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Lou Dobbs Moneyline
Dow Declines 51.83 to 9,067.94; Nasdaq Advances 0.65 to 1,605.95
Aired October 08, 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. Nearly four weeks the after the terrorist attacks against the United States, America continues to strike back with its ally Britain. For the second night U.S. and British forces, are pounding military targets in Afghanistan. 31 sites have been taken out so far. More attacks are on the way. Meanwhile, America is beefing up its security at home; swearing in a new homeland security chief and gearing up for a war that could go on for a very long time.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: It's not an effort that's against the Afghan people. Indeed we're providing humanitarian assistance to the Afghan people. It is going to take a good deal of time. We need to be patient.
(END VIDEO CLIP)
DOBBS: Tonight General Wesley Clark will be here to discuss the success of the U.S. and British military operations and to tell what we can expect in the days and weeks ahead.
We will of course also continue to track Osama Bin Laden's money trail. Tonight we take a look how easily terrorist money flows into and out of global banks. And we'll be taking a look at how all of this is playing out on wall street, where the Dow lost ground, but the Nasdaq actually gained a fraction. We'll also be talking about what impact a prolonged war will do to consumer confidence and a stock market recovery.
But first, these are the latest developments in America's new war. The Pentagon confirming a second wave of airstrikes against targets in Afghanistan. Explosions heard around Jalalabad and electrical power was cut off in the capitol of Kabul. All U.S. planes returned safely after the first wave of airstrikes. The United States and Britain today telling the United Nations Security Council that attacks against additional countries may be necessary in the fight against terrorism.
Thousands of anti-American protesters flooded the streets in Islamabad and several other Pakistani cities. One demonstrator was killed, several others wounded in clashes with police in Quetta, Pakistan. A second case of anthrax in Florida. That causes the FBI to take a more serious look of the possibility of a terrorist link. With more now on the attacks on Afghanistan and reaction in neighboring countries, we are joined by Christiane Amanpour in Islamabad.
Christiane, first let's turn to the political situation in Pakistan itself. President Musharraf today reorganizing top military leaders there. What likely effect will that have?
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, he did this actually just before the first wave of strikes were underway yesterday, and analysts say that basically he's removing certain members of the military who were closely associated with Pakistan's Afghan policy.
Now that Pakistan has decided to stand with the United States in the international coalition, those were moves that he made. Others were simply promoting people who absolutely had to be, given the military doctrine about promotions. You either get moved out. So that was what was going on. He's cautioning people not to read too much into it.
President Musharraf had a press conference today, in which he said that the ideal scenario for Afghanistan would be short, sharp, well-targeted military campaign in Afghanistan followed by a political and national reconciliation government there, plus rehabilitation efforts by the west for Afghanistan, pointing out that rehabilitation -- a little bit could go a very, very long way in that country. Lou.
DOBBS: Christiane in the context of Afghanistan and Taliban, they are not given to -- at least by recent practice -- rehabilitation. What does the word mean?
AMANPOUR: He really means an effort to reconstruction the country in terms of building, rebuilding infrastructure, bridges or roads, to try to make the water management system work, to try to make it possible for Afghanis to go back to agriculture. Not to just stabilize Afghanistan, but to help some 3.5 million Afghan refugees who have come in over the last 20 years into Pakistan and who are a destabilizing influence here, to allow them to allow them to go back to some kind of real life and living situation back in Afghanistan.
Mindful of the protests that have been going on here today in Pakistan -- there was that one in Quetta to the west of here which was quite violent and ugly, as you reported earlier -- but to the rest of Pakistan, it's been very, very quiet considering what the religious leaders had tried to bring out on the streets. And the president of Pakistan has put two religious leaders who have been calling for these demonstrations -- some of the more hardline, extreme religious leaders -- under arrest.
So hoping he can control that, and still claiming that the vast majority of this country does support him in this stance, Lou.
DOBBS: Christiane, President Musharraf has not imposed martial law. What is your judgment about the stability of his government and civil order?
AMANPOUR: Well, being that he is a military leader here -- he took over by a military coup, a bloodless one a few years ago -- he does have a pretty good grip, according to analysts, on the situation and on the security situation. So people are not that concerned at the moment about that.
And interestingly, in terms of demonstrations, you know there haven't been that many, if at all, around the rest of the Islamic world. I spoke to the Prime Minister of Lebanon earlier today, who said that while the leaders of the Arab states who are allies of the United States are watching this action, supporting the United States in its combating of terrorism, but also are very concerned that eventually the United States -- sooner rather than later -- gets heavily involved in bringing the Palestinian-Israeli situation to a peaceful resolution by there being able to sort of remove one of the key things that does inflame public opinion here , and that is the pictures of Palestinian suffering that are broadcast all the time on the screens around this part of the world, Lou.
DOBBS: Thank you very much. Christiane Amanpour from Islamabad.
The Pentagon today confirmed U.S. and British forces hit 31 strategic targets in the initial strikes against the Taliban. For more on that as well as the latest on the military offensive, we head over to Jamie McIntyre at the Pentagon. Jamie?
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Lou, the latest is that those operations on day two continue. At this point it's been an exclusively United States show, on the second day. About half as large a strike package as yesterday. Let me just run some of the numbers quickly for you.
