and the economic prospects today weighing on Wall Street.
The major markets ending lower and joining us tonight, Henry Kissinger, the former secretary of state will join us to tell us what the appropriate U.S. military response should be and on whether there's been too much emphasis on coalition building, and not enough on terrorist destruction. We'll also hear from former Defense Secretary William Cohen on what the United States can and should do militarily both in terms of retaliation and defense.
And we will be talking to the head of the World Bank, James Wolfensohn, on whether the terrorist attacks, and a war against terror, will send the world's economies into a recession.
But first, here are the latest developments in America's New War: President Bush says the U.S. is making progress in the fight against terrorists, including tracking down its money supply.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thus far we've frozen $6 million in bank accounts linked to terrorist activity. We have frozen 30 al Qaeda accounts in the United States and 20 overseas and we're just beginning.
(END VIDEO CLIP)
DOBBS: Meanwhile, CNN has learned the Bush Administration is beginning to share evidence with its allies, linking Osama bin Laden and his al Qaeda network with the September 11 terrorist attacks. U.S. officials say they believe Osama bin Laden remains in Afghanistan. Law enforcement sources tell CNN as much as $100,000 was wired from Pakistan to one of the terrorist hijackers over the past year. Iran's defense minister said today that it will take action against any U.S. warplanes that violate its airspace if American jets strike Afghanistan.
Now on to the money trail. While there has been no military response to the September 11 attacks, the U.S. has made progress in choking off terrorist funding. Allan Dodds Frank has the latest.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): The U.S. treasury has frozen than $6 million and authorities overseas have stopped more than $25 million more. In 50 accounts liked to Osama bin Laden's terrorist network.
In Britain, the chancellor of the exchequer said authorities there, who already had frozen about $68 million belonging to the Taliban, had located another $20 million or so in several dozen accounts.
GORDON BROWN, CHANCELLOR OF THE EXCHEQUER: Here in Britain we are already implementing last year's United Nations resolution on terrorist financing, that bank funds are mounting to $88 million have now been frozen in Britain.
FRANK: In Germany, CNN has learned, accounts containing a total of less than $5 million have been frozen. In France, about $3.6 million has been located so far and in Switzerland, less than one million dollars.
In a related development, authorities tell CNN they have determined that one of the hijackers, Mohamed Atta, received about $100,000 in wire transfers from Pakistan to two Florida bank accounts.
And law enforcement sources say, in the days before the September 11 attacks, Atta and two other hijackers each wired back more than $5,000 to accounts that passed through Dubai, in the United Arab Emirates. The money went to a man suspected of having links to Osama bin Laden who flew to Karachi the day of the of the attacks.
(END VIDEOTAPE)
So far, in addition to the United States, only 19 other countries have actually committed to freezing assets, and another dozen have said their banks are reviewing accounts. Those numbers are expected to increase sharply as soon as some countries are able to pass new money-laundering legislation.
DOBBS: Allan thank you very much.
Going after the money is one thing. Going after terrorists militarily is another. And the coalition necessary to do so is yet another. Here to talk about our options, Henry Kissinger, former secretary of state. It is good to have you with us, Henry. HENRY KISSINGER, FORMER SECRETARY OF STATE: Always a pleasure to be here.
DOBBS: Almost three weeks to the day since the terrorist attacks, coalition building underway. Is it going a pace -- is this a reasonable amount of time or does it seem exceedingly slow?
KISSINGER: I think whatever one thinks of coalition building, I think it's a good idea, we have to assemble the necessary forces. We have to get supplies into place. I think the major challenge is when we act that we act in a decisive way.
DOBBS: Decisive in this instance, we have named an individual, Osama bin Laden, his network...
KISSINGER: He's a symbol. He's not the problem alone, and we should not think that if we catch Osama bin Laden or kill him, that that's the end of the problem, or by itself, an adequate answer to what has happened in this country.
DOBBS: Those countries that sponsor terrorism, and they certainly include the Taliban in this instance, perhaps reaching out as far as Iran, Iraq, Libya, the Sudan, which has now been exculpated apparently through coalition building. What will be the impact here in terms of policy?
KISSINGER: I'm looking at the coalition building as phase one. At the end of the day this whole enterprise will be judged by effectiveness. And there must be some criteria by which one judges whether countries are, in fact, participating in fighting terrorism other than condemning the particular attack on downtown New York and on the Pentagon. So I do not take it for granted that the present coalition will stick together on every measure. But I do take it for granted that the United States will continue to press until a major success has been achieved.
DOBBS: That major success, in your judgment...
KISSINGER: There are a number of criteria by which one can judge it. For example, there's no excuse for any state to encourage terrorism through it's state supported media, which as has happened to us. There is no excuse to have terrorist training camps on its soil. There is no excuse nor not blocking the transfer of funds. Any state that continues to do this would in my view, fall in the category that President Bush in his rally major speech defined as when one is not for us, one is against us on this.
DOBBS: From that moment of clear-cut policy, either against terrorism or supporting it and certainly...
KISSINGER: Then they must be subject to American pressures. Not only military, not in the first instance military, economic, political, intelligence. But at the end of the day, state supported terrorism should be fought by the United States.
