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Lou Dobbs Moneyline
Target Terrorism: Dow Climbs 173.19 to 9,123.78; Nasdaq Advances 88.48 to 1,580.81
Aired October 03, 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. Three weeks after the terrorist attacks on the United States the Bush administration's public focus is on preparations for America's New War and money. The president wants more money to stimulate the economy. Business leaders want more money to help recover from the deadly terrorist attacks.
Treasury Secretary Paul O'Neill wants more funding and tougher laws to battle terrorist money laundering and transfers even as he says more assets of the terrorist organization have been found.
On Wall Street today more money pouring back into the markets. Investors cheered by news that business in the service sector and for some technology companies is now improving.
And tonight we'll have a report for you on Afghanistan. We'll tell you why a country that has no resources and very little money is considered to be strategically important. Tonight we'll also take a look at some of the extraordinary measures being proposed to make airlines and flying much safer.
And joining us tonight is Mort Zuckerman, the Editor in Chief of "US News and World Report" to discuss the president's plans to deal with terrorism.
Larry Korb with the Council on Foreign Relations will be here to talk about the United States' war against terrorism and why the building of some odd alliances may be a difficulty.
Yet our Ed Yardeni of Deutsche Bank Securities will be here to tell us what we can expect in the way of an economic recovery and the direction of the stock market.
But first these are the latest developments in America's New War. Defense Secretary Donald Rumsfeld arrived in Riyadh, Saudi Arabia. It is the first stop on his four-nation tour -- a tour that includes Oman, Egypt and Uzbekistan.
Rumsfeld is trying to strengthen support for a U.S.-led military campaign and gather intelligence. U.S. officials confirming the two previous efforts to try to capture Osama bin Laden failed because of clumsy handling.
In one the CIA trained and armed about 60 Pakistani commandos -- that in 1999. That plan called off after General Pervez Musharraf took over Pakistan in a military coo that year. President Bush visited a school today not far from the ruins of the World Trade Center. Mr. Bush thanked the teachers for their heroism in helping to lead the children to safety. The president also talked with those children about reasons why they love their country.
President Bush in New York, as I said, today. It's his second visit to the city since the September 11th attacks. The president taking the occasion to push for an economic stimulus package -- a package that could cost as much as $75 billion.
John King joins us now from Washington -- John.
JOHN KING, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, many in the Congress have been waiting for the president to outline just what is his bottom line. As you mentioned, the president today using that visit to Wall Street to say he believes the economy needs $60 to $75 billion in additional stem stimulus. Details still to be worked out with the Congress but the president said one item should be an immediate tax cut to put more money in the pockets of consumers likely to be a payroll tax that would take effect within a matter of months.
The president also says businesses deserve some form of immediate tax relief. Pressure in the Congress to make that temporary. And the president said, "Look around -- the impact of September 11th." He said, "Dislocated workers need help, too, from the government -- things like extended unemployment benefits and extended health care benefits."
(BEGIN VIDEO CLIP)
GEORGE BUSH, PRESIDENT OF THE UNITED STATES: We have to recognize that as a result of September 11th folks have been laid off and we need to make sure they're able to survive until this economy gets going again.
(END VIDEO CLIP)
KING: This could be the first big fight between the president and Congress since the event of September 11th. And it was clear today the president's biggest problem is not with the Democrats, who favor a more modest stimulus plan of about $50 billion but with Republicans who think the White House is being too timid, that the tax cut for businesses should be more generous. Many Republicans saying they think the president is being is too cozy with the Democrats right now. But the administration believes this package will have what in Washington would be the equivalent of the economic Good Housekeeping seal of approval.
The backing of the Federal Reserve Chairman Alan Greenspan, who was involved in those private negotiations in Capitol Hill, who says the stimulus plan should be big enough to give to give the economy a jolt but not so big that it drives up inflationary pressures. Lou?
DOBBS: An important and premature, indeed, John. Thank you very much. John King from the White House An Indian Airlines jetliner hijacked today -- 54 passengers onboard. It's a Boeing 737. The aircraft was hijacked shortly after taking off from Mumbai in India -- formally Bombay.
It landed in New Delhi where it was moved to a secure area at the airport where it remains tonight. And it is surrounded now by commandos. All of the passengers are reported to be safe. Negotiations are under way with those two hijackers. It is not yet known what they have demanded or how they hijacked the aircraft.
President Bush meeting with some of the country's top business leaders today. They spelled out what kind of help they would like to see from Washington.
Peter Viles has the story.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): While President Bush came to New York to meet business leaders many executives have headed the other way to Washington to lobby for federal help. The insurance industry's request -- what it calls a federal backstop, asking Washington to act as insurer of last resort against the cost of future terrorist attacks.
BERNARD HENGESBAUGH, CHAIRMAN & CEO, CAN FINANCIAL: We were concerned that going beyond this now a second event could destabilize our industry and therefore we asked the president to consider a way of backstopping the insurance industry.
VILES: Hotels, travel agents and restaurants are seeking tax breaks.
MARILYN CARLSON NELSON, CHAIRMAN & CEO, CARLSON CO.: A 20 percent downturn in this industry, which is what we seem to be trending towards somewhere between 20 and 30 percent.
If we can't quickly stimulate that we'll lose 3.3 million jobs.
VILES: On the industry's wish list double the tax deduction on business travel expenses from 50 percent to 100 percent. Make detectable the expenses of spouses and children who tag along on business trips and given every American a special exemption of up to $2,000 on personal travel over the next 15 months.
The bus industry hit hard by cancellations of group trips is asking for repeal of the diesel fuel tax -- part of a aid package similar to the airline bailout. Bigger industry groups have broader agendas. The business roundtable asking for an immediate reduction in the payroll tax for both workers and employers and a reduction in corporate income taxes and asking Washington to move quickly and decisively.
