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LOU DOBBS MONEYLINE
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Aired November 20, 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.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, November 20. Sitting in for Lou Dobbs: Jan Hopkins.
JAN HOPKINS, CNN ANCHOR: Good evening, everyone. I'm Jan Hopkins in for Lou Dobbs.
Taliban fighters want out of Kunduz. The Northern Alliance agrees to share power. We will have a live report. And we will tell you about plans to rebuilt Afghanistan when the war is over.
The anthrax attacks continue. More letters found on Capitol Hill and a possible inhalation case discovered in Connecticut. We will have the latest.
Major airlines are cutting back. Small airlines are gaining ground. We'll tell you how regional carriers are taking advantage of a huge opportunity.
On Wall Street, stocks give back a lot of yesterday's gains. We will hear from a stock strategist who thinks there may be more pain ahead.
Now for the latest on the war against terrorism. Konduz and Kandahar, the last two cities under Taliban control, remain surrounded by Northern Alliance troops today. This as commanders from both sides met to discuss the Taliban's possible surrender.
Two Taliban members have asked the United Nations for its help in negotiating the surrender of Konduz, but the U.N. says it doesn't have the means nor people on the ground to do that.
Today the Pentagon announced it would stop airstrikes against the Taliban if opposition forces made such a request. The Pentagon says U.S. warplanes are on call right now and will be used if and when they are called upon.
Rear Admiral John Stufflebeem said that American warplanes have recently targeted al Qaeda facilities as well as Taliban tanks, armored vehicles and trench positions.
In the Afghan capitol of Kabul today, more than two dozen women demonstrated outside a United Nations office, demanding jobs under the next Afghan government. Under Taliban rule, women were not allowed to work and were forbidden to show their faces in public.
The Northern Alliance today accepted an invitation to discuss the future of Afghanistan with the U.N. and other Afghan representatives, that meeting to be held in Germany next week. For more on Afghanistan's political future, we are joined by Christiane Amanpour who is in Kabul. Christiane.
CHRISTIANE AMANPOUR, CNN SENIOR FOREIGN CORRESPONDENT: Well, Jan, it is a big breakthrough because there has been very much dragging of feet going on on this political track. And in an interview with CNN yesterday, President Rabbani finally said that yes, he was willing to hold the first round of consultive meetings with other factional leaders outside Afghanistan, somewhere in Europe.
(BEGIN VIDEO CLIP)
BURHANNUDIN RABBANI, FORMER AFGHAN PRESIDENT: I have already assured you -- and I will assure you again -- that we came to Kabul to bring peace and ensure security and pave the way to invite Afghan groups to come here and start the peace process.
(END VIDEO CLIP)
AMANPOUR: Now, Francesc Vendrell, the U.N. special envoy to Afghanistan, has been having an intense round of talks with Rabbani, with other Northern Alliance officials, and with other factional leaders. And he and indeed the U.S. special envoy too, Jim Dobbins, who was here briefly a day ago meeting with Northern Alliance officials -- they have been desperately trying to get this political track on the road.
And what the U.N. wanted was for it to take place outside of Afghanistan so that it was a more neutral site, because many of the factional leaders don't really recognize the Northern Alliance -- or, as they are called, the United Front -- as the sort of legitimate leaders of Afghanistan.
(BEGIN VIDEO TAPE)
FRANCESC VENDRELL, U.N. ENVOY: Many other Afghans do not regard the United Front -- or the Northern Alliance -- as the legitimate government. It has not been approved by any internationally recognized mechanism like elections or a referendum. Therefore, for Afghans -- other Afghans, it was better to hold it in a neutral place.
(END VIDEO CLIP)
AMANPOUR: Now, on the other front -- the military front -- there are two last bastions of Taliban resistance. One of course is in the north, in Konduz, where fighting still continues. And the Northern Alliance has told us that they have sent in a three-man delegation to issue a ultimatum -- to issue ultimatums to this Taliban to surrender. This as refugees and civilians are fleeing from Konduz under the U.S. airstrikes and also the fighting there. If the Taliban decides not to surrender, we are told, after three days, then the Northern Alliance says that it will launch an offensive against them. In Kandahar in the south, the Taliban is still there, trying to cling on to power. Nothing much changed there over the last few days. But of course there are always conflicting -- conflicting claims, the Taliban saying that it is in control, other sources telling CNN that in fact a key -- a key associate of Mullah Omar has switched sides.
Journalists have not yet managed to get into Kandahar. The Taliban haven't yet invited them in there, so it's hard to independently verify what is going on down there -- Jan.
HOPKINS: Christiane, the bodies of the four journalists headed to Kabul were recovered, right?
AMANPOUR: Yes, they were -- they were recovered. They were received by the International Committee of the Red Cross. And yes, they are being -- they are being evacuated back home.
HOPKINS: Anything else you can report about the situation in Kabul?
AMANPOUR: Well, that road from Jalalabad to Kabul, which is where these journalists were -- were basically taken out of their car and -- and murdered, is still dangerous.