15 Tomahawk cruise missiles fired from three American ships including one submarine, ten carrier-based aircraft on strike today. Two B-2s flying out of the United States hit targets with their satellite-guided bombs, and three B-1s also hit targets in Afghanistan. But the Chairman of the Joint Chiefs, General Richard Myers, today said it would be a mistake to just add up how many targets have been hit. That, he said, would be the wrong measure of success.
(BEGIN VIDEO CLIP)
GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: Regardless of the pounds of munitions or the scope of targets, yesterday's strikes began setting the conditions for future operations. We did destroy some of the terrorist infrastructure, and we did begin feeding and assisting the victims of the Taliban regime.
(END VIDEO CLIP)
MCINTYRE: Two between-the-lines message that came out of the Pentagon briefing today. One is the acknowledgment that this is not something that can be accomplished from the air. Donald Rumsfeld, the defense secretary, again saying that cruise missiles and bombers are not going to solve this problem. He said, "We know that." A hint that U.S. ground troops may be needed in the near future. And also the clearest acknowledgment yet that the United States is very interested in working with people in Afghanistan to topple the Taliban.
(BEGIN VIDEO CLIP)
RUMSFELD: There's no question that the group of people that are closely linked to al Qaeda who are in the Taliban -- including Omar and his lieutenants and that structure -- are harmful to the world and dangerous to the world. And are -- and that Afghanistan would be vastly better off were they not there.
(END VIDEO CLIP)
MCINTYRE: So far, no U.S. pilots or planes have been lost. Pentagon officials say that American planes are flying well above the effective range of Afghanistan and the Taliban's antiaircraft artillery and shoulder-fired missiles, and they will continue to do that until the United States is sure there is no threat from the ground. Lou?
DOBBS: Jamie, I know that certainly the chairman of the Joint Chiefs and the defense secretary are being very careful with what they do say, but the Northern Alliance, the united front in the north has said that it is ready to move against the Taliban. Any indication when that might occur?
MCINTYRE: Well, Defense Secretary Rumsfeld today said that he had not yet seen any indication that there had been a change in the balance of power on the ground. Although clearly the United States feels that these airstrikes will weaken the Taliban, some of the targets are troop concentrations of Taliban and Al Qaeda-supported troops, and there clearly is an expectation that that will give a military advantage to the Northern Alliance. But they haven't seen the situation on the ground change yet.
DOBBS: And an indication of just how pleased the chairman and the defense secretary are with the success ratio on these targets to this point?
MCINTYRE: They're very pleased with the first day's results. But they say this is just the beginning. They want to caution people against thinking that just because their precision-guided munitions have gone where they are wanted to and they've destroyed some infrastructure that they're very far along in this campaign. This is going to take some time, and as I said, is probably going to end up taking some troops on the ground. Probably not a big occupation forces, but special forces to go in and finish up this work.
DOBBS: Jamie, thank you very much. Jamie McIntyre from the Pentagon.
The chairman of the Joint Chiefs today saying the United States has a greater amount of smarter, more accurate weapons than it possessed during the Persian Gulf War. The United States and its allies hoping that will help keep civilian casualties low. For more on U.S. military tactics and what we might expect in the days ahead, we're joined by General Wesley Clark. He was the former Supreme Commander of NATO, and CNN military analyst. General, good to have you with us.
GEN. WESLEY CLARK, FORMER NATO SUPREME COMMANDER: Thanks, Lou. Good to be here.
DOBBS: The second wave of strikes -- what is your judgment about the priority and the reason for these targets?
CLARK: Well, the aircraft are still going in to clean up the targets that remain from the airfields, command and control, surface- to-air missiles, some of the radars, perhaps some of thee surface-to- air missiles moved just as the first strikes were in progress so we didn't take those out. We know the alternate locations. We probably went in to get them out tonight.
DOBBS: How difficult an assignment is that, mobile surface-to- air missiles, how difficult it is for our aircraft and those of the British to seek these out and destroy them?
CLARK: We can find them. We did this in the Coast Guard Operation Allied Force, very much the same kind of laydown. A few more targets in there. The missiles are moved around but we are watching them. We do have overhead photography. We have electronic tracking. And if they are there, we will eventually get them.
DOBBS: If you would give us your best judgment of what we should expect over the course of the next several days or whatever period you judge to be the first phase of this action?
CLARK: I think the first phase has drawn to a close fairly quickly here, which is the acquisition of air superiority. You're going to see a few more strikes, probably tomorrow night, there. You're going to see an increasing effort to concentrate on the ground troops.
We will probably be putting in more special reconnaissance forces if they're not already in. We'll also be looking to target those troops which may be those Taliban troops and Al-Qaeda troops, which may be blocking the advance of the Northern Alliance. So we're going to start to see at some point some movement on the ground, assisted by our air -- overwhelming air superiority.
DOBBS: When you say reconnaissance you're -- I assume -- talking about special operations group, SEALS and special forces?
CLARK: That's right.
DOBBS: What would be their initial objectives?
