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TERRY KEENAN, CNN ANCHOR: A bad week gets a whole lot worse, as the bloodletting in the markets continues. The Nasdaq suffers its worst week since October 1987. We'll assess the damage.
DARYN KAGAN, CNN ANCHOR: The legal battle goes on. A temporary stay keeps Elian Gonzalez in the United States, but for how long?
BILL TUCKER, CNN ANCHOR: Gateway Computers has made a name for itself as the number-two direct marketer of personal computer, and it is our "Stock of the Day."
KAGAN: Then, there are billions of dollars sitting in bank accounts around the world. Some of those dollars might be yours. We'll tell you how to find out.
ANNOUNCER: From CNN and CNNfn, this is IN THE MONEY with Terry Keenan, Bill Tucker and Daryn Kagan.
TUCKER: Good morning, and welcome to IN THE MONEY.
KEENAN: And hello from me as well. Welcome to another fasten your seat belts Friday as a week of ferocious selling continues on Wall Street without pause.
TUCKER: That is right, as if sellers needed any more ambition, they got it this morning in the form of a very bad report on inflation. We will have more on that in a moment. But first, let's get a damage report.
KEENAN: And let's warn you, these numbers are not encouraging. The carnage that we have seen in the Nasdaq is the worst since October 1987. We are now down 20 percent for the week on the Nasdaq, while the Dow is off about four percent. And for the Nasdaq, that would be worse than the week of October 1987.
TUCKER: Yes, the week of October in 1987, we were down 19 1/2 percent roughly. So that's the size of what we're taking a look at here today. It's been really brutal selling.
I'm going to throw a number out there, and I promise I won't do this very often, but 3500 is viewed as a very key support level for the Nasdaq. We bounced off that level today and that is encouraging to some. If we go back and test it again, it might make a few people worried. But it would seem to have a floor at least for the moment.
KEENAN: Yes, important to keep your eyes on that, and hopefully we won't break that level because there could be more selling if we crack that 3500 level.
Let's take a step back now and look at the trigger behind this morning's sell-off and that was today's consumer price index.
For more on what it is and why it hurt the markets so badly, we are joined by IN THE MONEY's Bill Dorman.
And Bill, any way you slice it, this was a bad report.
BILL DORMAN, CNN CORRESPONDENT: It is true, and it was surprisingly bad. That's always a bad sign in terms of Wall Street. Consumer price index, this simply measures inflation level at the consumer level. Now this is a month to month change, and it really spooked the markets this morning because the core rate, which is when you take out food and energy prices, was the highest that we've seen, the fastest pace of growth, in more than five years.
There you see a little review in the 101 of what the CPI does measure inflation at the consumer level. The core rate, as I said, that takes out food and energy. Now everybody knew that energy prices were going to be high, it was going to be ugly because of gasoline prices. But even apart from that, the news was bad.
This statistic is a favorite of the Fed. They are very concerned about inflation. So this is one of the reasons why this is pressuring markets this morning.
And again, you take a backdrop of negativity that we've had all week, you add a consumer inflation number like this, and it's just tossing a match on gasoline.
KEENAN: And one reason the stock investors don't like it is because if inflation goes up too much, the Fed will raise rates even more, interest rates go will up and that's bad news for stock; correct?
DORMAN: Exactly, and again, you can think of this again just as another factor of uncertainty. Markets hate uncertainty. Now we had something where expectations were that inflation was not going to be a problem, now we have seen some news that that is a problem. That adds uncertainty and that is going to hurt. Again, you add that to the negative emotion and you get a turbulent day.
KEENAN: You get a day like this after a week like this. Thanks a lot, Bill, Bill Dorman.
And let's just take a look at how this number is affecting the bond market. There you see all those traders and they are doing a lot of selling this morning. The 30-year bond us down almost a point in price. The 10-year note, not as bad, down 11/32. But there you see the yield 5.97 percent in the 10-year note, and that, of course, is the level that a lot of what mortgage rates are pegged off of. TUCKER: All right, let's take a look now at the New York Stock Exchange, where we have selling intense there as well. The Dow Jones industrial average some 70 points off its lows of the session so far this morning.
Rhonda Schaffler is keeping watch on that market for us.
And Rhonda, frankly, it would be easier to talk about the winners, there are only five Dow stocks up last time I checked.
RHONDA SCHAFFLER, CNN CORRESPONDENT: Yes, and ironically, there are some tech names, and we do have some buying in tech stocks, or even some good earnings reports fueling a little bit of buying, Hewlett-Packard, IBM for instance. But once you get beyond that, you have got a broad-based decline here, better than three to one decliners over advancer. The Dow coming off a 200-point drop yesterday. And pretty much every sector getting hit hard. The only exceptions are a handful of some of the utility stocks and even some gold stocks.
But, at the moment, the Dow is sliding 215 points. It was the CPI report that really unnerved investors here. They weren't thinking too positive as it was. And, of course, that was pretty negative.
Let's show you its impact on financial stocks. That group got hit yesterday, getting hit again. Of course, the expectation is that there is going to be more interest rate hikes by the Fed, and now the outlook is uncertain for this group. Chase Manhattan is down more than 3; Dow component J.P. Morgan also down more than 3. Capital One is off better than 2. It reported OK earnings yesterday, though. FleetBoston down 1 13/16, and First Union is down more than $1. First Union also reported earnings that were OK yesterday.