DOBBS: In the role here of Russia, particularly, since it is obviously greatly at the center of this geopolitically, with these Muslim states bordering Russia, what is the role you expect from Russia and China?
KISSINGER: Russia, until this event, was more concerned about the Taliban than we were. For us Taliban was a nuisance and far away. So I think we can count on Russian support throughout this particular crisis --and I think on Chinese support almost certainly.
DOBBS: What support would you -- what form would you expect that support to take?
KISSINGER: From Russia? I think they have certainly agreed that we have some sort of military arrangement with Uzbekistan and Tajikistan, regions which we can't reach without flying over Russian territory in some way and which normally there used to be republics of the Soviet Union. And I would be astonished if we didn't have very considerable intelligence cooperation.
DOBBS: Success may be defined here in a number of ways. The president has said that it will be fought on a broad array of fronts, but militarily, do you expect this to be a broad military front?
KISSINGER: I think there will be a military component. And I think the countries concerned have to have the sense that there is a military component because if there isn't then gradually the various measures that are being taken are going to run into the sand like the sanctions and the inspection system. And I repeat, we don't have to take the action, but it has to be clear that we will take it if nothing else works.
DOBBS: As you assess geopolitically the situation, as well as the domestic, if you will, the political upsurge in nationalism and the desire to retaliate, how much time does the president have in your judgment to affect a military response?
KISSINGER: I think from the American public there is almost unlimited time. And I think he's moving decisively an deliberately, and the two are not inconsistent with each other.
The night of the attack I wrote a brief op-ed piece for "The Washington Post," and I said they made a big mistake. They are going to get America united and focused and I think the impact of this is if anything, greater than Pearl Harbor.
DOBBS: And sustainable.
KISSINGER: In my view sustainable under the strong leadership we have had.
DOBBS: Henry, thank you very much for being here.
Coming up next on MONEYLINE, America is arming itself. We'll tell you how Americans are arming themselves, how gun sales are soaring as our national sense of security has been affected.
Security at our nation's borders is rising. We'll tell you about the latest efforts to shut down the borders to prevent future terrorist attacks, and the economic impact of those moves. And the markets today ended lower on concerns about prospects for the economy. And the head of the World Bank joins us. He will be here to talk about the impact of the September 11 attacks and what we can expect in the way of impact on the world economy. Stay with us.
(COMMERCIAL BREAK)
DOBBS: A late development concerning the Reagan National Airport, the only one that's remained closed since the attacks. Word of a possible change in that policy. Tim O'Brien has the story from Washington -- Tim. TIM O'BRIEN, CNN CORRESPONDENT: Sources sell CNN that a decision to reopen Reagan National Airport on at least a limited basis has been approved by President Bush and will be announced perhaps as early as tomorrow. Flights to and from the airport which lies just across the Potomac River from the Nations's Capital, will be subject to extremely high security measures.
All planes into and out of the airport will carry armed sky marshals. Also, the approach and take off patterns will be made to stay as far away as possible from strategic locations in the Nation's Capital. Inside the airport will have heightened security measures that one of the sources said would go far beyond the new restrictions put in place across the country in the wake of the September 11 attacks.
No the pressure to reopen Reagan has been immense, from congressman generally who like the convenience of the close-in airport and also from local officials who said keeping the airport closed was having disastrous consequences for the local economy.
(BEGIN VIDEO CLIP)
REP. JAMES MORAN (D), VIRGINIA: We have to be responsible about it. We are not just looking at the economics of the situation. We understand that National Airport really needs to be the safest airport in the world and that's our intention. But it also needs to open -- now.
(END VIDEO CLIP)
O'BRIEN: One of the security problems involves passengers who board in other cities and have connections here in Washington. It is possible that they may have to go through security a second time in Washington. We don't have the full details of the security arrangements and they may still be incomplete. But CNN has been told that the airport will be reopened at least on a limited basis and the decision will be announced within 48 hours, perhaps as early as tomorrow -- Lou.
DOBBS: Tim O'Brien in Washington.
Today on Wall Street a volatile day. The Dow Jones Industrials recovered from an early session 100-point plunge to finish the day losing only 10 points. Christine Romans at the New York Stock Exchange with that story -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a wide range of trading session, but folks overall saying that it felt pretty indecisive. Take a look at the Dow on the day. You are right, down about a hundred points in the early going but it rejected that and clawed back to just a 10 point loss. Investors playing defense in the Dow buying what they considered today at least to be big solid safe household names. They bought Citigroup, up 3 percent. Banks were strong. Citigroup itself was upgraded.
IBM up for a second day in a row, folks buying Big Blue, Merck, and Philip Morris. Defensive buying in drugs health care utilities and tobacco. Now Compaq computer shares hardly moved on the day but we can expect them to be active tomorrow I am sure. The company came out after the bell and warned. The company saying that they lost about a week's worth of business because of the September 11 attacks. We will watch to see how CPQ shares fare tomorrow. They are down 45 percent so far this year -- Lou.
DOBBS: Christine, thank you.