Apparently other journalists yesterday tried go down on the same road and they were stopped, and you know, held up at gunpoint. And only intense intervention by their local translator, apparently, saved their lives. So it's a bit of a dangerous road there.
In Kabul itself, things are calm and under control, and life is slowly getting back to as normal as it possibly can given that this is an extremely poor country, and an extremely poor city which depends to a great extent on humanitarian aid. And the humanitarian process is just starting up again, after that sort of two-month hiatus when the humanitarian organizations were kicked out of Afghanistan shortly after September 11.
HOPKINS: Thank you. Christiane Amanpour in Kabul, Afghanistan. President Bush appeared to temper expectations of a quick resolve to the conflict in Afghanistan, saying the military campaign has entered a difficult period and that U.S. forces could be there for quite a while. But the cost and effort to rebuild Afghanistan once the war is effectively over could take years and billions of dollars. Tim O'Brien has that part of the story.
TIM O'BRIEN, CNN CORRESPONDENT: Jan, the media were barred from this working session of this conference today, which was hosted by the governments of Japan and the United States. The purpose of the meetings, however, was obvious: to work out a plan for relief, recovery and reconstruction of postwar Afghanistan.
Secretary of State Colin Powell, in opening remarks, said this is a time of great hope for the people of Afghanistan.
(BEGIN VIDEO CLIP) COLIN POWELL, SECRETARY OF STATE: For the first time in decades, the people of Afghanistan have reason to hope for themselves and for their children. Together we can make that hope tangible and real. That is exactly what we have rehabilitation and reconstruction assistance is all about: turning hope into a powerful force that shapes a better future for the Afghan people, their region, and our world.
(END VIDEO CLIP)
O'BRIEN: It was agreed that the United Nations must play a central role in any reconstruction program, that could it take years and will be expensive, costing in the billions. But the results also a recognition of the need for immediate help in things like agriculture -- planting crops for the next harvest -- and education, which means rebuilding schools and finding teachers. There is an immediate need to repair roads and provide shelter for the long, cold winter.
Treasury Secretary Paul O'Neill also addressed the gathering, saying the enormity of the task ahead is daunting.
(BEGIN VIDEO CLIP)
PAUL O'NEILL, TREASURY SECRETARY: The facts that we confront in Afghanistan stagger the imagination, with an annual average income of less than $200 per person, in a place where one out of every six children die before their first birthday, in a place where two thirds of the people are not literate.
(END VIDEO CLIP)
O'BRIEN: State Department officials later described the session as a rich debate that is certain to produce results. In other words, a success, But it is also clearly just a starting point. The U.S., Japan, Saudi Arabia and the European Union agreed to lead the reconstruction effort, and Japan has also agreed to hold a ministerial-level meeting next January -- Jan.
HOPKINS: Tim, what about land mines? That is something that anybody that is involved with reconstruction has to deal with, right?
O'BRIEN: It is a very serious problem, and has been a problem in Afghanistan for a long time -- long before this current conflict. It is going to delay rehabilitation and recovery efforts at a time when time is not on anybody's side with the long, cold winter approaching. So that is another real hazard.
HOPKINS: Thanks very much. Tim O'Brien in Washington.
The Northern Alliance seems to be on the verge of driving the Taliban out of Konduz and Kandahar. And they've agreed to power- sharing talks.
Joining us to assess the war's progress is General David Grange. So does it seem like the endgame? GENERAL DAVID GRANGE (RET.) U.S. ARMY: Good evening, Jan. I don't know if it's -- it's going to take a while. In Konduz, you know, you have the hard-core fighters and they are going to probably fight on to the death. They cannot surrender their foreigners because they will be killed, I think.
The Taliban that are Afghani Taliban will probably change sides, both in Konduz and Kandahar. But then as this is going on, and that part of the consolidation of the civil war takes place, we then also have our objectives of the international coalition, that is taking down the al Qaeda where it cannot operate out of Afghanistan as well its tentacles that go out beyond Afghanistan itself. And that is still a challenge to accomplish that primary mission, for at least the United States of America.
HOPKINS: Well, and also Osama Bin Laden has not been found. There is now a bounty on his head, $25 million. Is that is enough to have somebody turn him in?
GRANGE: Well, first of all, I wonder how many people understand what $25 million means. You know, a lot of these people, they may not even have the word or understand the value of that type of price tag. So the information campaign to get that type of incentive out there amongst the people is probably a challenge in itself.
But I think it will help. People can be bought off, especially in this area. And eventually, the pressure we put on, which has so far break in the al Qaeda, and Bin Laden he will be caught as well as his henchmen.
HOPKINS: Now, do you think that in fact Bin Laden is in a small area, that -- that, you know, U.S. ground troops could find him in caves or whatever? Or is that really an exaggeration?
GRANGE: You know, it's hard to say the sources some of the information. You have heard reports of, well, we have it narrowed down to a 30-kilometer box that we can search in now, and that may be from one or two sources of information.
I'm sure that the international focus is on that area, but also I'm sure it's -- they are being very prudent to watch many other areas that he may be in or some other reports say he is in, to include Pakistan. You know, he is an expert at deception, and they have been deceiving the international coalition for quite a while, even before September 11.