One of the few stocks where we're seeing a little bit of buying is Ford. It is going to be spinning off its Visteon auto parts unit to shareholders. That stock fractionally higher compared to a stock like GM which, at the moment, is down about 2 3/4 -- Bill.
TUCKER: All right, Rhonda, leaving with a smile, as it were, Ford stock one of the rare winners on the big board today.
KEENAN: OK, no smiles at the Nasdaq marketsite where Charles Molineaux is standing by.
And, Charles, we first want to get a temperature check of the mood there because we were already down 17 percent going into today. Is there some surprise that we have the continued ferocious selling this morning?
CHARLES MOLINEAUX, CNN CORRESPONDENT: Not after we got those consumer price numbers. A lot of strategists looked at this market yesterday and the wild gyrations that we saw and figured that it was looking for a bottom and that it was going to continue looking for a bottom and moving within a nice range, like we saw yesterday, of a couple hundred points, unless, of course, we had some sort of outside stimuli. And, well, this morning's Consumer Price Index certainly provided that stimulus to the downside, and downed the market when it was off ferociously at the beginning. And we were down by 161 points at 3515 for a while. Of course, now we're down by 146, so we've recovered somewhat from that.
But, actually, after a bounce, we're heading back down again. Check it out: Industrial stocks are down by 4.6 percent, telecoms are down almost 5, biotechs are down 3.6 and computers are down by 4 percent.
So the selling is also very, very broad. Declining issues outnumber advancers by a five-to-one margin.
KEENAN: OK, we do have a couple of winners, right? and some earnings news supporting those stocks.
MOLINEAUX: Supporting or maybe not necessarily. Juniper Networks, for example, is up by about a buck, 1.7 percent after reporting it made 6 cents a share, 3 cents better than the first consensus, and announced a two-for-one stock split.
But look at PMC Sierra. It's down by $5 or 4 1/2 percent. It rolled out results of 17 cents a share profit. That is a penny better than the market had expected, but it still didn't work. Actually, Internet stocks in general are weak. The Goldman Sachs Internet Index is by down 2 1/2 percent, business-to-business stocks in particular. Business-to-businesses are also almost all weak, so we're having a real hard day for those stocks. Check it out: Internet Capital is down by 2 bucks. Ariba is the only one up by about 2. But Commerce One and VerticalNet are both down by more than $4.
And Sun Microsystems is another exception to the rule. It is up by $3 or almost 4 percent at 8075 after it rolled out better-than- expected -- much-better-than-expected results. It made $436 million, 26 cents a share. That's above the projection of only 23, and Prudential's upgraded it to a strong buy -- Terry.
KEENAN: All right, thank you very much, Charles.
Charles Molineaux at the Nasdaq marketsite.
And we continue to sell off. We're 30 percent off our highs on the Nasdaq. Pretty much a bear market by any definition even though it's been a quick one.
TUCKER: I don't care. Duration or not, 30 percent -- we call it bear territory.
Well, inflation is what is acting like the specter that everybody heard about but nobody had seen. It spooked the markets today with that stronger-than-expected economic number, and that's got a lot of -- many people wondering if the Fed, in fact, will continue to pull the interest-rate trigger again and again, and when they might stop.
Tom Madden, chief investment officer at Federated Investors joins us now with his outlook.
And, Tom, welcome to IN THE MONEY.
THOMAS MADDEN, FEDERATED INVESTORS: Nice to be here.
TUCKER: Well, there are better days that you could have joined us, that's for sure. But thanks for coming around.
TUCKER: What does this do? Does this confirm Alan Greenspan and the caution by the Fed today?
MADDEN: Well, I think that you have had a real tone change, and you've been covering it very effectively. I mean, you had retail sales yesterday and they're up at something like 15.8 percent nominal. And now you have a CPI number which is the most adverse we've seen in five years. This puts ammunition in the hands of the hawks at the Fed, and it absolutely raise the specter that the Fed will have to raise rates higher and for longer than the doves on Fed policy would have hoped.
And with leadership in tech and telecom already sapped with the decline in the Nasdaq, you now have had selling spread to the broader market. My advice to investors, as I advised our portfolio managers this morning, is be calm and try to defeat fear because usually in these moves, what happens is the market goes from overvaluation, not to fair value but to undervaluation, and you have tremendous buying opportunities as you find a bottom. But this could go on for a while, I think, that's what we have to just encounter.
KEENAN: Well, Tom, do you see a bottom here with the Nasdaq down 30 percent? And do you see any buying opportunities in some of these Nasdaq names?
MADDEN: Well, I'm beginning to entertain that probability. And I think that one of the things which has happened which we've been talking about is that investors have recognized that the BTB players may include the old-economy companies, as well as some of the new- economy players, who is going to benefit from the no matter what are the famous names. So, as you see the EMCs and Ciscos trade cheaper, that's where my attention gets focused.
But I will add to you that I think that the correction in dot.com land is likely to be an ongoing affair, and the market has a different take on that side of technology, and the bear market there may continue.
TUCKER: Tom, what are you doing with your money? What are you advising your portfolio managers to do? sit over in cash? move it over into the old-economy stocks? what?