JOHN DILLON, CHAIRMAN & CEO, INTERNATIONAL PAPER: If there is a risk today I would risk -- I would err on the side of taking actions. If it's too much stimulus we can always correct it down the road. (END VIDEOTAPE)
VILES: The manufacturers' lobby pushing for the repeal of the alternative minimum tax, which tends to hit businesses harder when their profits are down -- a subject manufacturers unfortunately are very familiar with these days -- Lou.
DOBBS: Pete, surprising not more is being made of the investment tax credit as a stimulus approach.
VILES: True. That is another item on the agenda. And the president did say whatever he does for business he wants to do something that will stimulate an investment by businesses so that could very well be one of things the administration settles on.
DOBBS: It sure could be. Thanks very much. Peter Viles.
While the president was in New York meeting with top business leaders, Treasury Secretary Paul O'Neill was telling senators he expects negative growth in the third quarter. The Treasury Secretary stressed that Congress must move quickly to restore confidence.
Tim O'Brien with the report from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Treasury Secretary Paul O'Neill did not offer any specifics of how the $60 to $75 billion package might be spent. But he did offer some broad guidelines of what the president has in mind.
PAUL O'NEILL, TREASURY SECRETARY OF THE UNITED STATES: I look forward to working with you to ensure that the package addresses three priorities -- restoring consumer demand, supporting business investment, and helping those affected by the September 11th attacks.
O'BRIEN: There is no shortage of ideas of what senators feel that might include.
SEN. JOHN BREAUX (D), LOUISIANA: ... right now if we put it down on paper would be more than the Bible.
O'BRIEN: Senator Breaux's contribution: make expenses for entertainment and business meals 100 percent tax-deductible. O'Neill defended the idea of extending unemployment compensation, suggesting that that compassion in some cases may loom as large as economics.
To support his confidence that the economy will quickly recover from the terrorism, O'Neill pointed to credit card purchases in September. He said they plummeted after the attacks, began a comeback last week and reached the same level last weekend as a year ago.
(END VIDEOTAPE)
O'BRIEN: Near the top of the administration's wish list for the stimulus package accelerating expensing and appreciation deductions for business. And to prevent speculators from profiting on the timing Secretary O'Neill is suggesting that any tax breaks be made retroactive to September 11 -- Lou.
DOBBS: Tim, thank you very much. Tim O'Brien from Washington.
Well, of course, the Treasury Department focusing on tracking Osama bin Laden's money and freezing any assets that they can discover. That effort the focus Capitol Hill today where congressman heard how many agencies do not share information at least before September 11th.
And Allan Dodds Frank has the report.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): The treasury secretary says the United States has located more terrorist money.
O'NEILL: We're looking at something over $13 million in the U.S. and substantially larger sums offshore.
FRANK: O'Neill and others also say until now there has never been a government-wide crack down on terrorist money laundering.
DENNIS LORMEL, FINANCIAL CRIMES, FBI: This is the first time I believe that we have a fully integrated financial component in a terrorist investigation.
FRANK: The witnesses said the Internal Revenue Service has not been sharing tax data, the FBI has withheld information on suspects and the CIA has held back intelligence.
REP. DOUG BEREUTER (R), NEBRASKA: You must share information with the intelligence agencies and with the other domestic agencies and not put your first priority on simply protecting information so that you can prosecute terrorists.
FRANK: Congressman and witnesses alike focused on the difficulties of regulating the Hawala -- the underground cash transfer system, a system based on trust. It started in ancient bazaars and now operates worldwide including in major U.S. cities.
It works this way. A Hawala operator in one location instructs a counterpart elsewhere to hand over cash after receiving the proper code word. Then the Hawala dealers settle accounts with each other later, leaving no paper trail.
STUART EIZENSTAT, UNDERSECRETARY OF STATE OF THE UNITED STATES: Some of the cash which was used at the end of this process for the atrocity that was carried on probably came through that kind of Hawala system.
(END VIDEOTAPE)
FRANK: The FBI also said that at least so far no links have been uncovered between the terrorists and short selling in 38 stocks in the days before the September 11th attacks -- Lou.
DOBBS: What does that mean "at least so far"?
FRANK: They have no evidence so far. The investigation is still continuing.
DOBBS: That's what it means -- all right.
And this is truly remarkable -- the idea that these agencies have not been cooperating. People talk about an intelligence failure -- this is a public policy failure of enormous proportions.
FRANK: It's the old interservice rivalry carried to the extreme.
DOBBS: OK, Allan, thank you very much. Allan Dodds Frank.
Well, if and when the United States decides to strike against Osama bin Laden it is likely to minimize using Pakistan as a base for military operations -- that because officials fear U.S. -- anti-U.S. sentiment could destabilize the region.
Meanwhile the United States has dropped sanctions against Pakistan and is now promising other nations similar incentives. To discuss now whether that policy could be a major problem in the future I am joined by Morton Zuckerman who is amongst other things the editor-in-chief of "US News & World Report."
Morton, good to have you with us.
MORTON ZUCKERMAN, EDITOR-IN-CHIEF, "US NEWS & WORLD REPORT": Hi, Lou.
DOBBS: What do you make of alliances that are being crafted in the so-called coalition building at this point?
ZUCKERMAN: Well, I'm reminded what Winston Churchill said after Germany invaded the Soviet Union -- he said, "I'd do a partnership with the devil if it could help me defeat the Nazis."
And I think here what we're doing is a version of that. We're going to get in bed with a lot of people with a lot of fleas on them and we're going to hope that we don't wake up and have some of the fleas on ourselves.