CLARK: They can go in and get in the rough terrain. They can stay up high. They have great long-range view finders, fiber-optics, binoculars, infrared sights, laser designators, and they'll be able to actually locate targets, figure out exactly where they are using the global positioning system and call the aircraft in to strike them. That's the difference in modern warfare. We don't have to bring in all the heavy artillery. It's in the sky and we own it.
DOBBS: Is it your judgment that that is one of the major objectives here, to us to allow to us move while special operation forces -- but a significant number of them at will within Afghanistan?
CLARK: I think that's one of the things we want to do. We'll also be using unmanned aerial vehicles overhead to help us zero in on the forces on the ground. As the Secretary of Defense said, we want to change the correlation of forces, the balance of forces, shake up the Taliban regime, get the Northern Alliance moving and change the Taliban regime in that country.
DOBBS: General, thank you very much. General Wesley Clark.
While the military battles in Afghanistan, a global effort to freeze terrorist money goes on, the Treasury Department telling CNN it is now ready to put a lock on more bank accounts in an effort to choke off Osama Bin Laden's funds. A department spokeswoman would not say how many accounts have been added, though another source indicated the number could be up to 24.
As that search for terrorist money goes on, we take a look now at international banks and how easily terrorist money has been slipping into and out of those banks.
Allan Dodds Frank has the report.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): A big moment for Deutsche Bank. The mayor of New York with the company's top executive, Rolf Breuer, opening the market last Wednesday as the bank's securities began trading on the New York Stock Exchange. But Breuer did not publicly address a problem facing several dozen global banks, namely the use of their financial networks by terrorists.
Of the 200 accounts frozen by German banking authorities and linked to terrorists, 10 were at Deutsche Bank, the biggest bank in Europe. According to Breuer, the accounts held less than $1 million, a minuscule number for a bank with nearly $875 billion in assets. Among those frozen, accounts controlled from this Hamburg apartment by Mamoun Darkhazanli, whose import/export company is suspected of facilitating funding for Bin Laden's group.
DON KARSON, KROLL ASSOCIATES: If somebody who is bent on terror parks money through the use of fairly anonymous individuals, who have a history in a community, who have a job, and who open an account with a small amount of money and keep it reasonably active, it is virtually impossible for a banking institution to really understand that an account may be used for an unlawful transaction of some kind.
FRANK: Deutsche Bank alone has more than 1,400 offices in Germany and nearly 900 offices in more than 70 other countries, including a large office on Liberty Street that was badly damaged when the World Trade Center collapsed.
RAYMOND BAKER, CENTER FOR INTERNATIONAL POLICY: When we have $1 trillion a year -- my estimation of the combination of different forms of dirty money that flows into Western coffers -- it becomes extremely difficult to ferret out those narrow parts of the problem that you want to stop; those parts that are criminal or terrorist in nature.
FRANK: Deutsche Bank's private banking is being questioned by "Der Spiegel," a leading German news magazine. The report, quoting bank e-mail, claims Deutsche Bank handles more than $300 million of assets and investments for members of the Saudi Bin Laden family. That family, one of the wealthiest in Saudi Arabia, says it long ago broke off relations with Osama Bin Laden. The bank says it is cooperating with investigators and refuses other comment.
(END VIDEOTAPE)
FRANK: But how much does the bank know? The magazine says Deutsche Bank has been unable to find out what happens to money moving through many Bin Laden family accounts controlled through the Cayman Islands and other offshore secrecy havens. Lou?
DOBBS: Presumably that's about to change.
FRANK: One would think.
DOBBS: Allan, thank you very much. Coming up next here on MONEYLINE, we'll tell you about a Florida man who has been infected with anthrax, a coworker of the man who died. The FBI is now looking at the possibility of a terrorist link. We'll have that report for you.
We'll also have the latest for you on gasoline and oil prices. Both are down since the September 11th terrorist attacks. And what effect will a prolonged war have on wall street? Consumer confidence is the key to a market recovery. Our guest tonight says that confidence may return sooner than you think.
ANNOUNCER: Next, Lou speaks for Lakshman Achuthan of the Economic Cycle Research Institute.
(COMMERCIAL BREAK)
DOBBS: Oil and gasoline prices have been falling since September 11th. According to the Lundberg Survey, gasoline prices at the pump dropping an average of 11 cents a gallon over just the past two weeks. Now the average just over $1.40 a gallon, Lundberg citing a fall-off in consumer demand. As gasoline prices fall, oil prices have moved modestly higher. In New York trading, light sweet crude oil gaining six cents, settling at $22.45 a barrel. Despite today's uptick, light sweet crude oil falling nearly 20% over the past month.
The Dow Industrials today closing modestly lower following the second wave of military attacks against the Taliban and the Al-Qaeda network in Afghanistan. Christine Romans joins us now from the New York Stock Exchange. CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, closing lower but really not very much. And buying here was not even a billion shares. The market really wandering much of the day, unphased by military strikes and by the upcoming earnings season.
Take a look at defense stocks. These did very well and have been for some time. Raytheon a two-year high. It's up 46 percent in the past couple of weeks. It's the maker of Tomahawk missiles. General Dynamics, Northrop Grumman, Lockheed-Martin all higher. A Lot of talk on the street about whether these gains are sustainable, because this is new kind of war and traders aren't sure exactly what that means for defense spending.