MADDEN: Well, we've been talking about and, in fact, we've been -- I think right on the autos, one of the things that we've been doing this week is adding to energy service names, like Halliburton and Schlumberger. But we have not significantly trimmed our tech exposure on the basis that a lot of what is going on really has a high emotional content and we don't want to whipsaw ourselves by, you know, cutting tech concentrations just as the market troughs.
My last point would be, my intuition is that the Nasdaq is getting close to a floor and maybe now we're going to see the adjustment concentrated back on the other side of the market in some of the Dow-type stocks as we're seeing this morning.
TUCKER: All right, Tom, thank you.
KEENAN: Thanks, Tom, Tom Madden of Federated Investors.
We have this news just in: Nasdaq member firms have voted to spin off Nasdaq in a public offering. Interesting coming on a day like this.
TUCKER: The vote just coming, and coming on a day like this, when it seems like everybody wants to get rid of Nasdaq at the moment.
KEENAN: Spin it off, get rid of it, whatever, just stop the selling.
Just ahead on IN THE MONEY: If you're trying to keep up electronically with the Joneses, we've got an "E-World" tip for you, that is coming up.
TUCKER: Also, the latest on the battle over Elian Gonzalez. We'll have a live report when IN THE MONEY returns.
KEENAN: OK, we want to take you back to the Big Board, where the Dow is closing in on its lows of the session, you see there, down 258 points, 10665 is the level. The real story on the Nasdaq we're at our lows of the day, down 21 percent for the week. We have broken the key support level of 3500.
We are seeing waves of selling hitting the Nasdaq right now. Yahoo! is down seven, Oracle down five, Amazon.com down five, Cisco is down two, and the carnage continues.
An incredible sell-off, we are now down in percentage terms more than during the week of the October 1987 stock market crash.
TUCKER: And just to keep it in perspective, too, a month ago we were at highs, record highs at the Nasdaq. At the moment, we are down more than 30 percent from those highs.
KEENAN: We are down about 1600 points from our highs on the Nasdaq.
TUCKER: Cold comfort in this, but you know about a lot of bears on Wall Street were saying that the Nasdaq composite would need a 30 percent correction. Well, they have got their wish. Let's see if this is where it stops, though. KEENAN: Yes, exactly, because I think we are now down about 31 percent from the high because the selling has continued in the last couple of minutes.
We have lots of other things going on in the news this morning. For that we go back to Daryn -- Daryn.
KAGAN: Bill and Terry, good morning.
We are, of course, talking about Elian Gonzalez, The reunion of the 6-year-old and his father remains hung up in legal battles this morning. Immigration officials saying that Elian Gonzalez's Miami relatives are in violation of the law now that they have failed to hand the boy over to his Cuban father. Instead of complying with the government's 2:00 p.m. custody transfer deadline yesterday, the relatives asked for, and received, a temporary court injunction blocking any attempt to take Elian out of the country.
An attorney for the relatives says the government will have to pick up the boy, adding the doors will be unlocked. And that stay has nothing to do with the custody issue. The custody is still supposed to be transferred to the father.
The Justice Department this morning responded to that court ruling keeping Elian Gonzalez in the U.S.
CNN Justice correspondent Pierre Thomas is with us from Washington.
Pierre, any idea what the Justice Department had to say to the court of appeals?
PIERRE THOMAS, CNN JUSTICE CORRESPONDENT: Yes, Daryn, source our telling us that the Justice Department asked the federal appeals court to require, order that Lazaro Gonzalez, the great uncle in Miami, turn the boy over to his father. And also interesting wrinkle, the Justice Department also informed the court that, if Lazaro Gonzalez does that, that they would issue a temporary departure control order, which would force Elian to remain in the country during any appeals process.
So the Justice Department taken the two prong act, asking the court to require that Lazaro Gonzalez turn over the boy to his father, and at the same time, that they would, in turn, require that Elian Gonzalez remain in the country during the appeals process.
KAGAN: And any idea how long it should take to hear back from the court?
THOMAS: Well, it could be as early as today. Normally these matters take a couple of days to resolve. But the Justice Department officials I talked to expect the court to rule very, very shortly. If not today, within a couple days.
KEENAN: Pierre Thomas, in Washington, thank you very much.
In other news today, four years after the U.S. Senate ratified it, Russia's parliament has approved the long delay START II treaty. The final vote in Moscow 288 in favor, 131 against.
START II would mean the removal of thousands of U.S. and Russian nuclear warheads. Ratification clears the way for work on a START III treaty to trim nuclear weapons even more.
We continue to follow the Elian Gonzalez story. Other news we are following today later this hour. Also ahead: some of you just may have some money coming your way, it may be virtually a point and a click away. Details on that, coming up a bit later.
Now back to Bill and Terry.
KEENAN: OK, we could use some hidden money today definitely. Thanks, Daryn.
OK, straight ahead on IN THE MONEY: We are going to continue to monitor the situation in the markets. The Nasdaq down another five percent today alone.
And then, say you made a smart investment, but now you've been smacked with a hefty tax bill.
TUCKER: Well, We're going to talk to a mutual fund manager about a couple of things, about maybe moving some investments into bonds and ways to reduce your tax trauma as well. Next, when IN THE MONEY returns.