But we're forming alliances of one kind or another -- at least cooperative relationships with countries like Pakistan and with various other countries whose regimes, shall we say, are very, very unappealing to us but it is a way of getting intelligence and a way of being effective in terms of what we do by way of retaliation and response.
DOBBS: Is it your sense, and I realize it is difficult to tell at this point, but is it your sense that the administration is being effective in building the coalition and laying the foundation for effective strikes against terrorism? ZUCKERMAN: Well, I would say that they are effective in building the coalition. I think that in this regard, for example, they have to work in stages in terms of what they are doing.
Whether they're going to be effective or not really depends on where this intelligence is going to lead them. And I suspect that very few people have the kind of intelligence that is going to be effective enough.
That is why I think they're moving fairly slowly. I don't -- it's not as if they don't want to move. I just don't think they know where the people are that they want to, in a sense, shall we say, terminate with maximum prejudice.
And I think this is the problem they have. These are people who live in caves and move around all the time. They have no radio communications with the. They're hard to follow unless you can get in.
DOBBS: The complexity, as you described, is not necessarily attractive or appealing regimes with which we are forced into alliance and partnership, if you will. At the same time the nature of those countries and those nations is such that with the intelligence that ostensibly they would be sharing is reliable intelligence.
ZUCKERMAN: Well, that's going to be one of the questions. I frankly believe that the -- our intelligence services -- the CIA in particular will be able to give us as good an assessment as we need. On the other hand, here we are. You have groups like has Hamas and Hezbollah and Islamic Jihad, who are terrorist organizations that we've left off the list for the moment.
We're going to have to find a way to separate ourselves from these people overtime and that's going to be another awkward stage. But for the moment our major concern is to get Al Qaeda group before they get us. There is a huge concern that there is going to be a series of responses to whatever we do that there will be retaliatory attacks here. And we have got to find some way to break that group, first of all, and then we're going to have to go after the other terrorist groups.
But there are no terrorist groups I hope that will escape the wrath of the United States. This is going to be a long, long haul.
DOBBS: And a long haul perhaps also economically. You were, as we discussed, on the condition of the economy before these attacks you were very negative.
ZUCKERMAN: Yeah.
DOBBS: What is your best judgment now as to the impact of all of this on the economy and how soon we might expect a recovery?
ZUCKERMAN: Well, I remain not only very negative but increasingly so. I am really quite skeptical of some of these packages that are being advanced -- not that I don't think we have to do something. But I think we're going to have quite a serious recession. Capital expenditures in my judgment, which was the lead horse in what caused the decline. The driver of the decline in my judgment is going to continue to decline. We have not hit bottom.
Now exports have virtually collapsed given all the difficulty of transportation. And the consumer now has had a shock to his confidence or her confidence that we have not seen in a long time. And I think with the unemployment is going to begin to rattle through the economic system. We're going to have a difficult time.
And I would just point out to you when we put $38 billion through the economy it didn't stimulate consumer expenditures that much. So I think we've got a long haul that we're faced with.
DOBBS: OK, Morton, thanks very much. Morton Zuckerman.
Well, still ahead here Afghanistan is a bleak country with no capital and very few resources. So what does the United States want with a country like that? We'll have a report for you.
Bobby Bonds is closer to breaking the home run record of Mark McGwire. But will they put an asterisk in the record book because of his Maple bat? All of that and more still ahead here on MONEYLINE.
(COMMERCIAL BREAK)
DOBBS: Air travel has plunged. Now industry officials are hoping technology can help to raise traffic once again.
Steve Young with the report on some controversial proposals under consideration.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): Jumbo jet pilots can make jilting maneuvers almost like combat jet jockeys.
JOSEPH SAN PIETRO, DRESDNER, KLEINWORT, WASSERSTEIN: The perspective of airline management has changed from cooperate with hijackers to save the plane. A pilot can basically maneuver the aircraft any which way he wants, which disallows a potential hijacker from basically standing straight.
YOUNG: The president and others want cockpit doors fortified but experts say they're forgetting something -- most wide body jets have a first class bathroom wall directly behind the captain's seat.
That bulkhead will have to be fortified, too. Raytheon and other companies are exploring ways during a hijack situation to freeze cockpit control and transfer to special ground personnel but most pilots are against that.
The flight crew has its own breathing supply and could depressurize the plane to put everybody in the main cabin asleep. Some are proposing the installation of nozzles to spray non-lethal foam developed to deal with civil disobedience but it would be tough to cover a nine-seat wide area. What about using a technological blindfold?
RICHARD DOHERTY, DIRECTOR, ENVISIONEERING GROUP: Well, there has been talk of some other aerosols that might impair visibility, for example, and render everybody unable to see except the pilots that are sealed off in their cockpit.
YOUNG: The experts say the most important role for technology is keeping hijackers off jets in the first place. Chicago's O'Hare and Midway Airports today said they're installing 1,100 fingerprint scanners so only authorized employees can reach jet ramps and baggage handling areas.
(END VIDEOTAPE)
YOUNG: Much better baggage scanners are available than those currently in use in this country but airlines haven't wanted to pay the price and passengers haven't wanted longer boarding delays. The tragedy may be changing minds -- Lou.
DOBBS: I don't think there is any doubt about it, Steve. Thanks. Steve Young.
Well, the market today rallying -- the Dow Jones Industrial surging 173 points -- the fourth triple digit gain in the past five sessions for the Dow.