Meanwhile, retail stocks retail spending, a little bit of worry there. Home Depot, Wal-Mart, each down about 3 percent. Target and JC Penney also lower. JC Penney, though, after the bell coming out with same-store sales results for the month September, the month that everyone wants to know about, and it was better than expected, Lou, up eight percent. We'll be hearing more from the retailers later this week as well.
DOBBS: OK, Christine, Thank you. Over at the Nasdaq, Greg Clarkin with a report for us. Greg?
GREG CLARKIN, CNN CORRESPONDENT: Lou, I'll tell you, the Nasdaq held up fairly nicely as well today. It was a very quiet trading session: just about 1.4 billion shares traded versus last week on some busy sessions when about 2.5, 2.6 billion traded. Nasdaq was down early on and then came and then just really drifted throughout the rest of the day to post less than a one-point gain on the day.
Take a look at some of the big name stocks, give you an idea of how they fared on the trading session. We saw gains from Microsoft, Intel, Cisco Systems, Dell Computers.
Two of the better-performing sectors, networkers and communications chip stocks. Robertson Stevens was very bullish on the networking companies. They say investors have been too pessimistic. Among those stocks they like are Riverstone and Foundry. Both of those stocks posted nice gains.
And then also you saw the communications chip stocks Broadcom and Conexant rising after Goldman Sachs says that those stocks have a lot of potential. So those stocks getting a nice pop on that Goldman Sachs note. All in all, not a bad day. A lot of folks were expecting a pullback into the stock market today. After all, it's had two nice run-ups in the last couple of weeks. But we really didn't get that today, Lou.
DOBBS: You didn't get that. I bet some folks were expecting to go higher, too, weren't they?
CLARKIN: There was a bit of a cautious tone. I think people were pretty pleased with the way that it held up in face of this new uncertainty.
DOBBS: It even looks pretty good these days.
CLARKIN: It does.
DOBBS: Greg, thank you very much. Greg Clarkin.
Consumers and their willingness to spend are the lynchpin holding this economy together. Americans may be gratified to see their government striking back at terrorists, but wars don't always boost consumer confidence. Here to talk about this economy's prospects, Lakshman Achuthan, economist, MONEYLINE regular contributor. Good to have you here back today.
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH CENTER: Thank you.
DOBBS: Consumer confidence. I think back to the Gulf War, when those first strikes occurred. That really boosted the market.
ACHUTHAN: That would be very helpful, if that would happen now.
DOBBS: Are we going to see that?
ACHUTHAN: I hope so. We have on the one hand...
DOBBS: You hope so.
ACHUTHAN: I certainly hope so.
DOBBS: You're here -- you know.
ACHUTHAN: Well, I know. Here's what I know. I know e that we're in a business-led global recession. That's on the one hand. On the other hand, like a economist, right?
DOBBS: You're sounding like one.
ACHUTHAN: On the other hand, you have a huge amount of pent-up stimulus in the economy. And we need to see if we have some stable consumer confidence, or even rising consumer confidence, that's the catalyst that could really turn this economy up. So that's what we need to see come up out of the events that are unfolding right now.
DOBBS: I've been kind of amused throughout the day. I've listened to a number of their news organizations report on the markets and so forth, suggesting that this reaction to military strikes was why the market moved this way or that way today. What's your judgment? I cannot editorialize. I'd sure like to. What's your judgment on that?
ACHUTHAN: My judgment is that I think the market is coming to terms with the fact that we're in this global recession, they see the policy-makers with all of the stimulus being introduced, both on the fiscal and the monetary, at home and abroad. That will generate a cyclical recovery. The key to the timing of that: is it in three months, is it in four months, five months or so on, is in the laps of the consumers. If the consumers go out and spend, they have quite a bit of spending power. DOBBS: Right. Unlike the Gulf War 10 years ago, a little better than. We're not seeing quite the same imagery we did in that -- we're not seeing all of the aircraft taking off. We're not seeing all of those strikes. We don't see General Schwartzkopf pointing at a bridge that is being struck, for example. And that may be playing into a more protracted confidence building as a result of these strikes?
ACHUTHAN: Sure. And also and this is hitting us a little closer to home. It's a bit different downturn, also, where it's business-led downturn as opposed to a consumer-led downturn. So there are a few similarities and a few differences that we have to work our way through.
DOBBS: But you believe the consumer nonetheless holds the key to recovery?
ACHUTHAN: Critical. If consumer goes to the store, they have lots of stimulus and support from the monetary and the fiscal policy that we've seen in the economy.
DOBBS: Your best guess as to when we'll see that recovery.
ACHUTHAN: I'd say it's going to show up next year. I just don't know the timing of it. If we see the consumer come back, it comes quickly. Otherwise, we might have to wait a little while longer.
DOBBS: We'll give you two or three days. You analyze it a little more. We want an exact date.
ACHUTHAN: We'll talk about that next week.
DOBBS: Lakshman, thanks very much.
DOBBS: Still ahead here on MONEYLINE: While battling terror overseas, President Bush moving to raise security levels here at home. We'll have that report for you. As security measures are being moved into place, everything from daily commerce to daily life has become somewhat more difficult. We'll have a report for you on that.