The Nasdaq today falling 18 points. Greg Clarkin is at the Nasdaq marketsite and has the story for us -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: Lou, it was one of those days that Wall Street was playing the waiting game, waiting for the federal reserve to meet tomorrow. Ahead of that we saw light volume. We saw volume really more heavily to the downside. The Nasdaq was down by about 40 points by 11:00 and made an attempt at a rally by the mid afternoon. That didn't hold and you saw choppy trading with the composite losing 18 points by the end of the day.
As far as the big caps go: we did see shares of Microsoft on the upside on the day up 62 cents. Cisco Systems on the down side. Dell Computer, just to give you an idea of the bearish tone of Wall Street research today, U.S. Bancorp Piper Jaffray saying Dell faces pricing and margin pressure as competitors liquidate their inventory over the next two quarters. Dell was 18 cents higher despite that.
Some of the semiconductor stocks had a tough day. We saw the Philadelphia Semiconductor Index sharply lower. If you take a sampling of some of those chip names you will see for the most part they all finished somewhat on the downside and those include the communication chip stocks such as (UNINTELLIGIBLE) all finishing lower.
Again, Lou, today really a bit of a quiet trading day. Decliners ahead of advancers by about a 2-1 ratio. The Nasdaq down 18 points.
DOBBS: OK, Greg. Thank you very much. Greg Clarkin.
The World Bank today reporting the attacks on the World Trade Center and the Pentagon will have a negative impact on the world economy, especially in the developing including perhaps especially Africa. World Bank President James Wolfensohn joins us now. He says some 10 million more people are likely to live below the poverty line as a result of the attacks. Jim, good to have you with us.
JAMES WOLFENSOHN, PRESIDENT, WORLD BANK: Thank you very much, Lou.
DOBBS: This report is sobering in terms of the impact one normally would not associate as a result of these terrorist attacks, the number of people forced further into poverty.
WOLFENSOHN: It of course is a natural consequence of a downturn in economic activity, but not something you immediately think of. When we saw the disruption and the tragedies caused on September 11, you don't think of the developing world. But the impact has been very substantial.
DOBBS: The World Bank has revised its outlook for world growth for 2002. What are the assumptions that are fundamental in that revision?
WOLFENSOHN: We have been making the assumption that there will be basically a continuation of the excellent cooperation on money policy and growing cooperation on fiscal policy. But I think all we're saying, Lou, is that as a consequence of a lack of confidence brought about by the tragedy, there's likely to be less economic activity to the extent 3/4 to 1 percent based on what we know at the moment.
This could be changed by government policy, by what Alan Greenspan does tomorrow and by what happens politically in the weeks ahead.
DOBBS: First in terms of monetary policy that will be set by the federal open market committee tomorrow. Alan Greenspan cutting 8 times this year. What influence do you expect that to have on the economy?
WOLFENSOHN: I think it has a positive influence. It puts more liquidity in the system. It allows propel to have lower rates so that they may make decisions to invest that they wouldn't otherwise. The United States is not doing this alone. I think what is important since September 11, is that the global system is coming together and Alan Greenspan is giving very fine leadership to that.
DOBBS: The Japanese economy, by nearly every measure, in recession. Is the World Bank at all hopeful of recovery there?
WOLFENSOHN: I think that certainly Japan is doing everything it can. But it is having great difficulties at the moment and as an engine of growth for Asia, it is certainly needing a resurgence of confidence.
Our biggest worry is that as a result of all this, in the developing countries we have less progress on poverty and many more children die as a result of lack of economic resources.
DOBBS: To what extent does the World Bank have options here? With Afghanistan, the focal point, now apparently the focal point of American military action with Pakistan providing assistance to the United States, these countries in very, very difficult straits to begin with, is there a role for the World Bank here, in point of fact in the region?
WOLFENSOHN: I think there is a tremendously important role, not perhaps immediately in the areas of conflict. But if you deal with issues of terror, the immediate question is what happens after you get rid of the terror?
And unless you can deal with the questions of economic advance, of development, of establishing a basis on which people can have hope, then just getting the leaders is now going to bring about peace. So we have a very, very important role to play in the peripheral countries and in the countries affected immediately after the terror activities are ceased.
DOBBS: OK, James Wolfensohn, good to have you with us.
WOLFENSOHN: Thank you very much.
DOBBS: Still ahead tonight on MONEYLINE, the terrorist attacks have had a major affect, of course, on the way Americans view their security. We will have a report for you on efforts to shut down our boarders, the possible economic impact of that. And more individuals are buying guns, more people own guns them today than three weeks ago. We'll have the latest on the country's efforts to arm itself.
Then, three weeks later and still no U.S. military response to the attacks that killed thousands of our citizens. We'll be talking with a former cabinet member about exactly what our military options are and what we should be doing.
ANNOUNCER: After the break, Lou is joined by chairman and CEO of the Cohen Group, William Cohen.
(COMMERCIAL BREAK)
DOBBS: Since September 11, of course it has been very much more difficult to cross the boarders into the United States. Now there's an effort to shut those borders down entirely for the next 6 months.
Fred Katayama has the report.
(BEGIN VIDEOTAPE)
FRED KATAYAMA, CNN CORRESPONDENT (voice-over): Just days after the United States and Mexico agreed to move quickly on the issue of immigration...