Christine Romans at the New York Stock Exchange -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: And Lou, it started out as a pretty weak morning overall but the -- well, then things really took off and the Dow was really able to get through resistance at 9,000 and 9,100 -- grabbing hold of better than expected services data and also that President Bush proposal on economic stimulus. The Dow up four out of five days triple digits -- up more than 1,000 points now since its worst levels after those attacks.
Look at the Dow winners here overall. Boeing up more than $6 1/2 over the past couple of weeks. Airlines doing well again today. Caterpillar and IBM up strong. IBM, by the way, up at pre-attack levels now having erased all of the losses of the past few weeks -- 3M, Microsoft, United Technologies all firm as well.
Now here comes the bad news after the bell another big time tech warning. Corning -- GLW is the ticker symbol stands for glassworks is down 91 percent over the past year coming out and saying it's going to take $1 billion restructuring charge, more job cuts. Very weak economic conditions for that company -- Lou.
DOBBS: OK, Christine -- thank you very much. The NASDAQ today gaining as well -- a rally of 88 points ending the day just shy of 1,600. Greg Clarkin at the Nasdaq market site -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And, Lou, a big impact today from Cisco Systems. That company's CEO, John Chambers, coming out about mid afternoon and saying that he's very comfortable with the current estimates for the quarter. That really helped drive technology shares, which had been on a rally already, to even greater heights. And you can see that happen around 1:00 or so. You see the big pop there.
The Nasdaq up 5.9 percent -- an 88 point gain. Take a look at the networking stocks, again, led by Cisco Systems. We saw shares of Cisco up better than 20 percent on the day. Juniper Networks with about an equal gain and then Ciena also participating -- up sharply.
Really all the big names moved nicely higher today. If you take a look at Dell, who was up better than two bucks, Sun Microsystems tacked on almost $1 and Oracle better than a buck. So at this point, Lou, the Nasdaq erased just about all the losses -- rather. Over the last couple weeks it's now just about 115 points shy of where it began trading back on September 17th after the shutdown -- Lou.
DOBBS: And very welcomed. Thanks very much, Greg.
Well, Oil prices today ended the day lower amid concerns that demand from the world's biggest consumer -- that is the United States -- will continue to decline.
Despite the country's war footing investigators are not seeking the traditional safe haven of commodities. In fact, commodities are dropping in price.
Lisa Leiter with a closer look at the day in the commodities market -- Lisa.
LISA LEITER, CNN CORRESPONDENT: Lou, well, you're absolutely right. In times of crisis commodity prices tend to rise and we're not seeing that right now. And analysts say there is a reason. It seems that the market is much more concerned about efforts, about the prospects for weak demand here and overseas than it is about increased efforts to rebuild New York and perhaps needs for metals, for example, for the military. That's not really a concern right now neither are rising prices or inflation.
(BEGIN VIDEO CLIP)
PHIL FLYNN, ALARON.COM: If people aren't buying things -- they're not buying new houses, they're not buying new cars, they're not buy this, they're buying this then prices are going to come down because of the lack of consumer spending or company spending. So, that's the bad side of this coin. Prices are low because demand isn't there, there's too much supply and that's an indicator of economic weakness.
(END VIDEO CLIP)
LEITER: The sharp drop in consumer and business demand, as you said, Lou, has also pushed down oil prices for much of this year. And they typically rise, too, in times of crisis. And that in turn today helped push down a key gauge of commodity prices.
The CRB Index today hit its lowest level since July of 1999. It is worth noting that commodity prices have been weak for much this year and they have been weak for a variety of reasons. Take coffee, for example. Coffee today fell three quarters of a cent to 46 cents a pound and that is about a 25-year low on continued concerns about over supply. All of these low prices, Lou, economists say raises more fears about deflation.
DOBBS: OK, Lisa -- thanks. Lisa Leiter.
Coming up next here on MONEYLINE -- Afghanistan, a country with few natural resources but it's a great strategic importance to world powers. We'll take a look. Then, the United States' battle against terrorism is different from any war this country has ever fought, of course. We'll be hearing from a national security specialist from the Council on Foreign Relations next here on MONEYLINE. Stay with us.
ANNOUNCER: Coming up next -- Lou speaks with Director of National Security Studies Larry Korb, Council on Foreign Relations.
(COMMERCIAL BREAK)
DOBBS: To many Afghanistan is a barren country with no assets, no resources, and no money. But to the world's superpowers it is an area of special strategic interest.
Kitty Pilgrim with the story.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): One of the poorest counties in the world, little industry, few communications, phones or television, roads destroyed by war. Why has Afghanistan played such an important role in world power politics? Location.
MARIN STRMECKI, SMITH RICHARDSON FOUNDATION: Afghanistan lies at the confluence of great empires and it's also at the center of the great trade routes in Central Asia and that's what's led it to be the arena for competition among great powers.
PILGRIM: Afghanistan is about the size of Texas but look at what is around it. On the east China bordered by Iran. To the south and east Pakistan, the former Soviet republics Turkmenistan, Uzbekistan, Tajikistan and Russia.
A neutral buffer state became a passage for Soviet thrust toward the Persian Gulf.
Invading in 1979 with the Soviet withdrawal of troops in 1989 it became a powder keg of rivalries until the Taliban gained control in 1998. Then the area became an incubator for terrorism and criminal activity. The world's largest opium producer until the Taliban shutdown production of poppies. It still is the matrix of smuggling rings which flourish because little else does in the region.
RADHA KUMAR, COUNCIL ON FOREIGN RELATIONS: Literally every single thing that be smuggled is smuggled through Afghanistan and that has created the incredible instability in Afghanistan but the wider regions.
PILGRIM: Afghanistan has exported its chaos: training terrorists to fight in nearby Chechnya and Kashmir. Dropped from diplomatic contact, Afghanistan has deteriorated in its isolation.
