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American Morning

America's New War: Market Holding in Range of 500 Points Down

Aired September 17, 2001 - 11:02   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.
PAULA ZAUN, CNN ANCHOR: Let's check back in with Lou, who has a guest to share his perspective with us.

Good morning, again.

LOU DOBBS, CNN CORRESPONDENT: Paula, thanks. Good morning.

As you say, the market holding here in range of about 450-500 points off on the Dow.

And want to turn now to Brian Finnerty.

Brian, are you there?

BRIAN FINNERTY, C. UNTERBERG TOBIN: I can hear you, Lou?

DOBBS: Brian Finnerty, are you there?

FINNERTY: Yes, I am, Lou. I can hear you loud and clear.

DOBBS: Brian, I can't hear you if you're there.

FINNERTY: He can't hear me, John.

DOBBS: Brian?

FINNERTY: Yes, Lou?

DOBBS: OK, there you are. I apologize.

As you know, this -- it's a little noisy down here today.

FINNERTY: Yes, it is.

DOBBS: Are you been surprised at the weakness here, or do you think it's a little better than you might of expected?

FINNERTY: Well, I think now the levels we're attaining right now, Lou, are a little bit better than we expected.

You know, Lou, we all came in, I think it was almost like a strip. We -- everyone said, well, we'll probably be down about five, maybe-little-more percent on the opening, and then we'll see what happens. And I think, Lou, a lot of us right now are encouraged by the fact that we opened on the lows and we've sort of traded up off those lows since the opening. So I think it's a little bit encouraging that that in fact has happened. They open them down as low -- you know, low, and now we're starting to work our way back a little bit higher; it's not a rush, but it's a gradual lifting of the stocks.

DOBBS: What are you going to look for here, Brian, as an indicator on the results of the day?

FINNERTY: Well, we would all love to see it close up on the day. I don't think that's going to be -- that really the key, though, Lou. I think the key is, we got the markets open, it was a huge effort to get them open by Dick Grasso, the president of NYSE, by the people at Nasdaq and all the exchanges around the world, by all the firms in concert to get the markets open, technically, to get the lines working again, to get everything going. That's a big victory right there.

Point number two, Lou, as we said, the markets opened on the low, but they are trading a little bit higher,and it's very, very orderly. We had a little bit of emotion on the opening. I mean, you know, right after -- you know, we had the moment of silence and "God Bless America," there were some wild swings right there, and particularly here in the Nasdaq marketplace, but that has calmed down and we're working higher.

DOBBS: All right, let's focus on one -- what should be a considerable amount of strength in this market, and that is those corporate stock buy-backs, those stock purchase plans. How significant do you think they are here? Do you think they've entered the market, or will they wait on it?

FINNERTY: I think a lot of them are waiting, Lou. I think what happens is those buy-backs get announced, and then what happens is the corporate repurchase people try to look for opportune moments. What the buy-backs are used for and have historically been used for, you know, we had a lot of them back in be '87 crash, there's a lot of them going on now, they've been used for stabilization. They're not used to run the price of a stock up. As a matter of fact, as you probably know, but our viewers should know, corporate buy-backs are not allowed to out bid the next natural buyer, so that they cannot, in fact, run the price of a stock up. But what they can do is provide support, an underlying support, for some of the stocks. And I think it's a good thing that corporations that do have excess cash can do this, and that will be big support for this marketplace right here.

DOBBS: Yes.

Now, Brian, I can't -- I have not been counting these, but the big board, as you know, the ticker above us here on the trading floor, it seems like there's an announcement of a stock buy-back -- and again, I repeat, an announcement of one, by various companies...

FINNERTY: Great.

DOBBS: ... coming on about -- it seems like one every three or four minutes. So that could be interesting level of support. At the end of the day we've heard a lot of people saying, and I think in some large measure it's understandable, be patriotic, go out and buy a stock, buy a hundred stocks. I will tell you straight out, I have been trying to temper that considerably, suggesting that people let the markets work the way they do best, and that's with sheer economic self-interest; that's what makes them work so well. What do you think?

FINNERTY: I think that's a great point, Lou.

One of my largest individual clients said to me this morning, Brian, the patriotic buying is terrific thing, he goes, but fiduciary responsibility is a much better thing and will eventually be a much bigger force in the marketplace. And what that means is, the big institutions and the mutual funds they are as patriotic as you and I and all the traders and all the people in America are, but they've got a fiduciary responsibility to perform the best for the money that they're managing, which is a lot of our money and all of ours money in the big mutual funds. So they've got to do the right thing, Lou.

And I think that, in fact, they are. They're looking for spots to buy certain stocks that they might like, they're looking for places to exiting other stocks that they may want to get out of, and that's what's going on in the marketplace right now.

And, Lou, the other thing that we should mention here is, remember a couple of days ago we were talking about, well, maybe we won't allow any shorting in the marketplace, that wouldn't be patriotic. I'm glad we didn't do that, we want to see the markets operate properly with short sellers, long sellers, long buyer, and short coverers, and everything going on normally and properly at once. And that gives us a much more true picture of what the real marketplace is doing.

DOBBS: Brian, you're absolutely right. And like every citizen in this country always has a very strong opinion about everything, that I want these markets to work free, but I have to tell you, I have sort of a visceral reaction against short sellers, so I would probably rewrite the law a little bit. But you're absolutely right, a free market is precisely that.

And I thank you very much, Brian, for taking time to talk with us here.

Before we close out, Brian, let me ask you real quickly, I've asked you for forecast over the years, give us your one-day forecast here at 11 -- almost 11:08 Eastern Tile, how does this market end?

FINNERTY: We're getting better right now. I'd love to say up on the day, because I'm as patriotic as everybody else. I'm going to say down 2 1/2 to 3 percent on the day, which will be a little bit of a rally up from here.

DOBBS: Absolutely.

FINNERTY: Down small, and then get ready for the big rally to come in the next -- in the ensuing days.

DOBBS: OK.

Brian Finnerty, thank you very much.

Paula, with the tick now off about 300 points, adjusting some continued weakness, but at the low side of what we had seen, in terms of the indication of weakness in the market, and with the up volume running well behind the down volume by margin of about 1-6, and the Dow off almost 500 points, it looks like this day is going to be interesting from beginning until close.

For now, Paula, that's it from here.

ZAUN: All right, thanks so much, Lou.

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