And I think that continues to be the case, and we have to really put the pressure on a lot of areas -- that we focus on certain specific areas -- we've got to keep the pressure all over.
HOPKINS: Now we hear that this -- that this may not end with Afghanistan, that Iraq may be the next target. What do you think about that?
GRANGE: Well, I think Saddam Hussein's regime in Iraq is a future target of some sort. And there is other countries that harbor terrorists, and it is going to -- come that day to fish or cut bait. They either have to say they are going to -- not support him any more and really do it -- because we will know -- or they continue to support terrorism -- even if it's indirectly -- and then we have to see if the United States and the international coalition can walk its talk.
We'll have to go after it, if we are going to do what the president of the United States has said we are going to do, and that is going to be a tall order with the size of the armed forces we have today and how many coalition partners we can integrate into this effort. It's not going to be easy. The military is spread all over a hundred -- over a hundred countries today throughout the world, doing different types of missions.
HOPKINS: Thanks very much. General David Grange.
GRANGE: Thank you.
HOPKINS: And on another topic, more anthrax found in the nation's capitol today, and another possible inhalation case discovered in Connecticut. Eileen O'Connor is in Washington. She's covering that part of the story. Eileen.
EILEEN O'CONNOR, CNN NATIONAL CORRESPONDENT: Well, Jan, Connecticut officials -- the governor -- announced that a 90-year-old woman may have inhalation anthrax.
She came to the hospital last week with a suspected case of pneumonia. Hospital officials, though, did tests on her for anthrax. Those tests have come back positive. They also had public health authorities in Connecticut do similar tests. They too came back positive. Now they're having the CDC come up and try to confirm those tests.
The FBI, CDC, public health officials are working together. They sealed off this woman's home. They say, though, they are perplexed because this is a woman who did not get out very much. She is an elderly woman, didn't have much contact with other people. So they are trying to figure out how she might have gotten it.
The Secretary of Health and Human Services, though, Tommy Thompson, indicated today that other -- that the investigators believe or increasingly leaning towards the theory and the belief that whoever is sending this anthrax is from the United States; that it's a person, perhaps, a single person or persons who has a grudge or cause here, a domestic terrorist group here in the United States.
Now, the Attorney General John Ashcroft wouldn't comment on that, but he did say that a profile the FBI had put out last week indicating this person might be a -- an adult male, interested in science, a kind of a loner, a person carries grudges -- that that profile has led to a lot of tips from the public, and, he believes, some promising leads.
(BEGIN VIDEO CLIP)
JOHN ASHCROFT, U.S. ATTORNEY GENERAL: We certainly have some better leads than we had a few days ago, when the FBI hadn't first put out its profile. And we'll have to wait to see and measure the extent to which these leads turn out to be either productive or nonproductive.
(END VIDEO CLIP)
O'CONNOR: And as you indicated, too, more offices on Capitol Hill have tested positive for anthrax. Those offices will be sealed. This was due to environmental samples taken there and -- but -- and they will then be thoroughly cleaned. Not sure if that was simply cross-contamination again from other letters.
Of course, Senator Patrick Leahy received a letter, according to authorities -- would have received a letter had it not been quarantined. Investigators, according to sources, do believe that the anthrax inside that letter will be -- turn out to be as lethal as the kind of anthrax that was sent in the letter to Senate Majority Leader Tom Daschle.
The letters both very, very similar, at least the envelopes of those letters. The letter to Patrick Leahy -- Senator Leahy still remains unopened. Investigators trying to figure out the best way to do that.
HOPKINS: Because if you open it then you release all of the anthrax, right?
O'CONNOR: Absolutely. And one of the problems they have had before with these letters that have been opened is that since so much of the anthrax in fact has been released, some of the very sophisticated chemical analyses that they'd really like to do on it to determine the source of the anthrax -- they haven't been able to do that.
And then they say, with more of the anthrax, they would be able to preserve the evidence and perhaps give them more leads. In addition, they want to make sure that any other leads that might be there in the paper, DNA, some kind of fingerprints, forensics -- again, also preserved.
You know, the other letter to Tom Daschle, of course, had been handled at least a little bit when that was opened. Investigators also interested in the contents of the letter are the -- is the wording any different than the letter to Senator Daschle. So far, they believe it is probably going to be a copy. But that again just a theory -- Jan.
HOPKINS: Thanks. Eileen O'Connor in Washington.
And still to come on MONEYLINE, we'll tell you how small airlines are turning the major carriers' pain into their own gain. We'll also have a report on charities other than September 11 funds, and how they're faring now. And with the beginning of the holiday shopping season just a couple of days ago, we'll tell you what consumers are saying about spending on gifts this year when MONEYLINE continues.
(COMMERCIAL BREAK)
HOPKINS: President Bush today said that he is ready to take whatever steps are necessary to stop a machinist's strike at UAL. The union today rejected an offer of arbitration seeking to end two years of talks over a new contract at United Airlines. The mechanics could strike just before Christmas. This would be another blow to an already crippled industry.