Just days ago the old U.S. Embassy sign leftover from the U.S. withdrawal in 1989 was torn down.
(END VIDEOTAPE)
PILGRIM: Last week Washington said again the time for diplomacy is past -- Lou.
DOBBS: OK, Kitty, thank you very much.
Well, Lawrence Korb is the Director of Studies at the Council of Foreign Relations and is here to give us insight into all of the complexities that surround this war against terror. Larry, first let me begin with what we're hearing now that we will not use Pakistani bases as we had been led to believe by the administration early on. Give us your assessment of the importance of that change.
LAWRENCE KORB, DIRECTOR OF STUDIES, COUNCIL ON FOREIGN RELATIONS: Well, it's important because you don't want to create instability in Pakistan. One of the things you have to be careful of is you don't want to solve one problem and create another. Logistically it's not that important because you can use the bases in Uzbekistan to accomplish pretty much the same thing. Plus if Saudi Arabian allows us to use the bases there.
DOBBS: Which they say they will not. And that is a reversal again in what was at least publicly heard.
KORB: Yeah, what you're -- that's why it's taken us so long to retaliate, because we have to go build this coalition slowly and make sure everybody gets on board. And we're going to have to be able to demonstrate to countries like Saudi Arabia, that if we do attack, we will not kill innocent civilians. We have pretty good location of where bin Laden is, and then be able to go in and get him with a minimum of civilian casualties.
DOBBS: A minimum of civilian casualties. And that of course, has been the policy, the statement of the United States government. They're being very focused, the administration says.
It seems somehow difficult for many of us to understand why there would be statements of support, statements of policy direction and then reversals. The first two and most important countries, Pakistan and Saudi Arabia, to base our forces, and then to see these public reversals. That has to be pretending. It seems logically some significant difficulty.
KORB: Well, there's no doubt about that. I mean, nobody ever said this was going to be easy, because don't forget, the Pakistanis were traditional allies of the Taliban. In fact, they created them. Musharraf has got to worry about the radicals in Pakistan. What he said was not for large amounts of U.S. involvement. So what they're trying to do is they're sending mixed messages. They're trying to say, well, we may be some part of it, but not we're not going to be the only part of it. And if you get the other countries in the area to do it, it'll be easier to get them.
DOBBS: And Russia, Putin has said that he wants to be helpful here, a rather vague description of what form that help would take. At the same time today, announcing that he would be willing to look somewhat favorably upon expansion of NATO. It looks like there's some significant trades being made between the United States and the various countries, most especially here, Russia, which also announced concurrently $300 million of arm sales to Iran, which for the past six years, we have blocked and blocked with considerable force.
KORB: There's no doubt about the fact you get cooperation from a country Russia, you're going to have to give them something. One of the things that we're giving them, we more or less have said we're not going to say bad things. We're not going to complain what you do in Chechnya.
And the expansion of NATO idea is also under the table. We're basically saying to them, if you want to come into NATO after it expands, we will not object to that.
DOBBS: Also at the same time, Larry, the announcement that India will stand side by side, as their foreign minister said, with the United States in the war against terrorism. A change shifting here at least some degree in the Pakistani policy and our relationship in this effort with the Pakistanis, while the Chinese are moving troops up against the border with Afghanistan. How concerned are you about that?
KORB: I'm not concerned. The Chinese are not going to invade Afghanistan. If anything, the Chinese do not want Muslim or radical Muslim terrorists in their own country. They have been concerned about that.
DOBBS: A shared concern by both Russia and China.
KORB: That's right. And -- what all the countries are trying to do is they're trying to demonstrate that they're not just going to be mere followers of the United States. The United States is not going lead them along.
So they're playing a dual game. We all have the same objective, but we're all going to get there in a different way. And we're going to have to satisfy different constituencies.
DOBBS: How much time, in your best judgment, do you think that the administration has, given the vast public support it has in this country for the war against terrorism. How much time do they have to retaliate?
KORB: Well, I think politically, they have as much as they want because of the presence of Colin Powell. The American people trust him. The real problem's going to be the Afghan winter. Once that comes in a couple of weeks, your problem is going to really become -- is compounded.
DOBBS: So you see it more as a meteorological issue.
KORB: It's a logistic problem, rather than a political problem. I mean, the American people trust Colin Powell. And if he says we're not ready to go, I don't think they're going to put pressure on them.
DOBBS: It seems there are clouds building in various forms, including meteorological.
KORB: That's right.
DOBBS: Larry, thanks very much for being with us.
KORB: My pleasure.
DOBBS: Coming up next here, a story about wood, various types of wood and records. We'll tell you why Barry Bonds baseball bat is receiving some very close attention as he approaches the single season home-run record. It's also a great business story.
And buyers today pushing prices higher on Wall Street. We'll look at what was a welcome and very impressive rally. Also, a leading economist joins us to tell us why he believes we're in recession. Stay with us.
ANNOUNCER: After the break, Lou speaks with Deutsche Bank Securities chief investment strategist Ed Yardeni.
(COMMERCIAL BREAK)
DOBBS: Now for the latest developments in America's new war. An Indian airline aircraft was hijacked after it took off from Mumbai, formerly Bombay, India today. It is now in New Delhi. It has 54 passengers on board. They are reportedly safe. They remain on the aircraft. And aircraft has been surrounded by Indian Army commandos.
Governor Tom Ridge gave his last press conference today. He begins his new job as head of homeland security Monday.
Afghanistan's supreme leader called on Islamic scholars to help people prepare for what he called a holy war. U.S. officials say Yemen has one of the most significant links to Osama bin Laden's al Qaeda organization.