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Fearful people build walls. Confident people tear them down.
KATAYAMA: The terrorist attack changed the debate from amnesty and guest workers to shutting down the boarders.
LARRY BIRNS, COUNCIL ON HEMISPHERIC AFFAIRS: This of course will mean that the dream that Presidents Fox and Bush had of a liberalized border, of a boarder that was essentially a vestibule for Mexican labor to come into this country, that that will all be gone. We are now thinking of security, not immigration reform.
KATAYAMA: Roughly 200,000 illegal immigrants settle in the United States each year. A UCLA study found that undocumented immigrants contribute $300 billion annually to the economy. That is roughly 3 percent of GDP.
Even if the United States were to stem the inflow, some economists say that won't hurt the U.S. economy now since it is slowing. Companies are more worried about finding customers than finding workers. Tighter borders have produced some unwanted side effects. Heightened security at the boarders has delayed the delivery of car parts causing auto makers like General Motors and Ford to shut down some of their plants for a few days. (END VIDEOTAPE)
In Washington, the Senate is moving to boost funding to hire more border patrol agents and some congressmen are working on a bill to suspend immigration for six months -- Lou.
DOBBS: Fred, thank you.
For many Americans, September 11 changed everything. Now the nation with the most guns is adding to its personal arsenal. Kitty Pilgrim has the report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): It is nationwide -- a surge in Americans bring guns. New Jersey, this shop, sales are up 80-100 percent.
VAL FORGETTE, OWNER, NAVY ARMS: Everyone is afraid. I don't care who you are, race, creed, color, religion, economic status. They are afraid. PILGRIM: The owner says pistols are not the biggest sellers. Rifles are popular and so are shotguns with their distinctive action.
FORGETTE: When people hear -- they know you're serious. Anywhere in the world anyone has ever heard it before knows comes right after that they are going to get shot.
PILGRIM: In Dallas, Texas, this target is selling briskly.
KEN GOLDBERG, OWNER, DFW GUN RANGE: We happen to hold him personally responsible around here for the carnage in New York. People need to do appropriate stuff right now to replace the inappropriate desires that are swelling up inside them.
PILGRIM: Manchester, Vermont -- the target is also popular. Gun sales have more than doubled. The U.S. government does not keep a record of gun sales. But one indication of how much gun sales are up comes from the NICCS, or background checks, that are run when someone applies for a permit or buys a gun.
The FBI reports an average of 30,000 a day, but saw a 15 percent jump in background checks for the few days immediately after September 11.
Outside Chicago they say people who are considering a gun went ahead and bought it.
SUSAN TENZI-ZEIDMAN, ADVENTURE STORE ARMY SURPLUS: It's their God-given right that protection starts in the home.
PILGRIM: Her customers agree.
RON SATTERLEEN, JACKSON ARMS SHOOTING RANGE: There is nothing wrong with it because it is every person's right so to do.
PILGRIM: San Francisco, classes to learn how to use a gun are fully booked through October.
UNIDENTIFIED MALE: A lot of folks are just buying a lot of guns --shotguns, a lot of shotguns.
(END VIDEOTAPE)
PILGRIM: All this comes at a time when the firearms industry was feeling an economic slowdown. Now it's the one industry that is doing well.
DOBBS: Kitty, thank you very much. Kitty Pilgrim.
For more on the government's effort to try and stop future terrorist strikes and U.S. policy towards countries believed to be sponsoring terrorism, I'm joined now by William Cohen, former Defense Secretary and MONEYLINE contributor. Bill, good to have you with us.
WILLIAM COHEN, FORMER DEFENSE SECRETARY: Lou, good to be here.
DOBBS: Three weeks in, the Kitty Hawk deployed. When should we expect military action?
COHEN: I think we should expect it when the president decides he has all the forces in place that will give him total flexibility whether to launch airstrikes through long-range bombers, B-1s, B-52, tactical air off carriers or using special forces going in on the ground, light strikes in and back out.
So I think we need as much time to get those forces in place as possible. But I also would point out that much of the action in my judgment will be covert. That will be police forces around the world who are supporting the United States in this effort, breaking down doors, going in, grabbing terrorist, taking them by force if necessary, arresting them or actually engaging in violent action against them. All of that is going to be a component of this particular action.
DOBBS: Henry Kissinger suggested that Osama bin Laden, the perpetrator of these attacks, is also a symbol. And he suggested the networks are far more important than the individual. Do you agree with that?
COHEN: I do. I think what the Bush Administration is doing now is going after the extremities and working toward the heads and that would be cutting off the flow of oxygen or blood or blood money, going into these organizations and shutting them down and gradually working their way back to the head or the symbols of these particular groups.
DOBBS: The longer this goes without military response and I should point out, I should qualify this by saying successful military response, there rises a greater opportunity for dissent for a diversion from the center in which this country is now united. Give us your best judgment about how long the President has?
COHEN: Well, if start talking about timeframes, immediately they'll be a countdown from day 30...
DOBBS: Sure.
COHEN: ... to 29 to 28. I think we ought to avoid that.