With travel slumping badly and security costs rising, many carriers have stopped flying regional routes. As Alan Chernoff reports, this opens a great window of opportunity for smaller airlines.
(BEGIN VIDEO TAPE)
ALAN CHERNOFF, CNN CORRESPONDENT: United's 2:45 flight from Phoenix still arriving at Los Angeles, even though United Airlines pulled out of the LA/Phoenix market after September 11. While the plane says "United Express," it's Skywest that now operates this flight.
Skywest is a low-cost regional carrier. It flies smaller jets than the big airlines, 50-seaters, under the names "United Express" and "Delta Connection." As major airlines have canceled one out of every five flights since September 11, Skywest has been aggressively expanding, stepping in for United and Delta on a variety of short-haul routes.
BRAD RICH, CFO, SKYWEST AIRLINES: In spite what has been, you know, some economic slowdown throughout the country, our past-year volumes have stayed relatively constant.
CHERNOFF: Major airlines are losing billions this year, but Skywest is making money: nearly $15 million in the quarter ended September 30, almost as much as the year-ago period. And Atlantic Coast Airlines, another regional, has seen quarterly profit grow to $13 million.
DOUG ABBEY, AVSTAT ASSOCIATES: The regionals are better positioned to come out of this more -- more strongly, certainly, than the major carriers are. They have been the growth story in the industry.
(END VIDEO CLIP)
CHERNOFF: Part of the secret to their success: United and Delta pay Skywest and Atlantic Coast a fixed amount to fly a route, no matter how many passengers are on board, guaranteeing a revenue stream.
JIM PARKER, RAYMOND JAMES AND ASSOCIATES: Subsequent to September 11, there has been a pronounced shift to regional jets as major airlines have parked hundreds of narrow-body aircraft. And they're looking to replace many of those flights with 50-seat regional jets. CHERNOFF: The stock prices are reflecting their success. Skywest up 87 percent from its low in late September. Atlantic Coast Air, up 114 percent from its low, though both remain well below their pre-September 11 levels.
(END VIDEO TAPE)
CHERNOFF: Even before the terror attacks of September 11, the airline industry had been trending towards regional carriers in short- haul markets. Now it's making more economic sense than ever -- Jan.
HOPKINS: So this is something that is going to last, this trend.
CHERNOFF: Oh, there is no question about it. In fact, these airlines have a lot of orders for aircraft and as soon as they get them they are putting them into service.
HOPKINS: Alan Chernoff, thanks.
Coming up on MONEYLINE, an update on the war against terrorism. We have the latest on the fighting in Kandahar and Konduz.
Plus, charities raising money for September 11 victims are overshadowing other charities. We'll look at financial implications.
And a major breach of security for playboy.com, which raises the question, how secure is online shopping? MONEYLINE will be right back.
(COMMERCIAL BREAK)
HOPKINS: Now for the latest on the war against terrorism. An elderly Connecticut woman is in serious condition tonight with suspected inhalation anthrax. Governor John Rowland made the announcement this evening, saying her home has been sealed, the FBI and Centers for Disease Control are investigating the case.
In Washington, trace amounts of anthrax were found in two more Senate offices, these belonging to Massachusetts Senator Ted Kennedy and Connecticut Senator Christopher Dodd. Those offices located in the Russell Building.
Investigators also believe an anthrax-tainted letter addressed to Senator Patrick Leahy is as lethal as one sent to Senate Majority Leader Tom Daschle last month.
Commanders from the Northern Alliance and the Taliban met today to discuss the Taliban's possible surrender of Konduz. That is one of two remaining cities still under Taliban control. The Taliban has asked the U.N. to help broker that surrender.
In the Afghan capitol of Kabul today, more than two dozen women demonstrated outside of a United Nations office demanding jobs under the next Afghan government. Under Taliban rule women were not allowed to work or allowed to receive an education. The Pentagon saying it might stop airstrikes around Konduz if that would help with the Taliban surrender. Jamie McIntyre is at the Pentagon. He joins us now -- Jamie.
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Jan, the Pentagon is not saying that this would be a bombing pause. Rather, they are saying they are simply responding to calls from commanders on the ground. That is to say that there are very few planned targets in the northern city Konduz: U.S. planes are up looking for targets of opportunity. Responding to requests from Northern Alliance commanders.
And to the extent that they don't ask for airstrikes, they will not be done, and they may not be asking for them as they continue to negotiate.
The one thing the Pentagon says it does not want to see happen is for Osama Bin Laden, Mullah Omar or any of the top Taliban and al Qaeda leader leaders to negotiate some kind of a deal that would allow them to escape.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: It would be most unfortunate if the foreigners in Afghanistan, the al Qaeda and the Chechens and others who have been there working with the Taliban, if those folks were set free, in any way allowed to go to another country, and cause the same kind of terrorist acts -- it would be most unfortunate.
(END VIDEO CLIP)
MCINTYRE: Now, Pentagon sources say the U.S. is considering beefing up its forces on the ground by sending in some Marines, who are now on ships off the coast of Pakistan. Pentagon sources say depending on what mission Marines are requested to do, the number could be as small as a hundred or as much as 1600, but no final decision has been made on sending in the Marines.