Meanwhile, the FBI says an attack against a Greyhound bus driver in Tennessee was an isolated incident and not an act of terrorism. A man carrying a Croatian passport slit the throat of a bus driver carrying passengers from Louisville, Kentucky to Atlanta, Georgia.
Greyhound pulled all of its busses off the highways for the entire morning, until the investigation could be completed. That bus crashed in Manchester, Tennessee. Five passengers were killed, as well as the attacker. 32 people injured in the incident. The driver survived that attack and was able to go for help.
A solid session to tell you about today on Wall Street. Several factors fueling the big rally. And among those factors, the president's proposed economic stimulus package and positive comments from Cisco Systems.
On the big board today, 90 companies hit new 52-week highs. 86 hit new lows.
On the Nasdaq, 62 companies hit 52-week highs, while 144 hit new lows. The Dow climbing past 9000 for the first time since before the terrorist attacks.
And at the New York Stock Exchange, advancing issues there beating decliners by a 2 to 1 margin. Among the most active issues today, Nortel Networks, up a quarter just a day after the company warned of weak revenues and announced a new chief executive and 20,000 job cuts.
Shares of Nokia climbing nearly $1 a share on the day. Shares of Texas Instruments up nearly 10 percent for the session, finishing at $25 and change.
A three-digit gain for the Nasdaq, the first time since early July. It's actually four digits with one decimal, but the index finishing up nearly 6 percent at 1580. Advancing issues beating decliners by a 2 to 1 margin.
Among the most active issues today, Cisco Systems climbing nearly $2.50 a share, that after the CEO reiterated first-quarter estimates. Chip stocks rallied, Intel up nearly $1.70 a share. Openwave Systems tumbling 40 percent one day after warning of a first-quarter shortfall.
Well, today's heavy trading volume, a welcome relief for brokerages who rely on commissions. Topping that list, online brokerages. Trading volume has rebounded over the past two weeks. But for the month, just finished online trading volume, down more than a third compared to a year ago.
Analysts say it will be some time before the days of record trading will return, if ever. And that prospect has depressed the prices of online brokerage stocks. Many of those shares tonight at the lowest levels in some years.
The Dow closing above 9,000 today for the first time since September 17, the day the markets re-opened.
For more now on Wall Street, Christine Romans at the New York Stock Exchange, Greg Clarkin at the Nasdaq marketsite.
And let's check in with you first, Greg.
CLARKIN: Sure. One of the big moves today was made by the software stocks. The software companies really posting very nice gains for the second day in a row. And a lot of analysts say at this point, it's really kind of an absence of news that is driving these stocks. The companies really have not been reporting or issuing profit warnings, as many analysts had expected.
The profit warnings that are coming are from smaller, secondary software companies. And even those warnings, some analysts say, are not as severe as many expected. So Siebel Systems rose for the second day in a row. We met with analysts yesterday, issued no further guidance on the quarter. That was taken to mean that the quarter is on track, although they didn't articulate that. And the stock was rallying again today.
Peoplesoft, as you saw, is nicely higher there. Bea Systems is also up. And Lou, one thing to keep on the calendar, tomorrow, Dell Computer will meeting with analysts in Austin, Texas. Maybe some news out of that.
DOBBS: Thanks. We'll look forward to that, as we turn to Christine Romans -- Christine.
ROMANS: Lou, here on Wall Street, folks are being the proverbial is glass is half full. And how do they know that? Well, the market has done well over the past several sessions.
And you've got stocks that are performing better even amid bad news. These earnings warnings keep coming in here. But look, Tiffany up more than $2 with an earnings warnings. Williams Sonoma says it's going to be able keep its earnings targets, but that sales will be weak. It (UNINTELLIGIBLE) more than $4.00.
Airborne Express, up of 69 cents. Nortel Networks up 25 cents. There were warnings of one type or another for many of these companies. It's interesting, too, when you look what's in the Dow, some folks are starting to say there were some real bargains to be had if you were buying in the past couple of weeks.
GE is up $10.00 since the attack on Wall Street. And about 7 Dow stocks are actually trading at pre-attack levels -- Lou.
DOBBS: OK, Christine, thanks. Christine Romans.
The President spelling out his stimulus plan, urging Congress to quickly pass it. Kathleen Hays is here now and has something for us on some interesting reaction -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: Yes, and of course, reaction already on Wall Street and the stock market anyway, one of the reasons they did better today.
I want to take a look at some of the main tenets of this stimulus package, outlined so far by the President, backed by Treasury Secretary Paul O'Neill, looking for $60 to $75 billion of additional stimulus, on top of $50 billion in relief funds already in the pipeline, urging individual and business tax relief, maybe speed up income tax cuts for individuals.
How about an investment tax credit for firms, aimed at shoring up consumer confidence, getting companies to invest in their businesses again, and providing some unemployment relief for people who have lost their jobs as a result of the attacks on September 11.
Now it's interesting. Paul O'Neill, Treasury Secretary, more than once has said we want a big package, but not so big it upsets the bond market. What does that mean? Bond people are the most sensitive to inflation. If they get the feeling that between the federal government giving us stimulus and the Federal Reserve cutting interest rates, this is going to be inflationary, that's where we're going to see a reaction.
Interesting today that the long end of the market actually performed better. Now this stimulus package is going to equal about one percent of GDP. The reason for this benign bond market reaction, according to one guru, is that the package still isn't big enough.
BILL GROSS, PIMCO: Yes, my estimation is we need a package of about two to three percent of GDP, because that's where the economy's going. And so, the stimulus is not enough at this point.
I expect at some point, we'll have additional programs. And we'll see not only $100 billion package, but perhaps a $2 to $300 billion package.