KEENAN: The selling continues at the New York Stock Exchange. Though we're a bit off our worst levels of the session, have been down 260, now down 223. Only four Dow components are higher today, and there you see what's going on with the brokerage firms, we had a bad inflation report. The financial stocks do not like the numbers, inflation rising seven-tenths of a percent at the consumer level for the month of March. And they are taking it out on a lot of the brokerage stocks, the sell-off in the Nasdaq not helping those on-line brokers either. We're down almost five percent for the Nasdaq, off four percent for the transports.
TUCKER; Part of the reason for the sell-off today is that we've got a very bad inflation report. We've been talking about it throughout the show. CPI coming in with an increase of seven-tenths of a percent, that is all -- not quite twice what had been expected. Core rate, however, was twice what had been expected, up four-tenths of a percent. That has, as you can see, spooked the markets and we've been seeing a lot of selling in stocks today.
We're joined now by Shiela Amoroso, she's the director of municipal bonds with Franklin Templeton and she joins us this morning from Palo Alto, California.
And welcome, Shiela. Nice to have you on IN THE MONEY.
SHIELA AMOROSO, FUND MANAGER, FRANKLIN TEMPLETON: Thank you. TUCKER: When you look at the stock market, especially this week, you are really tempted to at least start thinking about other forms of investment, and I'm wondering how's the muni-bond market and does it offer any opportunities or any save haven from the storms we're seeing in equities?
AMOROSO: Well, the bond markets definitely have seen some volatility themselves, but the Fed is being vigilant in their action in raising short rates in order to slow the U.S. economy to noninflationary levels, which should bring some stability to the bond market. But being tax time, muni bonds can offer investors a lot of value, in that their tax-exempt status helps to reduce their tax bill.
TUCKER: And how do you go about buying one or investigating -- getting into the muni bond market?
AMOROSO: Well, we offer 23 different state-type funds at Franklin Temple -- Franklin Templeton and there's many other ways to buy municipal bonds.
TUCKER: You can call up your broker or do you -- could you get in touch with Franklin Templeton? You know, for those of us who aren't the initiate who are wondering how do I move investments there, how do you do it?
AMOROSO: The best way to do it is to work with your investment adviser, because you need to figure out things such as: What is your tax rate at the federal level and what do your state taxes look like? Because the benefit of municipal bonds is that tax exemption over a taxable bond, where you do pay taxes.
TUCKER: Exactly, and speaking of taxes, that may be the silver lining in this market sell-off that we're seeing now. You got any strategies for how we can take advantage of some of the losses that we may be seeing in this market?
AMOROSO: Well, there is a strategy, and asset allocation is a great strategy. And when you look at the fixed income portion of asset allocation, bonds make a lot of sense. I mean, asset allocation overall is a risk reduction strategy, and that's the type of thing you want to be thinking about right now.
TUCKER: All right, Shiela, thank you very much. Sheila Amoroso, from Franklin Templeton, appreciate you being here.
AMOROSO: Thank you.
TUCKER: Well, e-mails, faxes, voice mails, cell phones, the number of ways people communicate can seem overwhelming, but what if you could integrate all of your communication tools into one easy to use system? There is a way, and you don't have to break the bank.
(voice-over): Andrew Constantine (ph), a New Jersey trial attorney, used to spend a lot of time and money retrieving his voicemails, pages, e-mails and faxes, but about eight months ago, he discovered a new tool called ThinkLink that lets him check and retrieve all of his messages in one place, either by Web or by phone.
UNIDENTIFIED MALE: A lot of times I'll be in a courtroom and my adversary will introduce documents which require a response. I can call my secretary or e-mail her and tell her to fax me the relevant documents I need to respond in court, and within minutes they're on my computer screen and I can print them out.
TUCKER: ThinkLink, an application service provider, or ASP, has no setup charges or monthly fees. The only cost is five cents per minute for outgoing domestic long distance calls. Local calls are free.
UNIDENTIFIED MALE: Using an ASP is generally as simple as signing up. You just go to a site, you say I want to be your customer, they send you a confirming e-mail, sometimes with a code number that you have to type in that becomes part of your identity, and then you're rolling.
TUCKER: To sign up, click on Thinklink.com, or check out other similar services, such as: uReach, TelePost, Linx, onebox and AccessLine.
TUCKER: All right, all of these services give you personal local number and phone-bases to interface. However, they don't all offer e- mail, faxing and outbound phone calls.
Well, just ahead on IN THE MONEY: Frustrations approach a fever pitch, as legal maneuvering prolongs the emotional debate over Elian Gonzalez.
KEENAN: Plus, could Gateway open the floodgates to profits for our portfolio and yours? You get to decide. It is our "Stock of the Day."
TUCKER: And then, Andy Serwer gets to the heart of a story.
Andy, what is the heart?
ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Bill, the worst week of your life. A lot of people on Wall Street are saying that. We'll have that story coming up.
KEENAN: Well, it looks nice on the outside, but on the inside a very different picture this spring day. The Nasdaq is down almost 200 points, a decline of 5.37 percent, this on top of a 17 percent decline in the first four days of this week.
TUCKER: It's 1,000 points, Terry. I mean, it's a little short of 1,000 points. It's 1,000 points in a week is what we're talking about right here. KEENAN: This week, yes. And it's -- that makes it the worst week since October of 1987, not just in point terms, but in percentage terms. Any way you cut it, if you're in Nasdaq stocks...