And we'll have the latest for you on the second case of anthrax discovered in Florida. One man has died. Now his co-worker is infected. We'll update the FBI's investigation for you, and we'll tell you about some of the companies working to help in that case. Next, on MONEYLINE.
(COMMERCIAL BREAK)
DOBBS: On the second day of against targets in Afghanistan, Tom Ridge, the former governor of Pennsylvania, today sworn in as the Director of Homeland Security. Calling Ridge the "right man" to fight terrorism, President Bush today signed an executive order creating the new cabinet position. John King joins us from the White House with more.
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Even before today's ceremony in the east room of the White House, many in Congress asking questions. Does Tom Ridge have enough power? Can he change the budgets of agencies he believes are not doing enough to fight the war on terrorism?
The president introduced his friend Governor Ridge today and promised he would have that authority, that he would always have the president's ear. Governor Ridge does get an office in the West Wing, very near the Oval Office. And the president made clear in his remarks today: in day two of those military strikes overseas, he said he believed Governor Ridge was the perfect man to lead the war on terrorism here at home.
(BEGIN VIDEO CLIP)
BUSH: Together we will confront the threat of terrorism. We will take strong precautions aimed at preventing terrorist attacks and prepare to respond effectively if they might come again. We will defend our country and while we do so, we will not sacrifice the freedoms that make our land unique.
(END VIDEO CLIP)
KING: We are told the president is being updated constantly on the second day of those airstrikes. Initial reports -- again like yesterday -- relatively encouraging, in the words of one senior administration official.
Also some new details of how all this came about. Senior administration officials saying the president decided one week ago tomorrow -- Tuesday October 2nd -- that he would invoke the military option. Then on Friday he gave the initial orders, after being assured all the military hardware and personnel was in place. And after looking the Defense Secretary, the Secretary of State and other members of his team in the eye on Saturday morning and receiving assurances from them that all was ready to go, the president signed the orders allowing those long range bombers to leave their bases and begin the military strikes now still under way. Lou?
DOBBS: John, returning if I may to homeland security. Tom Ridge, a tough, successful governor of Pennsylvania. The issues are of communication, particularly among the agencies of the government being very difficult, one. How committed do you judge the administration to be in cutting through the red tape and giving him real authority here?
KING: Well, the president said today we're at war, and he doesn't want those turf battles -- Governor Ridge saying much the same. As a symbolic gesture of the president's commitment -- you would notice if you saw the pictures in the East Room today -- the men that Tom Ridge may have to yell at in the days and weeks ahead, the president's cabinet, the heads of all the agencies involved in this effort, seated in the front row.
Proximity matters in Washington, Lou. Governor Ridge's office in the West Wing, close to the vice president, close to the president, close to the chief of staff. The president promising Governor Ridge will have that authority. Many in Congress, though, do have questions about whether he can settle the turf battles that have plagued this effort for many, many years.
DOBBS: And they could be part of the solution, those Congressional numbers. John, thank you very much. John King from the White House.
Another Florida man has tested positive for exposure to anthrax. He worked in the same building as a 63-year-old man who died from exposure to anthrax last week. The FBI says that investigation could now become a criminal investigation. For more on the story, we turn to Mark Potter in west Palm Beach, Florida -- Mark?
MARK POTTER, CNN CORRESPONDENT: Hi, Lou. As you can imagine, investigators are quite busy right now. They're trying to figure out how anthrax killed one man, how a coworker was exposed to the disease and how anthrax came to be inside the building that they both shared.
Investigators say in addition to Robert Stevens, the 63-year-old photo editor who died last week from anthrax, there was another man who has now tested positive for exposure to the disease. He does not have anthrax, but it appears, according to lab tests, that he has anthrax spores in his nasal passages, suggesting exposure.
Families members identify him as 73-year-old Ernesto Blanco. He's from north Miami, Florida. He worked in the mail room at American Media, Incorporated, a company that publishes tabloid newspapers. Now, what's important about that is that Robert Stevens also worked there. He was a photo editor, and investigators say that trace elements of anthrax have been found in the building, specifically in Stevens's workplace on his computer keyboard.
Now, the building been shut down. It has been sealed up for investigation, and workers and visitors to the building are being tested now for possible exposure to anthrax. And for many, as you could imagine, it has been quite frightening.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I'm just -- concern. You know, concern for myself, concern for my friends, concern for, you know, my company. I just want to get questions answered and get on antibiotics and take the right steps to make sure that everybody is going to be OK.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's the not knowing. They tell us not to worry, and as of Friday it was, you know, you can't be spread from person to person. And now today somebody else has it. And so right now what we're doing is waiting out here and -- I guess they're going to test us all.
(END VIDEO CLIP)
POTTER: Now, workers and visitors to the building since August 1st were asked to go to a public health facility in Delray Beach, Florida, where today they stood in line for hours awaiting their test.
In addition to the test taken by nasal swabs, they're also being asked to take blood tests. And adding to the worry, it could take days for those results to come back. Investigators say they still do not know whether this was a natural or bioengineered form of anthrax. They say are working on it, though, and hope to have answers soon.
Lou, back to you.
DOBBS: Mark, a question quickly. The keyboard, the spores were found -- is that the only place they've been found, or have they not said?