I think the President has enough time, as long as the country is seeing the steps being taken to give him the opportunity, again and the flexibility, to take whatever action is necessary. If they see the international community taking action, shutting off the money and cutting down.
DOBBS: Confusing signals already, at least in the media. One, the defense minister of Saudi Arabia saying that the United States will not be launching aircraft from Saudi soil against Afghanistan. What do you make of that?
COHEN: I think he also said that nor was a request made of the Saudis to do that. I think what we have to do is, again, take care of what we ask from various countries, understanding their political sensitivities as well.
The Saudis and others will provide us, in my judgment, with everything we will need to carry out whatever mission we determine we have to carry out.
DOBBS: Statements by Iran that they will confront U.S. aircraft, should they fly over Iranian air space in an attack against Afghanistan.
COHEN: I think they would do so at their peril, if they were to take on the United States in this quest. They would be isolated completely from the international community. There have been signs that they have been making moderate signs coming out of Iran that they want to become fully integrated in the international community.
For them to take on the United States, while the United States enjoys virtually world support, would be a big mistake on their part, not only politically, but militarily. DOBBS: Is there, in your judgment, the prospect here that the Taliban will simply be eliminated?
COHEN: Well, certainly they face that potential in the event that they don't comply with what President Bush has mandated that they must turnover bin Laden. They must tear up the terrorist camps. They must shut off support for terrorist training. All of that puts them at risk.
DOBBS: And in terms of homeland security, Governor Tom Ridge of Pennsylvania put in charge of that. A number of agencies already charged with that responsibility. How difficult is his task?
COHEN: Well, his mandate appears quite broad, but the question is how deep. He will have jurisdiction over some 46 agencies. It's unclear, at this point, what his actual power will be. The Senate and Congress looking to give him more power and would like to see that a cabinet position as opposed to a cabinet level, but that of course, means there would Senate confirmation, which means that the Senate and others would want to have more hearings and be briefed on a regular basis, as opposed to him simply reporting to the president.
Other complicating factors, you have General Downing, who's now been hired, so to speak, to take care of counter terrorism. And you also have Dick Clark as the cyberterrorist portfolio. So it gets fairly confusing. I think as we clarify fairly quickly, to find out exactly how much power he has, any line authority, any budget, and how to exercise that.
DOBBS: Because we need him to be very successful.
COHEN: We do. And he has one very major thing going for himself. He's very close to the President. And his proximity in his office will be right across the street from the White House. So he should have a good deal of power, but he'll have to define that power and exercise it fairly soon.
DOBBS: Bill, thank you, as always. Bill Cohen.
Well, coming up here, corporate American toughening up on security, but being very tight-lipped about the measures taken.
Stocks today finished the first day of the fourth quarter, first day of October. And it's a day of losses, but only modest losses. And our next guest says the recent data from the weekly leading indicators show the possibility for a winter recovery has evaporated.
ANNOUNCER: Next, Lou speaks with Lakshman Achuthan of the Economic Cycle Research Institute.
(COMMERCIAL BREAK)
DOBBS: We will have the latest developments on America's new war in just a moment. But first want to tell you about what was a volatile session on Wall Street, a late day rally. Helping to cut losses on the big board, 89 stocks hit new 52-week lows, while only 34 hit new highs, but they did hit new highs. 121 stocks hit 52-week lows on the Nasdaq, while a third of that number managed to hit new highs.
On the Dow today, the blue-chip index falling 10 points. It'd been down as much as 115 points earlier in the session. On the big board, however, declining issues romped advancers by a margin of almost 2 to 1.
Among the most active stocks today, Citigroup higher after Credit Suisse First Boston upgraded the stock to a strong buy. AT&T giving back some of last week's gains. Wal-mart edging higher today. The world's largest retailer expecting to meet original sales goals for September. And Exxon Mobil falling because of sliding natural gas prices and sliding crude prices.
The Nasdaq falling 18 points. Decliners again outpacing advancers by a nearly 2-to-1 margin. Looking at some of the most actives today, Cisco Systems lower, that after saying its top executives won't be receiving bonuses this year, because the company missed financial targets.
Intel sliding after Merrill's Joe Osha cut his earnings estimates. Qualcomm sharply lower today, erasing last week's gains in fact. And Brocade falling, after cutting fourth quarter and 2002 targets.
Well, consumer spending grew by a modest two-tenths of a percent last month. The figure showing that most of the recent tax rebate went into savings, not spending. Not the kind of news retailers wanted to hear certainly. That sector weaker as a result today.
E-commerce stocks faring somewhat better. Traffic to retail web sites continuing to rebound to levels seen before the terrorist attacks. Buyers are returning to the web, after a sharp following those attacks on September 11.
According to Jupiter Media Metrics Traffic on one of the most popular e-commerce sites, Amazon.com has returned to normal levels.
(BEGIN VIDEO CLIP)
ANTHONY NOTO, GOLDMAN SACHS: Now, I think we have a macro overhang right now, that has largely been exacerbated by the events on September 11. And that on the margin, improvements in consumer confidence in the back half of next year would improve online commerce sales. But fundamentally, the biggest inflection point will be when we have mass market adoption of broadband. And then in my opinion, we'll have mass market adoption of e-commerce.