TUCKER: Any way you want to slice, dice it and take a look at it, it is a nasty week.
KEENAN: ... you've lost a lot of money.
TUCKER: You've lost a lot of money. We're currently at lows on the Nasdaq, 3476 is the low there, the bloodletting on Wall Street not showing any signs of lessening up this morning.
KEENAN: And, you know, it's important because we said at the top of the hour that we have been holding the 3500 level on the Nasdaq. That was down 1543 points from the high. But we've cracked through that number and we came back briefly. But we're back down through it again and nobody knows where the support is -- is behind that. And there's no support coming from the bond market, from the economic numbers.
KEENAN: We're testing lows and we're past the lows that we hit last Tuesday when we had that incredible sell-off. We;re now below those levels.
TUCKER: In fact, usually you'd look over to the bond market to see a rally because the money would be coming out of stocks and into bonds. You're not seeing that today. You're seeing selling in the treasury markets today. That's exacerbating the situation, making it worse, as it were.
For a closer look at what's moving on Wall Street this morning, let's get back down there and check in with our two market mavens. Rhonda's over at the New York Stock Exchange, Charles is at the Nasdaq.
Charles, you've got the story today. Let's start with you: 3472 is where we stand right now.
MOLINEAUX: Yes, and keeping in mind, Bill, that when we went down below 3600 -- and that was now close to -- rather, 3650 -- that was close to 200 points ago, that was a descent below the low of last week's intra-day descent that we bounced back from. We are now back below that point, and by a substantial, now down by 200 points at 3476. We saw a steep drop at the outset and looked like we were going to go into something of a rally and recovery. We've been plummeting back down to this new low level we find ourselves at, a loss of 200 points. And we're now below 3400, and by a substantial margin at that.
Financial stocks are now down by 5 percent on the day. They continue to show weakness. Insurance stocks are down by 3. But look at industrials: They're off by 6 percent, telecoms are down by more than 6 1/2, and biotechs are down by 4 percent. This morning's consumer price numbers poured a lot of water -- a lot of gasoline onto a fire that was already burning and a lot of these stocks investors were ready to sell already, and that was the last thing they needed to see happen, was inflation looking stronger than expected. We are now down by 200 points at 300 and -- rather, 3476.
Let's see how things are going on the New York Stock Exchange, which is also looking mighty bearish. Rhonda Schaffler is there -- Rhonda.
SCHAFFLER: Charles, things have just gotten worse, Dow now at session lows, down 278 points. A lot of heavy selling coming into the market right now. Volume is picking up. Virtually every Dow stock is lower. The only exceptions to this point, we're seeing some gains in Hewlett-Packard and ExxonMobil.
Leading the downturn, financial stocks. J.P. Morgan and American Express the biggest losers on the Dow. American Express is now down about 7 7/8, J.P. Morgan off more than 5. This is across the board. Decliners lead advancers by more than a three-to-one margin. Virtually every sector getting hit pretty hard, Dow sliding 286 points, and the futures are selling off heavily at the moment.
Let's go back now to Bill and Terry.
TUCKER: All right, thanks.
KEENAN: OK, thanks, Rhonda.
We want to break with format now. We had hoped to bring you our "Stock of the Day," but considering what's going on in the market, we want to talk about the market overall.
We want to talk tech right now so we're going to bring in Walter Winnitzki. He's the senior analyst at Chase H&Q.
And, Walter, welcome. Nice to have you with us. Let's talk about what's going on in the market today from your perspective. I know you follow the computer makers. How does it look from your end?
WALTER WINNITZKI, CHASE H&Q: Well, I was looking for a reason to get out of the office and you provided a nice reason for me.
KEENAN: Well, it does.
TUCKER: You want to run and hide.
Gateway is up in -- I mean -- up -- it's up 1/16 in the market today. What's special about Gateway that's making it somewhat immune to the rest of the brutal bashing we're seeing on the Street today?
WINNITZKI: Well, it had been trading up early in the day, and I think for two reasons. Number one is there was a steep sell-off. People were concerned ahead of the company's earnings that came out last night, and I think a lot of investors just didn't want to hold the stock. And second is what did come out last night which, on balance, wasn't too bad. We saw some pretty favorable underlying trends for both the industry as well as for this company. So it was, on balance, not too bad news.
KEENAN: Are you seeing any bargains yet in the stocks that you're following?
WINNITZKI: Well, I guess bargains are a relative word. What we're seeing is there are certain sectors. For example, the personal computer sector had sold off because of fears of the Y2K slowdown, and we're beginning to see some evidence that the industry is coming out of that. And remember these stocks trade on earnings momentum. And if we see a resumption in earnings momentum, I think that's going to be good news for these stocks once we get a better environment for the overall tech market.
TUCKER: It's hard to see that right now, though. I mean, you know, when you've got a top analyst at Goldman Sachs coming out, making comments about Microsoft and hitting the PC group by noting that PC sales are slowing down. Now, granted the criticism here is that he's using old numbers. Are you saying you're seeing sales begin to pick up and you're optimistic?
