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American Morning

Key Economic Figures Show Reason for Concern

Aired April 17, 2001 - 09:00   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.
DARYN KAGAN, CNN ANCHOR: Let's start talking about money. That's a topic that most people can relate to out there.

LEON HARRIS, CNN ANCHOR: Why not?

KAGAN: Why not? We're going to start...

HARRIS: I hope you've got some good news about it.

KAGAN: Well, a little bit a mixed bag. How about that?

We'll start with -- we're going to start with your jobs and your money.

There still is reason to be concerned. Some key economic figures just out showing consumer prices up 0.1 percent. We'll explain the significance of that in just a moment.

Several major companies are announcing layoffs. Leading the pack, Cisco Systems. The networking giant plans to cut 8,500 jobs and expects third-quarter earning to be disappointing. European companies, Philips Electronics and Ericsson, plan to slash between 6,000 and 7,000 jobs each. And, according to "The Wall Street Journal," Texas Instruments will cut 2,000 worker. Comair, the nation's second-largest regional airline, is eliminating 200 pilot jobs. That in the midst of a pilot strike.

Joining us with more now is Deborah Marchini of CNN Financial News to put some of this in perspective.

Deb, first, let's start with Cisco Systems. A lot of folks out there don't know what Cisco does, and yet it's kind of like a temperature for how the economy is doing.

Good morning, by the way.

DEBORAH MARCHINI, CNN CORRESPONDENT: It actually -- good morning. Nice to see you, Daryn.

Well, Cisco used to be the biggest stock in terms of market value that there was for a brief period of time. Cisco makes what's essentially the backbone of the Internet, and what it says is that its business kind of fell off a cliff. That worried a lot of investors. It had stock down in premarket trading. The futures were showing that the NASDAQ was likely to fall sharply at the open as well. But we've since seen that rally back on some other news. Cisco having the most negative report with that warning after the bell yesterday.

This morning, we've heard from four Dow Industrials components. Eastman Kodak's going to cut another 3,500 jobs. It beat expectations on its earnings, though, by three cents. Johnson & Johnson came in two cents better than expected on a rise in sales. Caterpillar was a penny light when it comes to earnings. And Philip Morris's results were in line with expectations.

We are still waiting to here from Intel, which is a cause of some concern. Intel, of course, is the biggest maker of computer chips, and there's concern that price cuts and weak demand for computer chips may mean a price war and profit pressures on Intel and anybody who competes with them -- Daryn.

KAGAN: Keeping all that in mind, the opening bell is about 27 minutes away. It doesn't look like investors are too hyped for today's day of trading.

MARCHINI: It was worse. As I said, we had the NASDAQ futures limit down 42 points. They've come back now. They're only 11 points lower. S&P futures are not that much lower either.

We had a couple of economic reports that may have tempered some anxiety, specifically housing starts. This is a barometer of how the consumer is holding up. They fell a little bit more than expected, but, still, housing is running at a fairly healthy pace, in part because mortgage rates are lower.

And what that is likely to mean is that consumer spending may hold up. That's important because consumer spending accounts for two- thirds of the economy, and as we heard from Cisco and many others, business spending is kind of in the dumps.

KAGAN: Deborah Marchini in New York, thanks for putting that in perspective for us. Appreciate it.

Later this hour, we're going to be joined by one of the Motley Fools with more economic numbers, also some information -- very important for all of us -- on planning for your retirement.

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