Meanwhile, some new information tonight about the strikes last week that killed the chief Bin Laden deputy, Mohammed Atef. Pentagon sources now say as many as 50 people were killed in a series of strikes, and that what happened was a U.S. F-18 dropped a laser-guided bomb on a building and then U.S. surveillance assets observed as members of al Qaeda came out of the building and then went back in, to try to apparently rescue people in the rubble. That is when a second F-18 came by, hit the building again, resulting in that high death toll.
Again, as many as 50 al Qaeda members, some of them described as low-level leaders -- Jan.
HOPKINS: Well, Jamie, what about the Marines' mission? Is it possible that Marines will be sent in to caves in Afghanistan to try to find Osama Bin Laden?
MCINTYRE: Well, it is possible, but that is not the likely mission. It's likely they would be doing the same kind of reconnaissance, intelligence gathering, just putting more eyes on the ground, something that is already being done by the 300 to 500 special operations forces.
They might also be called on to provide security at some of the airbases the U.S. is looking at for -- for the provision of humanitarian relief. But the big reason they haven't been sent in yet is that the Pentagon hasn't decided on exactly what it needs them to do.
HOPKINS: Thanks. Jamie McIntyre at the Pentagon
An update now on the money you donated to the families of victims of September 11. New York's Mayor Rudy Giuliani today said the city has almost finished distributing the first round of aid from its Twin Towers Fund. That fund was set up by the mayor to help the families of uniformed New York city employees.
(BEGIN VIDEO CLIP)
RUDOLPH GIULIANI, MAYOR OF NEW YORK CITY: We've raised $105,700,000. That's the total amount actually raised. We have distributed, with the -- with the letters that were signed this morning, $36,840,000 in the first round of the distribution, which is now almost complete.
HOPKINS: The mayor also said work will continue at the site of the World Trade Center on Thanksgiving Day, at the request of victims' families.
A windfall today for many charities across the nation. President Bush announced a billion-dollar grant to community charities that help the homeless. That is the largest such grant in the history of the country, and as Susan Lisovicz, the president is hoping that Americans will dig deep into their pockets this holiday season as well.
(BEGIN VIDEOTAPE)
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): President Bush says charitable giving during the holiday season is more than a moral gesture. It is an act of patriotism.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The generosity of this country will say to the world that we are a nation that will not be affected by terror and evil. That in fact, we encourage good to overcome evil through our actions and deeds.
LISOVICZ: With $203 billion in charitable donations last year, Americans are already the most generous people on earth. They've given more than a billion dollars alone to September 11 causes. And while a recent survey found that nearly three-quarters said they would continue to give as much or more than they usually give to other charities and nonprofit groups, fully half said an economic slowdown will reduce giving.
UNIDENTIFIED MALE: The areas that are dependent heavily on an inflow of customers, the museums, the theaters, are especially hard hit. People simply are not going out and doing what they normally do. The other category of nonprofits are those that rely heavily on government contracts: city, state or federal funding.
LISOVICZ: Ironically, some of those charities, like food banks, for instance, find that they are needed most when the economy weakens. Some experts say the government should provide more incentives.
SARA MELENDEZ, CEO, INDEPENDENT SECTOR: The priorities for now will be the war, fighting terrorism and economic stimulus packages. Well, there hasn't been anything in there to encourage Americans to give more. And we know from research that while Americans give to be generous, they do give more when they can deduct what they give, because it costs them less.
(END VIDEOTAPE)
LISOVICZ: Without any new incentives and in the midst of a severe economic downturn, there are predictions of a shakeout in the philanthropic landscape. There are an estimated 800,000 nonprofit organizations in the U.S., excluding religious organizations. And some experts in the field say not all of them will survive these challenging times -- Jan.
HOPKINS: I've heard, Susan, that there was not very much giving right after September 11. But now it's starting to get back a little bit towards normal, as we head towards the end of the year?
LISOVICZ: There is a lot of giving to September 11. Anything else has suffered. And what really hurt, of course, is that the economic toll, overall, really hurt them as well. It's not September 11 that is going to hurt those other charities. It is the economic downturn. And through history we've seen that from Pearl Harbor on the only year American giving did not increase was 1987, the year of the stock market crash.
HOPKINS: Interesting, thanks, Susan.
And still ahead on MONEYLINE, hackers break into www.playboy.com. A security breach leaving some of its users exposed. We'll have that report. And ahead of the all-important Thanksgiving shopping weekend, we'll preview what's in store for retailers this holiday season. And Wall Street gives back most of yesterday's solid gains. Can the markets sustain the recent run-up?
ANNOUNCER: Coming up, Jan is joined by Douglas Cliggott, U.S. equities strategist at J.P. Morgan.
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HOPKINS: On Wall Street today, stocks giving back most of yesterday's solid gains. The markets closing just above session lows. The Dow losing 75 points. The Nasdaq tumbling 53. The S&P sliding 8.
Christine Romans is at the New York Stock Exchange. Greg Clarkin at the Nasdaq marketsite. Christine, you begin?