(END VIDEO CLIP)
DOBBS: He didn't say when that was going to happen, did he? Today, the Goldman Sachs Internet index, a broad measure of Internet stock performance, slipping a fraction over the past three months. It has fallen 50 percent.
For more now on the markets, Christine Romans at the New York Exchange. Greg Clarkin at the Nasdaq -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, this is a market that is desperate to try to gauge the economic ripples from the September 11 attacks. What we know is that many companies continue to warn, among them, casinos, lodging, restaurant companies, doing poorly here, coming out.
MGM Mirage, for example, saying it's laid off 6,000 people just in the last three weeks. Rail stocks falling today, Worries that auto demand is going to stay weak. And rail companies that ship autos could hurt some more.
Also, bank earnings are expected to fall, because downtown New York branches have been disrupted, because markets were closed for four days.
And the economic warnings outside of these sectors continues. Just in the last hour, hour and a half or so, Lou, we've heard from Compaq Computer, Mcgraw Hill, the publisher, and also from Abercrombie & Fitch, the retailer.
So as these warnings continue, you can see reflected in the market a great bit of wariness. Traders saying that's exactly what happened today to start the new fourth quarter.
DOBBS: Christine, thank you. And over on the Nasdaq, Greg Clarkin -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And Lou, the tone of the research still continues to be negative for tech companies as well, as analysts kind of figure out the exact effect of the September 11 attacks on the technology companies.
Here's what traders are saying. Today, they were really kind of just waiting on the Fed, basically, waiting for that announcement tomorrow afternoon as to what type of rate cut they'll be getting.
One trader said, you know, he's doing a lot of hand holding these days, with investors large and small, trying to figure out exactly where to go here. He said the common denominator though is that a lot of people really do not feel the need to rush in at this point. They believe time is on their side, in terms of the price of some of these technology shares.
And then also, he said, watch the tech teenagers in his words, the Dells and the Intels. Those stocks trading at $17, $18, $19 dollars a share. Hence, the tech teenagers name for them. They said when they get down around that level, sometimes folks just find it too hard to resist coming into that.
And that's something we saw last week, too, when those get -- those big name technology stocks get depressed at those levels, a lot of folks just kind of wade in there. But what we've though, is when they wade in there, those stocks in subsequent sell-offs, go even below those. So that has burned a number of people. But still, they do hold attractive values when those stocks get down to those levels, Lou.
DOBBS: Well, they hold attraction, perhaps, but not necessarily attractive values.
CLARKIN: Scratch value, exactly.
DOBBS: OK, Greg. Thanks a lot, Greg Clarkin.
Now for the latest developments in America's war on terrorism. President Bush says the United States is making headway in the fight against terrorism, including the arrest of a terrorist responsible for the 1986 hijacking of a Pan Am flight that killed two Americans.
Meanwhile, CNN has learned that the United States is beginning to share evidence with its allies that links Osama bin Laden to the attacks on both the Pentagon and World Trade Center. But the State Department says not all allies will receive the same level of information.
The U.S.S. Kitty Hawk is joining "Operation Enduring Freedom." A Navy spokesman saying the aircraft carrier left Japan this morning, but without its attack aircraft. One official says the Kitty Hawk may be used as a floating base for special operations.
New York Mayor Rudolph Giuliani became the first mayor in nearly half a century to address the United Nations. Giuliani urged the United Nations to take decisive action in the war against terrorism.
(BEGIN VIDEO CLIP)
MAYOR RUDY GIULIANI (R), NEW YORK: There's no question that there are countries that have supported terrorism and there are countries that condone terrorism, and then there are countries that think it's safe to be neutral. I think all of those have to be pushed aside and they have to be made to make a decision. And that is, are they going to stand up against terrorism? And if they're not, then they should be ostracized and the U.N. should take very, very serious and strict action against them.
(END VIDEO CLIP)
DOBBS: And the latest official report showing the number of people missing in the World Trade Center attack is 4,651. Police reports, however, put that number slightly over 5,000 still.
Well, turning to the economy now, manufacturing contracted for the 14th consecutive month in September. But the figures were stronger than many economists, in fact most economists, had expected, suggesting that the sector, which has been in recession for more than a year, may be about to recover.
However, the figures don't fully reflect the impact of the September 11 attacks. Kathleen Hays is here now and has a closer look at the economic numbers -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: Got quite a few the run through. We're going to start with some August numbers, Lou. August vital signs, everything from construction spending, to personal income and consumer spending. Income growth basically stalled out in August. It was unchanged. That's mainly wages and salaries. Spending was up a mere 0.2 percent.
In fact, a lot of things pointing to the fact that consumers are saving their tax rebate checks for the most part, not spending them. Construction spending, that includes residential construction, public construction, down sharply. More than a percentage point in August. That public sector has been under some pressure lately.
In terms of the purchasing managers, which Lou just mentioned, this is a survey of manufacturers across the country. They have an index, which has a dividing line. Anything above 50 is growth. Anything below 50 is contraction.