WINNITZKI: Well, I think what you need to remember is the concerns on Microsoft reflect what happened earlier in this quarter. The exit rate we see an acceleration. I think that's pretty well- known now. And what we're going to be seeing from some of the computer companies as they report was that, yes, there was a slow start, but that was already reflected in stock prices. And now we have to look forward. We buy stocks on where we're heading in the future and the news is turning more favorable. And I think that's what we're beginning to see.
KEENAN: OK, we'll take whatever good news we can get. Thanks a lot, Walter.
KEENAN: Walter Winnitzki of Chase Hambrecht & Quist.
And look at that Dow: We're now down 300 points.
TUCKER: I can't keep up what with what's happening on the Nasdaq right now. We're at new lows on the Dow, 612 -- 10612, new lows on the Nasdaq, 3446, the selling really continuing here. It is not a pretty picture on Wall Street today.
KEENAN: We're going to take a quick break and we're going to continue our complete coverage of the markets. We have Dick McCabe. He helped start things off this week with negative comments on the tech sector. He's going to be up a bit later in the hour. We also have Andy Serwer and the news from Atlanta, so don't go away.
(COMMERCIAL BREAK) TUCKER: Welcome back. New low for the Dow, 10619, down 304 points today -- today, folks. We're seeing selling continue on Wall Street. Markets undone by a set of bad inflation numbers. Consumer prices running at a much faster rate than had been expected and that is undoing the markets. The Nasdaq now at a new low for the session, down 235 points. We are looking at a better than 1,000-point loss this week alone, by far and away the worst week ever for the Dow. And that does includes the week of October, 1987, the week of the big, ugly crash.
KEENAN: Yes, no safe haven today. I mean, we have a 6 percent decline in the Nasdaq, we have 4 percent declines for the Russell 2000, for the transports. Even the Dow utilities are down by 1/4 of a percentage point. Wholesale selling right across the board on Wall Street this morning.
TUCKER: Yes, the advance-decline line this morning is not really sweet. It is running by better than just about four to one on both of the exchanges, as a matter of fact; a little worse on the Nasdaq. But not pretty.
KEENAN: No, and reminiscent, of perhaps, the fall of 1998, and certainly for some people, October of '87 today, with the Nasdaq down with its worst week ever.
TUCKER: But worse, because the difference there -- we did have some duration back then, so we will have to see if this continues to have the duration. But we are down more than 30 percent off of the highs, those highs ironically coming only about a month ago on March 10.
KEENAN: Exactly, time now to check some other stories making news this morning.
For that, let's go back to Daryn -- Daryn.
KAGAN: Hi, Terry and Bill. Once again, we are going to give you more on the update of the case of Elian Gonzalez. The Justice Department has responded now to a temporary injunction that prevents the six-year-old boy from leaving the U.S. The Justice Department telling U.S. circuit court of appeals here in Atlanta that Lazaro Gonzalez should be required to turn Elian over to his father. It also agrees the boy should be prevented from leaving the U.S. until the appeals process is completed.
The appeals court could rule any time between now and a couple of days from now. Elian remains at his great uncle's Miami home, despite yesterday's order that he be relinquished to his father. Immigration official say that action will be taken against the family for ignoring the deadline.
A little gentle reminder to all of you procrastinators out there: The tax filing deadline is Monday. Typically, it falls on April 15. Since that's a Saturday this year, last-minute filers get until the 17. And people in a few Northeastern states get even one more day. It will be Patriots Day on Monday in Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, Vermont and much of New York State. Do returns in those states don't have to be in the mail until Tuesday.
And right now we send it right back up to Bill and Terry.
TUCKER: All right, thanks, Daryn.
KEENAN: OK, thanks, Daryn.
Well, we've thrown out of the rest our show because of what is going on in the bottom right-hand corner of your screen: intense selling.
We are going to have a market round table for the rest of the hour. We have Dick McCabe on board from Merrill Lynch, he is chief strategist, and our own Andy Serwer is here. We will go back to the exchanges, back to the Nasdaq, where it is all happening.
TUCKER: And let's get caught up on what is going on. That market coverage continues right after this.
KEENAN: OK, we are trying to find a bottom here in the New York Stock Exchange. We are off our worst levels, we were down 300 points just a couple of minutes ago, now down 273, selling right across-the- board. We are down 2 1/2 percent on the Nasdaq, almost -- on the Big Board that is, almost seven percent on the Nasdaq.
There you see some of the Big Board actives, AOL, levels we haven't seen in a couple weeks, down almost four selling right across- the-board there.
TUCKER: And in case you thought overseas markets might provide some haven from the storm, you would be wrong. Take a look at what has happened in Europe. We had markets there close down with near three percent losses all the way across-the-board in London, Frankfurt and in Paris. So the selling is, dare we say, global.
KEENAN: Yes, well, the best news for European investors is that it is the weekend there.
KEENAN: No more chance to sell. Not the case here, where we still have several hours left in the trading day.
I want to bring in Andy Serwer. he has been following this market and looking at some of the individual losers for this week, because the Nasdaq has fallen an unprecedented 1000 points as of today.
SERWER: Terry, just devastating, and talking to traders this morning, they were completely wiped out, hoping for a breather today, maybe calming down. No such luck. Before we get into some of these losers, I wanted to point that, you, maybe this will be like Tuesday some people were just telling me of last week, where things were terrible, and then came back. I think this afternoon will be critical because either the selling will beget more selling where people won't want to hold their positions over the weekend or maybe some people, some bargain hunters, will jump in.