CHRISTINE ROMANS, CNN CORRESPONDENT: Hi there, Jan. Well, it was a little bit of a stumble today in the market, after some strong solid gains over the past few weeks or so. The Dow down 75 points, volume about 1.3 billion shares. A little better than yesterday.
Let's take a look at some of the big losers here on the big board. Enron, topping this list actually, warning it could be forced to pay a $690 million debt by next week, and reducing already lowered third-quarter earnings. Shares of Dynegy, its potential merger partner falling with it. Analog Devices down with the chip sector during the session. Down again after-hours, after it beat the Street on its fourth quarter earnings, but warned on the quarter ahead.
EMC down about 5 percent here after an analyst told investors be cautious, calling it a 800 pound gorilla with some challenges in the near term, although good prospects for the long term.
And Target third-quarter earnings rising 5 percent, helped by higher sales and profits at its Target chain. It also owns Marshall Fields and Mervins as well. All of the retailers down today, giving back after some solid gains over the past eight weeks -- Jan.
HOPKINS: Thanks, Christine Romans as the New York Stock Exchange.
The Nasdaq tumbling nearly 3 percent today. The big loser, Greg Clarkin is at the Nasdaq marketsite with some of the biggest losers -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And Jan, I'll tell, today was one of those days where we reminded that the markets don't rise every day. And that's something that may be at least in technology land, people had lost sight of, given the fact that the Nasdaq was up about 36 percent over the last eight weeks, going into today's trading.
Today though, we did see that pullback. All the major categories, technology sectors fell. Take a look at some of the big names on the day.
Microsoft, despite the fact that they settled some of their private antitrust suits, that stock loses better then a buck. Cisco, Sun, Intel all falling today. But take a look at what some technology stocks have done over the last two months. You're going to see some tremendous jumps there.
JDS Uniphase more than doubles. Dell Computer with a healthy gain, as in Microsoft and Intel during that span. So these stocks have come a tremendous way in the last eight weeks or so. And analysts say, you know what? This pullback is logical. It's expected. In many cases, it's healthy. The Nasdaq right now 1880, down 53 on the day -- Jan.
HOPKINS: Thanks, Greg Clarkin at the Nasdaq marketsite. There are just three days left before one of the biggest shopping days of the year. According to industry estimates, the last two months of the year count for nearly a quarter of all sales for the year. So it's a crucial time for retailers hit hard recently by the attacks and concern. And therefore, consumers are cutting back.
So will this season be a boom or a bust or somewhere in between? Kathleen Hays joins us now with a closer look -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: Well, and as you point out, Jan, certainly, this September 11 attack and how much we've rebounded for that is a key question people have. So we're going to start by looking at the latest chain store sales that are tracked by Michael Niemira over at Bank of Tokyo Mitsubishi UBS Warburg.
Anyway, their weekly number actually fell by 0.5 percent. It had risen a bit the two previous weeks, but what's really instructive here is look where we were on September 11. Look where we are now, still well below the sales levels we were seeing then.
In fact, Mike Niemira estimates that retailers have lost about $5 billion of potential sales since the September 11 attacks. So it's not exactly resounding.
And there have been a couple of high profile surveys in the last week or so, asking people what are you going to do in terms of holiday shopping? The latest, well actually one today from Roper. And they found that 54 percent of people intend to spend same amount on holiday shopping this year. 18 percent, excuse me, 26 percent, said they're going to spend less. That's the problem because they kind of overweigh the people who are going to spend -- the 18 percent who said they will spend more.
Now we saw this same kind of sentiment reflected in a survey from the New York-based Conference Board. They view that consumer confidence survey you've heard so much. Well, they do a special survey every hear, saying how much do you plan to spend on holiday gifts?
Here's what they found. Each household, on average, expects to spend $462. That is down from last year, when people spent $490. Actually, the strongest shoppers generally are here in the Northeast. That pattern expected to be borne out this year. And what people are kind of worried about now, Jan, is if we don't get a strong shopping season, people have already put their orders in.
When they made the orders for the shopping season say in the summertime, they were not anticipating as much of a slowdown maybe in the economy. They certainly didn't anticipate the September 11 attacks. So if the inventories start piling up, we may see them discounting earlier and deeper, but that's going to throw them out of bounds, too, in terms of their earnings -- whatever they're going to end up getting at the conclusion. So it's kind of dicey. Maybe it won't be so bad, but maybe we need something really good to really rescue this for a lot of people.
HOPKINS: We'll get some sense of what's going to happen on Friday.
HAYS: Oh, another cautionary note. Last year, strong holiday shopping on that Friday after Thanksgiving did not portend a really strong season for the ensuing weeks. So that might be one little thing to keep in mind.
HOPKINS: Thanks, Kathleen Hays.
The Dow gaining more than 20 percent since its September 21 low. Yesterday officially entering bull market territory again. Nasdaq surging more than 30 percent during that time.
But my next guest says that gains will come much more grudgingly from now on. Douglas Cliggott is one of the top stock strategists on Wall Street. And he joins me now.