HAYS: Now the folks at PIMCO have been negative on the economy. They think we've got this big, excess capacity in businesses. Its investment spending, you know, just fallen off the charts. Other economists I've talked to have said, hey look, I don't think the economy is in that bad of shape. But it's interesting, if the stimulus package gets that big, we're going to see deficit spending and a bad reaction in the bond market.
DOBBS: Well, it almost makes you think of the invasion of the body snatchers to hear Bill talking about a big stimulus package and its possible impact on the bond market.
HAYS: Indeed.
DOBBS: Kathleen, thank you.
Well, one sector of the economy enjoying a lot of stimulus right now is housing. With mortgage rates low and affordability reasonably high, the real estate market continues to defy the overall slowdown. Low mortgage rates are also igniting a refinancing boom.
Allan Chernoff with the story.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Manhattan resident Jane Holzer is refinancing her mortgage, hoping to save $1,000 off her monthly payments.
JANE HOLZER: I'm always looking at rates, checking them. And then during the summer, I sort of made applications. And now I'm thinking about even doing a second round because rates are so good that it's just too tempting.
CHERNOFF: Jane has plenty of company. Americans are rushing to refinance, hoping to take advantage of historically low mortgage rates.
MELISSA COHN, PRESIDENT, THE MANHATTAN BROKERAGE CO.: A month ago, the average would be just 60 percent of our business at Manhattan Mortgage was purchased and 40 percent was refinancing. And now I would say that that has now flipped, where we now do 60 percent refinancing at the moment and 40 percent purchase.
CHERNOFF: 30-year fixed rate mortgages have been fallen steadily since May of 2000, now down to average of 6.7 percent, the lowest in three years and very close to more than 30-year lows.
As rates have fallen, mortgage applications have climbed, particularly for refinancing. Refinancing applications are now more than 10 times what they were when rates began falling and nearly triple their level the beginning of the year. Mortgage applications to purchase homes have failed to show the same kind of improvement.
DOUG DUNCAN, MORTGAGE BANKERS ASSOCIATION OF AMERICA: Since 1998, there's been significant appreciation in housing values. So there's a lot of equity built up in those homes that people can tap, by refinancing their mortgage and taking out some cash. And more than 50 percent of the people that are refinancing are doing that.
(END VIDEOTAPE)
CHERNOFF: During the last refinancing boom of 1998-1999, the Federal Reserve estimates Americans tapped into their home equity by more than $50 billion. They spent much of that money on home improvements and other major expenditures. Today's refinancing activity means once again, consumers are putting extra money in their pockets. And that could give some help to the economy -- Lou.
DOBBS: Very good form of stimulus. Allan, thank you. Allan Chernoff.
Well, Ed Yardeni says this economy is in recession. He points out that stocks typically do better several months before a bottom. And today, the Dow capped off five straight sessions of triple-digit gains, signaling a bottom might be here.
Ed Yardeni is definitely here. Ed, good to have you with us.
ED YARDENI, DEUTSCHE BANK SECURITIES: Thank you, Lou.
DOBBS: First recession, how deep, how long?
YARDENI: We were falling to recession before the attack.
DOBBS: Right.
YARDENI: And I think actually, the month of August was showing a pretty precipitous drop-off in consumer spending starting to occur, largely because the consumer saved their tax rebates, but now it looks as though the attack is going to accelerate process. And I think the consumer recession could probably last through year-end, maybe into the first quarter.
DOBBS: Well, that would be a relatively short duration?
YARDENI: It would be a relatively short duration, but as you know, some sectors have already been in a recession all year, like manufacturing, like technology. So in some areas of the country, it's going to feel like a very long recession.
DOBBS: We just heard Bill Gross talk about a $2 to $300 billion stimulus plan. The President adding another $60 to $75 billion to his proposals, which raises us to something approaching $150 billion. What's your best judgment?
YARDENI: I think we got to be careful of just throwing money at the economy. I mean, obviously, we want to make ourselves feel better. And so, we do want to spend money to try get things to turn around, but maybe what we need to do is accelerate the tax cuts that are already in the pipeline just down the road, to just give consumers more money. If consumers spend more money, then all will be much better for profits and for capital spending.
DOBBS: But as you just pointed out, apparently consumers, tax paying consumers...
YARDENI: Right.
DOBBS: ... are not spending those rebates. They're saving them.
YARDENI: Yes.
DOBBS: How about the idea of investment tax credit, bring it back?
YARDENI: I don't know if that's just going to suddenly fire up the economy. What you really need is spending. And I think the best way to do that is to give more purchasing power to the consumer. Now one thing that's important here is we are giving purchasing power to the consumer with lower mortgage rates.
DOBBS: Right.
YARDENI: The airlines are cutting their fares. The auto industry is giving tremendous incentives to buy cars.
DOBBS: When are we going to see a significant move in consumer credit card rates, for example, because those have been intractable?
YARDENI: Yes, I think that's probably going to happen. Otherwise, the banks are going to put too much pressure on their own customers and they're going to find that instead of getting their payments, they're going to get some delinquencies. So I think the banks, if they're smart, are going to start responding to the fact that we've got a 2.5 percent Fed Funds rate out there. DOBBS: We'll find out whether the banks prefer the pressure beyond themselves or their customers.
YARDENI: Well, I hope they vote for the customer.
DOBBS: Well, speaking of their customers, those people living in fixed incomes.
YARDENI: Yes.
DOBBS: While these rates are great for people who would like to buy and refinance, they're being murdered here.
YARDENI: Yes, absolutely. You got some people that are absolutely getting killed on falling interest rates here, because you know, they're not showing the kind of returns they need. And they need those fixed incomes.