POTTER: As far as we understand, one spore, actually, was found on the keyboard in Robert Steven's workplace, and it matches the organisms found in his body and also the organisms found in the nasal passage of the man who was exposed to the disease. So it's an important discovery, and they're in there right now, FBI agents and investigators from the CDC, to see what else they can find.
DOBBS: And at this point, they have completed their inspection of the building, they're only beginning, where are they in the process?
POTTER: I don't think that they've completed it. We're a community away, so I cannot tell you exactly. But the indication that we're getting is that they're being very thorough. And they're not only looking in the building. They're going out to area hospitals to see if there's anybody else in an intensive care unit who also may have been exposed. So far they've found nobody else.
DOBBS: Mark, thank you very much. Mark Potter.
Well, news of the anthrax cases have worried consumers wondering how to protect themselves. All of that has, over the course of the past week, put the spotlight on a drug called Cipro. It is an anti- infection drug. It is made by Bayer. The FDA gave Cipro the approval for treatment of inhaled anthrax a year ago, citing the possibility of a biological attack. Bayer sells $1 billion of this drug each year, but that could rise.
Even before the Florida cases, pharmacists said Cipro was flying off their shelves, and doctors now recommend taking two pills a day for two months, versus just a week for most infections. Bayer has an exclusive patent on Cipro until 2003.
Residents in Belize bracing for the year's most powerful Atlantic storm. Hurricane Iris is considered to be very dangerous. Experts are labeling this storm a category four. Iris is expected to hit land between the coasts of Belize and Mexico's Yucatan Peninsula before nightfall. The Hurricane Center warning that Iris could raise seas by up to 18 feet above normal, causing coastal flooding and mudslides.
Radio talk show host Rush Limbaugh says he has lost nearly all of his hearing over the past three months. Despite that, Limbaugh hopes to continue his nationally syndicated show. The conservative commentator reaches some 20 million listeners each day. Limbaugh won't say what has caused the condition, but of course he wants to find other ways to communicate with callers to his show, vowing to go on. Limbaugh recently signed a $200 million deal to extend his show through 2009.
Coming up next here on MONEYLINE: the airstrikes against the Taliban and Al Qaeda have ignited tighter security policies across this country, on land, sea and air. We'll take a look at the impact this has had on our nation's commerce next, and we'll tell you why a Morgan Stanley equity strategist says we'll see what he calls "cartoonish-like losses" in the upcoming earnings season.
(COMMERCIAL BREAK)
DOBBS: We'll be bringing you tonight throughout the broadcast, the latest developments in America's new war. That coming up in just a moment.
But first, stocks today on Wall Street were lower, but stable. On the New York Stock Exchange, more than 60 stocks reached new 52- week lows, while only 46 fell to new lows. And on the Nasdaq, the number of stocks hitting new highs and lows virtually even. The Dow fell 51 points today. On the Big Board, decliners did beat out advancers by a nearly two to one margin, despite that modest loss.
Among the most actives today, AOL Time Warner, the parent of CNN, falling on concerns it may be forced to buy back a majority stake in its European operations from Bertelsmann. U.S. Bancorp dropping again, after warning last week on its third-quarter profits. Motorola gaining ahead of its quarterly results, which are due out tomorrow. A loss of six cents a share is expected. Cendant dropping after offering to buy all outstanding shares of cheap tickets, expecting to complete that merger tomorrow.
The Nasdaq gaining less than a point on the day. Declining issues again beating out advancing issues, but only by a margin of about four to three. Among the most actives on the Nasdaq: Cisco Systems lower after Lehman Brothers lowered its estimates on earnings, citing visibility issues. Sun Microsystems, down fractionally on the day. First-quarter sales plunging more than 40 percent, warning it may not return to profitability until next summer. Dell Computer rising after affirming its earnings outlook last week. Qualcomm gaining after First Union reiterated a strong buy rating on Qualcomm.
Semiconductor issues, the standouts on the Nasdaq today. Applied Materials up more than 7 percent, and that helped push the chip sector higher. Also up today: military electronics. In fact, it's the best performing sector this year. Aerospace General Dynamics, which makes submarines and Raytheon, which makes Tomahawk cruise missiles, trading near all-time highs tonight.
Sectors on the downside: regional banks. Suntrust, the biggest loser there. Analysts expecting more earnings warnings in the group. Also moving lower, department stores and hotels.
Now to the latest developments in America's new war. The United States and Britain unleashing a second round of strikes in Afghanistan against strategic targets of Al Qaeda and the Taliban today. Targets were struck in Kandahar, Jalalabad and the capital of Kabul.
President Bush presided over the swearing-in of his new director of homeland security today.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's a decorated combat veteran of the Vietnam War. He's a patriot who's heard the sound of battle. He's seen the reach of terror in a field in his own state. He's a man of compassion who has seen what evil could do.
(END VIDEO CLIP)
DOBBS: Meanwhile, CNN has learned that President Bush is trying to plug new leaks of classified material. Last week the president ordered key department heads to brief only top lawmakers.
Attorney General John Ashcroft says Americans should have a heightened sense of awareness in the wake of military strikes against Afghanistan.