A couple of the worst stocks, let's talk about Nasdaq here: Lagado down 74 percent; VISX down 72; Compuware 67 percent down; Parametrix (ph) 65; and CMGI, one of our old favorites, down over 50 percent on the week. And I should point out, that's from this morning, they could be down even more right now.
And let's go to the Dow, some of the worst stocks there, we have got P&G down 37 percent; Microsoft down 32 percent; KO, the big KO, Coke is down 19 percent; and Johnson & Johnson is down 18 percent. So some real bloodletting there, Terry.
And you know, it continues, and people are looking for a little relief this afternoon.
KEENAN: Those were year-to-date numbers. One interesting thing about last Tuesday versus today, last Tuesday almost everyone said there was no trigger, perhaps you know there were margin calls, but that occurred because the stock market was down so much. Today, we have a trigger, the CPI numbers were terrible.
SERWER: Right, they were bad. I think there have been triggers every day. You know, you get Rick Sherland (ph) with Microsoft. You have got Greenspan here. You have got bad numbers there, So, you know, and what happened is is that you fall down the ladder with a relative valuation play that, if company A is worth $500 million because it's got $50 million in growing X, and company B is growing a little faster so it has a higher market cap. They knock down company A, Terry, as you know, then they've got to knock down company B. And so, where does it stop? You got to hit a bottom somewhere, but it is tough to call.
KEENAN: I looked at that on "MONEYLINE." Earlier in the week, Microsoft has a $20 billion investment portfolio, and in a lot of these companies that have fallen a lot faster than Microsoft.
SERWER: Right, that is key, absolutely.
TUCKER: Well, Andy is going to stick around. We are going to check in now with Dick McCabe down in Merrill Lynch. Dick had been looking for something like this. Is this what we need? Is this good for us Dick?
Welcome to IN THE MONEY.
RICHARD MCCABE, MERRILL LYNCH: I guess good for you is kind of how you look at it, analytically or physically, right, but I think it is Newton's Law, which I guess said every action has its equal and opposing reaction. We had the upside extreme in technology, particularly in the early part of this year, now we are going to the other extreme on the downside.
I'm beginning to see some sign finally, in the last day or two, that the preceding complacency on the part of investors about this weakness is beginning to change, there was a little pick up in the put volume, the call volume ratio for the CBOE yesterday. So people are saying: Well, gee, maybe this is really something meaningful after all. So we may be getting close to at least a temporary low, maybe between now and Tuesday. And we should then get rally for a few weeks or a month.
But I keep in mind that usually, when you get decline that is this bad, 30 percent or thereabouts, the first rally isn't the new bull market, it is a good rally, and then there is further tests in the following three or four months.
KEENAN: And Dick, usually when you have a sell-off this severe, 30 percent, you see some damage, either to hedge funds, to some of the brokerage firms out there, the broker dealers, and the individuals who are perhaps getting margin calls. What are you hearing this morning?
MCCABE: Not hearing much along those lines, but I certainly agree with the possibility that if the market closes poorly today, as opposed to the way it closed so well late last week, there might be more maintenance calls cropping up early next week, or that go out over the weekend. I have no figures that I can cite, but I suspect that could be the case, and it might put further pressure on the market on Monday or Tuesday, if we don't close well today.
TUCKER: That is what I was going to ask you, we have waded into this debate whether it is bear market or not a bear market. Cold hard facts are, Dick, we are down more than 30 percent from the highs a month ago on the Nasdaq. Have you got a number in your mind or place where you think this market has got to go to before it can find a bottom.
MCCABE: Well, I think it has to go to wherever it goes to get the sentiment figures to show more pessimism, not just the one day improvement in the portfolio number, but more services bearish, all the things you typically see at a bottom, whether that is 30 percent down, 35 percent down, I don't know. It may be a little below where we are right now, but we are well along on the downside.
TUCKER: Would you be happier, for example, if we saw more intense volume. We are already over a billion shares. I mean, do you need that, what Wall Street calls a capitulation, a sense of like oh, my God this really is it?
MCCABE: Well, that does give a good low. I thought we had that, at least I was hoping we had it last Tuesday, when we had 2.8 billion shares traded that day, which was a temporary climatic low.
If the market would be able to hold around this level in the mid 3000s, only a bit below the climatic low of Tuesday of last week, and then rallied well today, that might be turn at least for a few weeks or a month of subsequent rally. If it closes badly, there may have to be one further sell-off early next week, and then you get a turning point for at least a near-term rally from that lower level.
So it is possible you might approach 3000, get down to low 3000s, but you may be there very, very briefly. That's about 40 percent down. Again, it is not so much to me a level we have to go to make a bottom, it is whatever it takes in terms of price weakness and time elapsing to get the indicators to improve.
If we stop here, we might for a few months be backing and filling, and the indicators might improve as the market goes merely sideways, so that would be a way out of it.
KEENAN: We are approaching the 3400 level right now, and I am looking at Cisco, Dick. And remember last Tuesday at 64, a lot of buyers came in. It's now down at 57. You are not seeing any bids for some of these big tech stocks as we speak, are you?