The index at 47 even in September, down a little bit August 479, but well above the lows we saw in January at 41. Again, reinforcing this idea that after getting so beaten up, maybe the worst is finally behind this sector.
Let's look at some plusses and minuses. New orders and production both held just above the 50 level. That's good news, especially with new orders down. That's leading indicator. Export orders down though, 459, but we've got a weak economy overseas.
Jobs off their weakest levels. Again, there's been months and months of cutbacks there. Maybe that's getting better as well. Of course the big question is, how will the Fed reserve sort all this out when it meets tomorrow, makes a decision on interest rates.
Most economists say that we are going to get a rate cut. In fact, this Reuters poll, 21 of 25 bond dealers see a half percentage point cut to 2.5 percent. It would be the ninth cut this year, but a Few say no, the Fed's going to a little slower, just a quarter point cut. But in the end, most people are hopeful that rate cuts from the Fed, fiscal stimulus from the federal government are going to get the economy back on it's feet.
(BEGIN VIDEO CLIP)
DAVID HORNER, MERRILL LYNCH: Well, in short run, the economy will get worse before it gets better, simply because of the impact of these attacks on consumer spending and their willingness to kind of get back to normal. In the longer run, we think the combination of rate cuts and spending increases will get the economy back to its normal growth level by probably the middle of next year.
(END VIDEO CLIP)
HAYS: You know, it's interesting, Lou, that even though we just had a half point cut from the Fed, what, a couple of weeks ago when the stock market opened after the attacks, few people think the Fed is going to choose that more conservative go a little more slowly approach, even though Mr. Greenspan, chairman of the Fed, has been urging caution. And let's see what the full impact is before we take too many steps.
DOBBS: Yes, I wonder if there isn't a message in that.
HAYS: What, we'll see tomorrow.
DOBBS: OK. Well, you know, what I love about these Fed cuts, whatever the Fed does, they're immediately second guessed, no matter what by Wall Street.
HAYS: Well, we'll be doing that by 4:00 tomorrow afternoon.
DOBBS: That's why Alan Greenspan has one of best jobs in the world. Everyone just goes along.
Kathleen, thank you very much.
Well, oil prices slipping even further today. That after OPEC decided not to reduce output to push up prices. That fall in prices ending a two year boom in oil prices, sparked by drastic production cuts back in 1999. Light sweet crude today, dropping another 15 cents, settling at $22.80 a barrel. Prices have fallen more than 15 percent over the past three weeks.
And I'm joined now by MONEYLINE regular contributor, Lakshman Achuthan. And Lakshman, I just want to ask you one first question. As Kathleen pointed out, we've got a lot of negative events here to kind of go over. But just in positive terms, in positive days, we don't talk about trends being made of one month or one week's evidence, but a lot of that's going on right now. People are focusing on a lot of negatives and saying well, that's the trend. Do you buy into that?
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, you're having some of these negative developments come on the heels of earlier weakness. So I think that they're kind of extending the trend. And we're looking for signs that there is a break in this downtrend and that we're going to see some kind of upturn. And we're seeing just a few, but on balance it doesn't add up yet.
DOBBS: The last time you and I talked, you were talking about the weekly leading indicators.
ACHUTHAN: Right.
DOBBS: And that was a focus of your forecasting. What does it look like now?
ACHUTHAN: Well, you see, these are important. They're going down. They continue to go down on balance. And we're looking at a couple of weeks of data in the post-attack period. And we're seeing most of them going down. We're seeing one indicator shooting up. And that's the one that the Fed is pushing. And that's money supply and liquidity. DOBBS: Let's talk about that.
ACHUTHAN: OK.
DOBBS: Some positive news. Let's focus on that one.
ACHUTHAN: But it's jumping. If it wasn't for that, this weekly leading index would be down quite a bit more. It's down about a point right now. Offsetting the jump in money supply is offsetting the weakness in the commodity prices...
DOBBS: Right.
ACHUTHAN: ... the rising jobless claims and things of that nature.
DOBBS: How much weight do you give commodity prices in this?
ACHUTHAN: We don't give an exact weight. What you're doing is you're looking for signals from a whole host of indicators. So what we're looking for is an inflection point. And it's important. It's a critical indicator.
Fundamentally, if the world economy is going to be bottoming, we're going to need to see commodity prices slow their decline. That'll be a very easy way to take the temperature of the world economy.
DOBBS: You're suggesting it hasn't happened yet?
ACHUTHAN: Well, not yet, not yet, but we're seeing the tug-of- war happening here. And when we see this finally turning up, it'll come from the money supply. That's leading it right now. We have to see it spread to other indicators.
DOBBS: Why don't we put up the graphic of these indicators. There they are. The weekly leading...
ACHUTHAN: Index there. And this is just -- what's happened here is it's come down to the lows that it was hitting in terms of the level, back in the spring.
DOBBS: Now what's interesting here, Lakshman, as we look at this, in June we're seeing this thing rise pretty nicely. At the same time, you thought during that period that the country was in recession.
ACHUTHAN: Yes.
DOBBS: What...