CNN has learned that the FAA is placing new limits in carry-on baggage. Passengers will be limited to one carry-on bag and one personal article, such as a purse or a briefcase.
And a second case of anthrax exposure has been discovered in south Florida. The latest case involves a coworker of a man who died from anthrax just last week. The FBI is investigating, but says it has no evidence so far that it is the result of a criminal or terrorist act, but is taking the investigation very seriously.
Well, turning now to Wall Street. Equity strategist Steve Galbraith estimates the direct earnings impact of the September 11th attacks will be more than $20 billion. Steve joins us now.
Steve, good to have you.
STEVE GALBRAITH, MORGAN STANLEY: Thanks for having me.
DOBBS: Twenty billion dollars, in the scheme of things, doesn't sound like that much. What will be the result of that?
GALBRAITH: Well, it's not. And 20 billion should be looked at in the context of the current quarter, and there's going to be impacts down the road looking into next year, so the 20 billion, literally, is just from the insurance companies and the airlines. So that's what I'd call the first derivative impact of the disaster.
DOBBS: But it does sound ominous, as you focus on that, suggesting you're not expecting good things.
GALBRAITH: No, and what you want to prepare your viewers for, and we're preparing our clients for is, as I said, cartoonishly bad earnings. There's going to be a lot of zeros after the losses, because no one has any incentive in this market environment to report anything good.
DOBBS: And is it also, do you think, reasonable to expect companies, while they look at this environment, in which we have a contraction, we have a lot of shock to this economy and various industries, they just simply absorb their losses now, they may just try not try to manage their earnings higher here?
GALBRAITH: No question, Lou. I mean, without question, we are going to see, in fact, in 2001 the single-largest year over year decline ever in the Standard & Poor's earnings. We went back 50 years.
DOBBS: Is that right?
GALBRAITH: Yes, it is. And I don't think enough people realize that. The carnage in the earnings is tremendous this year, and that's why I think we have to get people to looking ahead to next year, because the likelihood is it will be better than awful.
DOBBS: The companies and investors could just write off this quarter. Is that what you're saying?
GALBRAITH: Of course. And the companies are taking the write- off literally, mind you. They've taken over $110 billion of restructuring charges this year. That, too, is a record. So you want to talk about a kitchen sink quarter in a kitchen sink year, this is it.
DOBBS: And in this kind of environment, what should investors do?
GALBRAITH: Well, we're pretty explicit in our advice. We think what folks should be doing is a barbell strategy, and by that I mean they should be in parts of their portfolios looking at stable growth stocks, where the earnings are very predictable. This would be things like health care, cable companies, things like that, in one part of their portfolio.
The more interesting part of the investment analysis, though, today, is in the stuff that's really gotten beaten up. The cyclical things, where the earnings power has just been collapsed over the last year, where you'll get a rebound with the economy.
DOBBS: Like what?
GALBRAITH: Like technology, for instance. Technology has been unveiled as the ultimate cyclical. So it's...
DOBBS: Be still my heart.
(LAUGHTER)
GALBRAITH: Well, it's amazing, because I was the world's youngest Luddite on Wall Street, because I was cautious on this stuff a year ago, whereas now it makes sense to me. So it's something like an Oracle, a Hewlett-Packard, Dell. These are companies that are significantly underearning their true earnings power.
And it would also be things like Dow Chemical, International Paper -- so the tradition big, ugly cyclicals as well.
DOBBS: I'm thinking about barbells, cartoonish losses and big uglies.
(LAUGHTER)
DOBBS: You're mixing a lot of metaphors and I think suggesting the market is going to be a little interesting for a few months.
GALBRAITH: Yes. No question.
DOBBS: Steve, good to have you with us.
GALBRAITH: Thanks.
DOBBS: Steve Galbraith.
Coming up next here on MONEYLINE, tighter border crossing, stricter rules at sea -- the nation hunkering down for this new war.
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DOBBS: On the day former Pennsylvania Governor Tom Ridge was sworn in as the first director of homeland security, movement into and out of the country has never been tighter. National Guard at airports, the Coast Guard securing the coastline.
Kitty Pilgrim has a look at how this beefed up security is affecting the flow of business.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): It's not easy to get from here to there. The flow of commerce slowed to a crawl the first weekday after America struck back. Commerce, crowds at the parade, life on the move. All went on as before, but carried a new trademark: vigilance.
TOM RIDGE, DIRECTOR, HOMELAND SECURITY: There may be gaps in the system. The job of the Office of Homeland Security will be to identify those gaps and work to close them.
PILGRIM: By land, trucks and vans being checked on entering Manhattan. Borders attempting to become impermeable to terrorist infiltrations, from the Florida coast, where cars are inspected, to Canada. In New York, tight security at the Empire State Building, 4,500 National Guard and extra police officers all throughout the New York area.
MAYOR RUDY GIULIANI (R), NEW YORK: The reality is there is extra security, because the country is engaged in a military action. We have extra police officers, we have national guard. They're doing all the things they are supposed to do. PILGRIM: By sea, the Coast Guard on high alert, with armed patrols protecting 300 ports and 88,000 miles of coastline. Authorized to stop any vessel within three miles of the U.S. coast., new rules put in place last weekend requiring any ship flying an overseas flag to give 96 hours advance notice of arrival in a U.S. port, with a list of what they are carrying and also a list of who is on board.