And it's a big problem for them, because they don't want to turn to the stock market. But I don't know that there's much we can do for them. On the other hand, lots of people are taking advantage of the refinancing windfall. So hopefully some of those people are also on fixed incomes.
DOBBS: OK, Ed Yardeni, as always, thanks for being with us.
YARDENI: Thank you.
DOBBS: Good to see you.
Well, topping tonight's "MONEYLINE Movers" as we turn back to Wall Street, MONEYLINE movers led by Winnebago. It was up more than $3 a share today. Winnebago doubling fourth quarter earnings from a year ago. Winnebago citing strong demand, attractive interest rates, part of the reason.
Priceline today up nearly 10 percent in price. The name-your- price online company saying it's experiencing a faster than expected recovery. Priceline expecting third-quarter revenue to come in at the higher-end of its targets. Goldman Sachs upgrading the stock as well.
Eli Lilly dropping more than $3.5 a share, a sharp decline in Prozac sales forcing Lilly to warn for the fourth-quarter and next year. Sales of Prozac tumbling since generic versions began hitting the market in August. Shares falling 15 percent so far this year in Lilly.
Just ahead here on MONEYLINE, we'll talk about the business of baseball. We'll show you how one man, a carpenter, revolutionized the game. And in particular, for those who want to hit a lot of home runs, particularly a fellow named Barry Bonds.
(COMMERCIAL BREAK)
DOBBS: Barry Bonds needs only two home runs to break Mark McGwire's single season home run record of 70 set back in 1998. As unlikely as 70 home runs seemed then, so is the story of the man who makes Barry Bonds' bats.
Five years ago, Sam Holman was an unemployed carpenter. Now he's revolutionizing the business of making baseball bats and records.
Casey Wian has the story.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Over a few beers at an Ottawa bar in 1996, Sam Holman listened to the complaints of a baseball scout friend. His buddy said bats broke too often, and wondered if Holman, an out-of-work carpenter, could do something about it.
Holman did some research and decided that maple, which was harder than the ash used for most bats, might work. He built this first bat from stairway banister wood, made a few more and convinced Toronto Blue Jay star Joe Carter to try his maple bat. The rest is history, or about to be, because Barry Bonds is one of more than 300 major leaguers now using the Sam bat. And he's on the verge of breaking the game's most glamorous record.
SAM HOLMAN: I think you'll find that his numbers have increased in the past three years over his past hitting. And I think maple has a lot to do with that.
WIAN: Almost overnight, Holman has become a player in the bat business. Out of his home, Holman made just 7,000 last year, but he expects to make at least 20,000 this year because he's moving to a bigger shop this weekend.
HOLMAN: I would like to have my house back.
WIAN: That's still a fraction of the million-plus Louisville Slugger bats industry leader Hillerich & Bradsby turns out annually. Major leaguers can go through 100 bats in a season. Those who use maple say they don't break as often as ash and they deliver more power. Louisville Slugger disputes claims that maple is responsible for Bonds' power surge.
Says Chuck Schupp, the company's manager of professional player services, "I don't think you can pinpoint it to maple. Sammy Sosa's hit 60 home runs in a row using ash."
But Louisville Slugger has entered the maple bat business in response to Holman's success and player requests.
HOLMAN: I guess that's a David and Goliath sort of thing, isn't it?
WIAN: And we know who won that one.
Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE) DOBBS: Well, Wolf Blitzer now reports in just a few moments. For a preview of what's coming up, here is Wolf to tell us all about it -- Wolf.
WOLF BLITZER, CNN ANCHOR: Thank you very much, Lou. Coming up, we'll hear from our military affairs correspondent Jamie McIntyre. He's traveling with Defense Secretary Donald Rumsfeld now in Saudi Arabia.
Also, I'll talk with former British Prime Minister John Major, who was in office during the Persian Gulf War and with Congressman Saxby Chandless, the chairman of the House Subcommittee on terrorism and homeland security. Plus, Tucker Carlson and Bill Press in our "CROSSFIRE" debate. It's all up next -- Lou.
DOBBS: Wolf, thank you. Look forward to that. And coming up next here on MONEYLINE, we'll take a look at what to expect tomorrow. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Well, CNN has just learned that that reported hijacking of an Indian Airlines Boeing 737 was not after all an hijacking at all. We're now told it was a misunderstanding amongst the pilots, the passengers and ground control. All 54 passengers of course are safe.
Satinder Bindra, our bureau chief in New Delhi will have a full report, that coming right up with Wolf Blitzer at the top of the hour.
Tomorrow here on MONEYLINE, earning season begins in earnest. Expect quarterly results tomorrow from Alcoa, Marriott, and Nautica. And in economic news, weekly jobless claims are expected to rise further, already at almost nine-year highs. While economists predict a sharp decline in factory orders for the month of August. That report due out tomorrow.
In other corporate news tonight, Glaxo-Smithkline creating a discount program for millions of senior citizens who do not have prescription drug insurance. That plan discounts the price of its medicines by 25 percent or more. Eligible citizens must be 65 years of age or older and they must earn less than $26,000 a year to qualify.
Sabena, one of Europe's oldest airlines, receiving a one-month reprieve from the Belgian government, a loan for $114 million, as it is trying to reinvent itself in difficult times. Its co-owner also suffering mightily in difficult times is Swissair. Swissair pulled out of its financial commitments just Monday on the brink of bankruptcy itself. Swissair, however, also winning a reprieve. The Swiss government loaning Swissair $280 million, trying to keep operations going through the end of the month. Swissair expects most flights to resume tomorrow, although certainly not at full capacity.
For tonight, that is MONEYLINE. We thank for being with us. I'm Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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