ACHUTHAN: Because this leads the economy itself. While the economy may be in recession, this is a leading indicator. So it's supposed to anticipate a recovery. We were having some signs of recovery, but those have evaporated in the summer. More recently, they've evaporated even further. Look to the money supply. That's going to start leading us out. We want to see it spread.
DOBBS: We're talking about the money supply, the federal open committee meeting tomorrow. Do we ninth rate cut? How much?
ACHUTHAN: You definitely get a cut. It's a positive. I don't know that it's going to do that much immediately. We already have a lot in the pipeline which is going to hit us fairly soon.
DOBBS: We'll take all the help we can get.
ACHUTHAN: OK.
DOBBS: Lakshman, thanks a lot.
ACHUTHAN: Thank you.
DOBBS: Coming up next here, more companies shut their doors in the wake of the terrorist attacks. We'll be talking about that. Then we'll take a look at some of the extraordinary measures corporate America is taking to beef up security. All of that is next here on MONEYLINE.
(COMMERCIAL BREAK)
DOBBS: Topping tonight's "MONEYLINE Movers," MGM dropping more than $1.00 a share. The entertainment, hotel, and gaming company warning its quarterly earnings will fall short. MGM has cut 6,000 jobs since the September 11 attacks.
Weyerhaeuser dropping nearly $1.50 a share today. Weyerhauser cutting it third quarter earnings outlook and closing two production lines, resulting in 200 layoffs. In May, Weyerhaeuser launched a hostile bid for rival Willamette.
EBay gaining more than $1.00 a share. Merrill's Henry Blodget expecting the online auction house to modestly exceed estimates. EBay, one of the few Internet companies in the profitable category this year. Shares up more than 40 percent so far this year.
Late today, American Airlines reported passenger traffic in September dropped 36 percent, compared to a year ago.
In other corporate news tonight, the future of Swissair is uncertain. Swissair seeking bankruptcy protection for some of its operations, selling its controlling stake in Crossair. Swissair says it cannot guarantee flights for the rest of the week, turning them over to Crossair.
Auto parts maker, Federal Mogul, seeking federal bankruptcy protection, citing asbestos liability. Federal Mogul faces asbestos claims from the acquisition of an auto parts maker just three years ago that once used asbestos extensively. Federal Mogul will continue its business during the proceedings and doesn't expect to cut jobs.
And after 66 years of publication, November's issue of "Mademoiselle" magazine is the last. Publisher Conde Nast is suspending publication of "Mademoiselle," citing a deteriorating advertising market. And that is the end of "Mademoiselle."
Just ahead here on MONEYLINE, across the country, corporate clamps on security. We'll have that story next.
(COMMERCIAL BREAK)
DOBBS: Corporate security is intensifying.
Steve Young has the report on what companies are doing.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): Roll up to Borland Technology in Scott Valley, California, and you may not realize they've tightened the screws on security. After the September 11 disaster, the software company edited its list of ex-employees and contractors to be sure those who still have a badge can't get in. Borland says its checked to be sure all card readers and cameras are fully operational.
UNIDENTIFIED MALE: Each of our perimeter doors has a card access.
YOUNG: A customer there for the day gets a day pass, allowing her to get to a meeting room, a restroom, and that's about it.
It's also revising the previous policy permitting up to two Borland executives and 10 employees to travel on the same airplane. It now permits only one senior executive on a flight. And it's published a matrix of who can't travel together.
For example, a senior executive and a chief scientist. While Borland was willing to discuss its increased security, many other companies were not, including Alcoa, Citigroup and Bristol Myers Squibb.
Any lessons learned from those reports of confusion about whether to immediately evacuate the stricken New York targets?
ED RYTTER, NY BUILDING & MANAGERS ASSOCIATION: I think the crisis we saw was unusual, but every building of any size, and even down to the very smaller size buildings, the management or the ownership of the building has prepared emergency plans.
YOUNG: Including, Rytter says, evacuation plans. That's the official word, but along with a lot of other companies, Borland doesn't have an evacuation plan yet. It's waiting for a consultant report.
ROGER BARNEY, CHIEF ADMINISTRATIVE OFFICER, BORLAND: We expect by the 15th or 16th of October, every employee here in Scott's Valley will have a copy of the emergency evacuation plan. Secondly, we will hold emergency evacuation drills.
(END VIDEOTAPE) YOUNG: Even before it gets that report, Borland has decided whether it's a bomb threat, terrorist attack or fire, it will ask employees to leave at once. It says it will deal with the ramifications of that as opposed to saying "stay in the building until we find out" -- Lou.
DOBBS: You know, in that context, I don't think any other company did so well in terms of its evacuation procedures, as Morgan Stanley. And that's certainly a plan that others could certainly learn from.
YOUNG: Absolutely.
DOBBS: Steve, thanks. Steve Young.
We'll take a look at what we can expect tomorrow. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tomorrow, the Fed's policy-making committee meets in Washington. The Federal Open Market Committee will decide the direction of interest rates. Most economists expecting now an interest rate cut. It would be the ninth this year. And many of those very same economists suggest it'll be a half point cut.
For tonight, that is MONEYLINE. We thank you for joining us. I'm Lou Dobbs. Good night from New York. Wolf Blitzer, that report begins right now.
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