Ten-thousand ships make 68,000 port calls in the U.S. each year. By air, National Guard take up positions in the country's airports. And the wait gets longer.
UNIDENTIFIED MALE: We were expecting that. In fact, it was maybe a small surprise that came that quick. The average plane maybe takes more time.
(END VIDEOTAPE)
PILGRIM: Well, so far all is well. It's just a brand new way of doing business, Lou.
And you know they are expanding the powers of some of these services to be able to handle anything that turns up.
DOBBS: Correct. Kitty, thank you very much.
Well, coming up next here on MONEYLINE, we'll have the latest for you on box office results over the weekend. We'll be telling you about AT&T, America's new war not stopping AT&T Wireless from making a big deal.
That story and a lot more still ahead here on MONEYLINE.
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DOBBS: Topping tonight's "MONEYLINE movers": led by Nextel. Nextel Communications down nearly $1 a share, losing about 10 percent on the day. Merrill Lynch downgraded them to "neutral" from "accumulate." Avigen dropping $4 a share. That biotech company losing more than a quarter of its value, after clinical trials for a gene therapy drug were halted. Shares of Cepheid climbing $1 today. The biological agent detection company soaring in price, following confirmation of a second case of anthrax in Florida.
In other corporate news tonight, AT&T Wireless buying a 77 percent stake in Telecorp, paying nearly 2.4 billion. That deal values Telecorp at about $14.50 a share, a 45 percent premium over Friday's close.
Northwest Natural Gas says it will pay $1.8 billion in stock and cash for Enron's Portland General Electric unit. That deal combines the largest natural gas utility with the largest electric utility in Oregon. Shares of Enron boosted on the deal.
Radio broadcaster Clear Channel Communications buying outdoor media and broadcasting company Ackerley Group, paying about $500 million in stock. On that news, shares of Ackerley jumped more than 20 percent, while Clear Channel shares fell 2.5 percent.
The prospect of a long war on terrorism did not stop a violent movie from taking the top spot at the box office this weekend. "Training Day," which stars Denzel Washington as a cop who crosses the line, grossed more than $24 million. "Training Day" is Washington's largest movie opening, and the second-largest October movie debut ever.
The romantic comedy "Serendipity," which stars John Cusack, opened at No. 2 -- $14 million over the weekend. Rounding out the top five: "Don't Say a Word," $10 million in box office receipts. "Zoolander" pulled in $9.9 million and "Joy Ride" pulled in 7.5 million.
"WOLF BLITZER REPORTS" coming up here on CNN in just a few moments.
For a preview, let's go to Wolf in Washington -- Wolf?
WOLF BLITZER, HOST, CNN'S "WOLF BLITZER REPORTS": Thank you very much, Lou.
Up next, day two of the U.S. airstrikes against targets in Afghanistan. How long will they continue? We'll check in with our correspondents on the scene.
There's also been a second confirmed case of the deadly virus anthrax, and the FBI is investigating what's going on. We'll get the latest from our own Mark Potter. "WOLF BLITZER REPORTS," "America Fights Back," coming up next -- Lou?
DOBBS: Wolf, thank you. Coming up next here we'll take a look at your e-mail and what more you can expect tomorrow, on "Ahead of the Curve." Stay with us.
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DOBBS: Tomorrow we'll have quarterly results from Motorola. Investors looking for a third-quarter loss of 7 cents per share. Also tomorrow, earnings from Harley Davidson.
Time now for a look at some of your thoughts. David Ebenezer writing -- quote -- "I find it difficult to understand why you give air time to Wall Street analysts who get the projections wrong most of the time." David says he is "especially critical of Abby Joseph Cohen."
From Maxwell Chen in Illinois, "For the past year," he says, "I have noticed every time Abby Joseph Cohen spoke or made bullish comments, the stock market plunged."
Well, not quite, Maxwell. Here are some of the facts. On March 8th, Abby said stocks are undervalued and she expected them to rise over the coming months. The market reaction, the S&P rose just a fraction. Then in her spring cleaning review, she said stocks offered sizable potential returns in the coming months. They reaction: a strong rally, almost 4 percent.
Despite a deteriorating economic environment, the bullish calls kept coming. In June she said she does not expect a recession, again recommending technology stocks. The market fell that day. And the first trading day after the September 11th attacks, she wrote a note entitled, "thumbs up," saying the economy and markets were strong, and of course, the markets fell heavily.
Then wrote, "Stand up! Time to buy stocks." The market rallied. Last week's notes: "Profit recovery will be increasingly evident by mid-year 2002." The market reaction: a small gain. As for profit recovery, we'll have to wait and see if she's right on that one.
By the way, her current 12-month price range for the S&P 500, 1,250 to 1,400 -- at least 20 percent higher from where we stand tonight. And since her bullish call in technology stocks in June, by the way, while she's done fairly well overall, the Nasdaq has plunged more than 20 percent.
Let us know your thoughts. E-mail us here at moneyline@cnn.com, and please don't forget to include your name and address.
For tonight, that is MONEYLINE. We thank you for being with us. I'm Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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