MCCABE: Not too much. They have weaken in recent days. In a sense, again, analytically that might be good because, until the last few days, the weakness in the Nasdaq/tech part of the market was mainly in the mid-size, small-size less season-type issues, which were really selling off drastically. Some came down 50 percent or more from their highs.
But in recent days, the selling is finally getting to the large season blue chip-type tech names, and that is usually what happens in a very late stage of a decline, when people perhaps can't sell, the small ones, they are too illiquid at that point, so they want to raise cash, and they go to selling the big ones. It is the give-up you often get near a bottom, but you can't call the exact day of the low from that perspective.
TUCKER: So there are no names that offer any shelter in this storm?
MCCABE: Usually not in the tech area, that is the one that is under pressure. You might have some shelters in energy, oil services, drillers, maybe some of the basics like the chemicals or the papers. I think they are improving long-term, just as the Nasdaq and the tech stocks are disimproving, to put it mildly, over the past few weeks or a month.
KEENAN: OK, thanks, Dick, we will let you back to work.
MCCABE: OK, you are welcome, Terry.
KEENAN: We appreciate it.
MCCABE: OK, thank you.
KEENAN: Dick McCabe.
TUCKER: While we were talking to him, Terry, we got a note that the Nasdaq set a new low, 3428, the Dow also down below 10600, 10594 the level now.
KEENAN: Let's bring Andy Serwer back in because Andy... SERWER: We have some more fun numbers.
KEENAN: ... have seen no bounces, but you have lots of numbers.
SERWER: We have some more really interesting and possibly very depressing numbers here. You know, as you guys mentioned, we are down 1000 points for the week on the Nasdaq. Just to put that in perspective, some of the other big -- or the other big weekly drops all happened this year, late March down 390 points for the week, that was the biggest before this week. So you can see the magnitude of this drop. Before that, all the four other ones were also from this year, and on a percent basis, we were down 17 percent at the beginning of the day. Of course, no one knows where we are going to will end up today.
But you know, the biggest percent drop of all time for the Nasdaq, 19 percent, in October of 1987. So we are gunning for that one too Terry.
KEENAN: We are past it.
SERWER: Yes, we are past it right now. So you know, juts to put that in perspective. Also here is another really interesting bunch of stuff. In 1997, there was only one 100-point swing on the Nasdaq. 1998, only one 100-point swing; in 1999, there were five, two down and three up. In the year 2000, this year, already we've had 17 down swings 100-points or more, and 18 upswings 100 of points or more. So you can see the volatility. Of course, you know, it is harder to get 100-point swing back a couple of years ago when the Nasdaq was only 1500 or 2000. But still, just comparing the year 2000, and 1999, amazing volatility really isn't it? I mean it is just striking.
KEENAN: Yes, and a lot of people warned us that, you know, volatility comes at market turns, wither to the upside or to downside, and those people were right.
SERWER: Right, right. You know, you guys were talking about some safe harbor stock, I mean, you look at the two big autos, I think they have been holding up pretty nice. I don't know exactly what they were doing this morning, but the multiples of Ford and GM are still $9. I was surprised because I was checking GM yesterday, when it reported some pretty good numbers, and I said: You know, maybe this guy is going to hold up. It hasn't really on the multiple level, but you know it hasn't dropped the way these other guys have.
And Sun, which reported good numbers today, is flat. So that's your one safe harbor in tech stocks, which not much solace is it?
TUCKER: That harbor is getting tinier, we are 260 points, we are at 3415 on the Nasdaq setting new lows. And you know, supposed to be good for you, but this don't feel good right now.
KEENAN: I'm curious what you've been hearing in terms of any players that are being washed out, we had Quint Slatery (ph) quit. He was the most successful mutual fund manager at TGBH earlier in the week. His fund was down 40 percent in March. Are hearing of any other players that are kind of folding here?
SERWER: No, I haven't heard any specific names, also you raised that point earlier, Terry, and it is a good point, that you know in markets like this, people do get big hurt, sometimes hedge funds get wiped out.
You know, one person I was just talking to the other day was Julian Robinson. Of course, he got out of the game a week or so ago, and he said it would not be ironic to him at all, if he got out at a sort of a low point for value stocks, and value stocks would start to back into vogue. He was sort of anticipating it. Ironically that that would be the turn.
You know, so I'm hearing sort of vague rumors about people, but you know, on a day like this, it is chaotic, everyone is just sort of minding their own store, trying keep their head above water. Maybe over the weekend, we will start to hear some more stuff about people in trouble.
KEENAN: Yeah, that could indeed be the case. And we are now approaching the 3400 level on the Nasdaq right now. I know Ed Kerstner (ph), who has been almost perma-bull, and he has been so correct on this market, but he still thinks there's another 33 percent to go on some of the more speculative momentum names?
SERWER: You know, and Ed's big line, and I hear a lot of people echoing this on Wall Street: New economy yes; new metrics, no. And I think that's what we've got today.
TUCKER: It is, indeed, All right, Andy, thanks very much.
KEENAN: Thanks for sticking with us.
SERWER: OK, guys.
TUCKER: A little piece of history now before we sign out today. It was on this date in 1912 that the Titanic sank.
KEENAN: You didn't have to bring that up. We are going to continue to monitor the markets for you throughout the day. Of course, we will back here Monday morning, when we hope it is a better week for all you investors out there. Thanks for watching. Have a good weekend.
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