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American Morning
Minding Your Business: New Year's Hangover on Wall Street?
Aired January 03, 2003 - 07:41 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.
JACK CAFFERTY, CNN ANCHOR: The stock market got off to a big start for the New Year. President Bush getting ready to put out his plan for jump-starting the economy, a little stimulus package in the works, which gives Andy Serwer plenty to talk about this morning, as he begins "Minding Your Business."
Good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Jack, yes.
CAFFERTY: That was some rally yesterday.
SERWER: Whew! I'd like to start off every year like that. The Dow took off yesterday, up 265 points, Jack. You can see that the Nasdaq up 49 points.
What does that mean to you and me and everyone with a 401(k)? It means our 401(k)s were up 3 to 4 percent yesterday. What happened? A positive factory report. I also think psychology at work. People laying their bets on the first day of the year.
Of course, it remains to be seen; 249 trading days left in the year, so one day does not a rally make.
CAFFERTY: Now, the other possible ingredient in that rally yesterday was news coming out of Washington that the president is going to come forward with another try at getting an economic stimulus plan through. He couldn't get it done last time, but maybe now...
SERWER: Yes.
CAFFERTY: ... with the Republicans in charge.
SERWER: Well, that's right. Yesterday down in Crawford, Texas, the president said he would be unveiling this package in Chicago on Tuesday. There's the prez walking and talking.
And you know, it's interesting because, of course, he spent so much time on foreign affairs. He doesn't want to repeat the mistake of his father and ignore the economy. He wants to show that he's on top of the ball -- on the top of his game.
Let's take a look at some of the details of the plan here. Cutting the corporate dividend tax. I want to get back to that. Accelerating the tax cuts that were supposed to happen later in the decade, this year. Unemployment benefits, we've talked about. And the equipment purchases are strictly a business thing. The corporate dividends are very interesting to me, Jack, because basically people say dividends are taxed twice. Corporations make money, they're taxed on that. Then they pass on dividends to you, you are taxed on that. People say this is a pro-business measure, but there are some suggesting it may not be, because President Carter tried to do this back in the 1970's. And who objected to it? Businesses. Why? Because if dividends become more attractive, i.e., the taxes are less, they put pressure -- ordinary investors put pressure on companies to increase their dividends.
CAFFERTY: Right.
SERWER: So, the CEOs told President Carter, we don't want to do that. President Bush is counting on CEOs being more on board, given the economic environment and the international situations.
CAFFERTY: All right, tell me about your econ-o-meter. I want to see how this works.
SERWER: Yes, we are rolling out the econ-o-meter to start off the New Year, kind of rating how things go. We're going to be rating the president's tax plan right now, a stimulus package. You can see there: "red hot," "getting warmer." I would give this a "getting warmer." We save "red hot" for things like end of the Iraq war perhaps, if one...
(CROSSTALK)
CAFFERTY: Putting all of the Enron guys in the same city (ph)?
SERWER: Yes.
CAFFERTY: That would be red hot, right?
SERWER: We say that that's a real special thing.
CAFFERTY: Yes.
SERWER: But getting warmer, I think this is going to provide some confidence for people out there, get the market moving for the New Year.
CAFFERTY: Sounds good to me. Back with more later.
SERWER: Yes, absolutely.
CAFFERTY: Thanks, Andy -- Andy Serwer, "Minding Your Business."
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Street?>
Aired January 3, 2003 - 07:41 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: The stock market got off to a big start for the New Year. President Bush getting ready to put out his plan for jump-starting the economy, a little stimulus package in the works, which gives Andy Serwer plenty to talk about this morning, as he begins "Minding Your Business."
Good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Jack, yes.
CAFFERTY: That was some rally yesterday.
SERWER: Whew! I'd like to start off every year like that. The Dow took off yesterday, up 265 points, Jack. You can see that the Nasdaq up 49 points.
What does that mean to you and me and everyone with a 401(k)? It means our 401(k)s were up 3 to 4 percent yesterday. What happened? A positive factory report. I also think psychology at work. People laying their bets on the first day of the year.
Of course, it remains to be seen; 249 trading days left in the year, so one day does not a rally make.
CAFFERTY: Now, the other possible ingredient in that rally yesterday was news coming out of Washington that the president is going to come forward with another try at getting an economic stimulus plan through. He couldn't get it done last time, but maybe now...
SERWER: Yes.
CAFFERTY: ... with the Republicans in charge.
SERWER: Well, that's right. Yesterday down in Crawford, Texas, the president said he would be unveiling this package in Chicago on Tuesday. There's the prez walking and talking.
And you know, it's interesting because, of course, he spent so much time on foreign affairs. He doesn't want to repeat the mistake of his father and ignore the economy. He wants to show that he's on top of the ball -- on the top of his game.
Let's take a look at some of the details of the plan here. Cutting the corporate dividend tax. I want to get back to that. Accelerating the tax cuts that were supposed to happen later in the decade, this year. Unemployment benefits, we've talked about. And the equipment purchases are strictly a business thing. The corporate dividends are very interesting to me, Jack, because basically people say dividends are taxed twice. Corporations make money, they're taxed on that. Then they pass on dividends to you, you are taxed on that. People say this is a pro-business measure, but there are some suggesting it may not be, because President Carter tried to do this back in the 1970's. And who objected to it? Businesses. Why? Because if dividends become more attractive, i.e., the taxes are less, they put pressure -- ordinary investors put pressure on companies to increase their dividends.
CAFFERTY: Right.
SERWER: So, the CEOs told President Carter, we don't want to do that. President Bush is counting on CEOs being more on board, given the economic environment and the international situations.
CAFFERTY: All right, tell me about your econ-o-meter. I want to see how this works.
SERWER: Yes, we are rolling out the econ-o-meter to start off the New Year, kind of rating how things go. We're going to be rating the president's tax plan right now, a stimulus package. You can see there: "red hot," "getting warmer." I would give this a "getting warmer." We save "red hot" for things like end of the Iraq war perhaps, if one...
(CROSSTALK)
CAFFERTY: Putting all of the Enron guys in the same city (ph)?
SERWER: Yes.
CAFFERTY: That would be red hot, right?
SERWER: We say that that's a real special thing.
CAFFERTY: Yes.
SERWER: But getting warmer, I think this is going to provide some confidence for people out there, get the market moving for the New Year.
CAFFERTY: Sounds good to me. Back with more later.
SERWER: Yes, absolutely.
CAFFERTY: Thanks, Andy -- Andy Serwer, "Minding Your Business."
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
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