HOPKINS: So Doug, after almost a straight move up, with the Dow back in bull market territory and the Nasdaq, clearly, higher than that, we pulled back a little bit today. Is this a one day event or do you think that we've come too far too fast?
DOUGLAS CLIGGOTT, J.P. MORGAN: I think the latter, Jan. I think we've come awfully far, awfully fast. And I think if we look at a long stretch of history, not just the last year, but more 10, 20, years, when you look at the ingredients for real sustained bull market, they're pretty straightforward.
You need depressed earnings. You need high interest rates. You need high inflation. You need high P-E multiples, so that once you get going, you can sustain it because then inflation comes down, interest rates come down, and you can continue to feed the market.
HOPKINS: We don't have any of that at this point.
CLIGGOTT: Well, the only thing you have is depressed earnings.
HOPKINS: Yes.
CLIGGOTT: And so, we should get much better earnings information, we don't think in the first half of next year. But by the end of next year, the earnings news should get better. But our concern is just when the earnings news is getting better, interest rates will start moving up. And so, that's a very different equation than we had in the entire 1990s.
HOPKINS: So you think that investors are betting on too much recovery too soon?
CLIGGOTT: We think so. And it isn't that a recovery isn't going to happen. We'll get one. Our guess is it won't be as profound as a lot of people hope, but we'll get a recovery. Our problem is with P-E multiples so high, in effect, the market's already discounting a tremendous improvement in earnings.
HOPKINS: So what do investors do at this point? CLIGGOTT: Well, I think what they always should do is have very diversified portfolios. Own some stocks. Own different kinds of stocks. Own some energy stocks. Own some healthcare stocks.
HOPKINS: Most people hate energy stocks at this point.
CLIGGOTT: Well, the more they hate them, I think the more attractive they get. But not just stocks. Own some bonds. Have cash, so that in a sense, you've got a portfolio for all seasons. Don't really just bet on hey, we're going to keep going up 20 percent every two months, because that's very, very unlikely.
HOPKINS: So you like energy stocks as a place, if you're buying stocks. What other ones?
CLIGGOTT: We like health care. In effect, what we're recommending is a portfolio that's diversified. Energy, if things surprise us on the upside for growth, and health care and more defensive things like foods and beverages, if things are more sluggish than people would hope.
HOPKINS: Thanks, Doug Cliggott.
CLIGGOTT: Thank you, Jan.
HOPKINS: Microsoft today settled a raft of private antitrust lawsuits with a touch of goodwill and a lot of money. Microsoft is providing more than $1 billion in cash and software to public schools around the country. The five-year program is designed to help millions children attending some of the poorest schools in the nation. The plan provides for hardware, software and training.
If the proposal is approved by federal court, about 100 private antitrust lawsuits against the company will be dropped. Microsoft tonight says it will take a 6 to 7 cent charge next quarter to pay for that settlement.
Microsoft says it hopes today's action will help its case with the federal government. Right now, nine states and the District of Columbia are refusing to sign a settlement worked out with the federal government.
Steve Young takes a look at why those states still regard the settlement as seriously flawed.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): Critics of the Microsoft antitrust settlement say it's riddled with loopholes and even newfound advantages for the company.
But Microsoft, speaking through a paid consultant, says it's gone the extra mile. For example, agreeing to disclose certain technical information, called application programming interfaces to competitors. DAVID EVANS, MICROSOFT CONSULTANT: This is proprietary information that Microsoft has, that Microsoft is going to be required to give to competitors, to make it easier for those competitors to write products that compete with Microsoft in certain areas.
YOUNG: The company is allowing a three person technical committee on its campus to investigate non-compliance complaints. And it's barred from certain retaliation. But that brings us to one of the loopholes, according to a trade group that's been critical of the company.
MITCHELL PETTIT, PRESIDENT, PROCOMP: They can retaliate, in most instances, unless competitors achieve a certain size. And nobody's ever seen a provision like that in an antitrust settlement like this.
YOUNG: Microsoft's mantra has been it's defending the freedom to innovate.
But not all innovation, not if it's something Microsoft can't match and it's spotlighted by PC companies. They're known as original equipment manufacturers or OEMs.
PETTIT: And Microsoft is free to tell the OEM you can't allow that competitor to feature the product.
YOUNG: Consumers may find the most surprising aspect of the settlement is the new power it gives Microsoft 14 days after you turn on your new PC. Critics say Microsoft is then free to zap any product or service icons put on your desktop by PC companies and replace with then Microsoft's, without bothering to ask you, but Microsoft insists there is no basis for any beefs.
EVANS: I really do believe that Microsoft, in effect, gave up more than it really needed to.
YOUNG: Nevertheless, the holdout states in the District of Columbia are still working on their tougher remedies for Judge Colleen Colar-Cotelli. What nobody knows is whether she'll think they're necessary to constrain Microsoft from future antitrust abuse.
Steve Young, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Just ahead tonight, hackers break into www.playboy.com. We'll take a look at what they managed to steal. And new data today showing how Americans get to work, including the cities with the longest commute times and the city where workers are more likely to walk to work. That story and a lot more just ahead.
(COMMERCIAL BREAK)
HOPKINS: In tonight's corporate news, Princess Cruises merging with Royal Caribbean, creating the world's largest cruise ship company. The deal's expected to save the combined company $100 million a year. Cruise operators are part of the slumping travel industry suffering since the attacks.
FedEx is raising its rates, following a similar move from rival UPS earlier in the month. FedEx says it will up the cost of air and ground shipments by about 3.5 percent, that in early January.
Former Sotheby's CEO Diana Brooks on the witness stand again today, testifying about her former boss, Alfred Taubman. Brooks says that Taubman conspired with Christie's to rig prices. Today, Taubman's defense attorney attacked Ms. Brook's credibility, at one point, making her cry.
The government today revealed a little more about the lives of Americans that was gleaned from last year's Census. One of the facts revealed today is how long it takes us to get to work. Topping the cities with the longest commute, New York. It takes an average of 39 minutes for New Yorkers to get to work, three minutes longer than in 19990. And it's longer now since September 11.
Chicago has the second longest commute time, followed by San Francisco and Newark, New Jersey. Oakland, California and Miami, Florida tie for fifth place. The city where workers are most likely to walk to work is Boston.
A security breach on the Internet. Hackers stole information from the Web site that boasts one of the world's biggest brand names. Playboy says that hackers broke into a portion of its systems, accessing the credit card data of its customers.
Fred Katayama has the story.
(BEGIN VIDEOTAPE)
FRED KATAYAMA, CNN CORRESPONDENT (voice-over): Many shoppers at Playboy's Web site got an eerie e-mail over the weekend. A group calling itself, "Ingreslock 1524" sent out e-mails that identified the recipient's name, credit card number, and expiration date. In the message obtained by CNN, the group contended it had "some very big plans" to use the data so they would result in "over $10 million of fraud claims" to credit card and insurance companies. Companies increasingly encounter similar data thefts online.
CHRIS WYSOPAL, E-STAKE: It's almost a daily occurrence. It's only when it's the big brand name sites like Egghead or Playboy does it actually make the news.
KATAYAMA: Playboy said it detected the breach over the weekend and that the FBI is investigating the incident. The publisher doesn't know if any credit cards have been compromised. Security experts say these breaches typically occur because of faulty software. And even when the software developer issues a patch to fix the flaw, the corporate technology manager often fails to apply it. At other times, the company failed to design adequate security into the Web site in the first place.
CLAY SHEELOS, GEORGETOWN UNIVERSITY: It's kind of like using an armored car to transfer money between two people living in cardboard boxes, that we really need to take a look at securing the end-systems and securing the e-commerce sites.
(END VIDEOTAPE)
KATAYAMA: In e-mails Playboy sent to its customers, it encouraged even those who did not receive the hackers' message to contact their credit card issuers to check for unauthorized charges. Although the hackers threatened damage, they appear to be alerting the victims in advance of any theft. They implied they did the hacking to "test" the security of Playboy's computer system. The group vowed to test that again in the future -- Jan.
HOPKINS: And this happens all the time?
KATAYAMA: According to experts we spoke to on a daily basis, it's just that this time it happened to a big brand name company.
HOPKINS: Thanks. Fred Katayama.
(PREVIEW "WOLF BLITZER REPORTS")
HOPKINS: Thanks, John. Coming up next, a look at your e-mail and what to expect tomorrow.
(COMMERCIAL BREAK)
HOPKINS: Tomorrow, the bond market closes at 2:00 Eastern ahead of the Thanksgiving holiday. But before that, reports on the economy will include the revised University of Michigan sentiment report for November and weekly jobless claims.
Time now for a look at some of your thoughts. Now that we have a new law governing air security, many of you wrote in anxious for lawmakers to agree on an economic stimulus package. You also feel the package should directly address the problem of rising unemployment.
Nelda in San Juan, Puerto Rico writes, "The road to U.S. economic recovery is predicated on legislative action on unemployment. Unemployment security," she says, "is as vital as air security.
Now onto one part of the investigation in the terrorist money trail. Robert Hardo in Atlanta writes, "A month or so ago, it was widely reported that there has been a noticeable flurry of short- selling of airline and related stocks just before September 11. We were assured," he says, "competent authorities were taking a hard look at the source and the timing of those sales. Since that time, nothing." So Robert wants to know what's happening.
This is the story we continue to follow. The Securities and Exchange Commission is leading the investigation into the suspicious options trading. So far, however, the SEC hasn't drawn any conclusions, but it is close to wrapping up the investigation. We will keep you posted on the outcome.
And now to some leg work of our own. Phil in Minneapolis writes to compliment one of our correspondents in the field, Christiane Amanpour, particularly her coverage of Afghan women. Phil writes, "I hope CNN will continue to cover the reconstruction of Afghanistan with an eye toward the role of women in Afghan society."
Send us an e-mail. Our address is moneyline@cnn.com. Please don't forget to include your name and hometown. That's MONEYLINE for this Tuesday evening. Thanks for joining us. I'm Jan Hopkins in for Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" with John King begins right now.
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