Marketplace: News Archives

Tuesday, November 28, 2000
(Jump to the rundown)

It's Tuesday, November 28. I'm David Brancaccio.

Both the George W. Bush team and the Al Gore team are getting their briefs in to the Supreme Court today in advance of oral arguments in the election dispute set for Friday. Bush is moving forward with his transition to the White House, meeting with aides today to discuss possible members of a Bush cabinet. While nothing's official, some names being floated are ones Wall Street would embrace. Marketplace's John Dimsdale reports.

Dimsdale: "Judging from the names circulating through the rumor mill, the Bush economic team will include a large number of financial specialists with close ties to Wall Street. On the short list for Treasury Secretary is Donald Marron, the CEO of investment house PaineWebber. Marron combines political savvy with his financial background. He's the champion of a Social Security reform plan that would encourage workers to invest some of their retirement money in stock market accounts. Also on the Treasury list is Jack Hennessy, a former CEO of Credit Suisse First Boston and long time friend of the potential Republican President. Hennessy's gregarious personality and contacts with Democrats would come in handy during the rocky political road ahead. Other Wall Street veterans on the list are Robert Hormatsm, who's now at Goldman Sachs, and former Chase Manhattan Bank chairman Walter Shipley. Wall Street experience is important, according to David Malpass, the chief international economist at Bear Stearns, because the incoming President, whomever he is, will have to make early policy decisions that will sway markets."

Malpass: "For example on trade policy, financial markets are very sensitive to how the U.S. proceeds on that. The same thing with exchange rate policy and with energy policy related to OPEC. So we have a host of issues where markets will be sensitive to how the new administration addresses policy issues."

Dimsdale: "The list of economic challenges for the next administration include the falling stock market, the struggling technology industry, a growing number of trade spats with Europe and weak currencies in many parts of the globe. In Washington, I'm John Dimsdale for Marketplace."

Share prices, especially those of the high-technology variety got clobbered today, with the Nasdaq Composite falling five percent or 145 points, to hit 2,734, which is another low. Profits are the overall worry, but it doesn't help when a Salomon Smith Barney analyst says in public that he thinks shipments of personal computers are looking anemic. One ticker symbol after another comes up short. MSFT for Microsoft is down 5.2 percent; CPQ for Compaq Computer is down 5.9 percent; Sun Microsystems and the Internet focal point Yahoo are down 7.9 percent each. The Dow fell just 38 points, although 500 more stocks fell than rose on the New York Stock Exchange. Alan Levinson is chief economist at T. Rowe Price.

Levinson: "There are fears of a slower pace of consumer spending growth, which has a technology component, and also with things like the decline in durable goods that was reported this morning. Business equipment investment, which has been technology heavy and computer heavy, may come under some pressure now that the economy is slowing and credit is a little harder to come by and corporate profits may be slowing."

Orders for expensive, long-lasting things known as durable goods orders, fell a breathtaking 5.5 percent in October. The experts were expecting much less. Consumer Confidence is also down to levels not seen since October a year ago, when so many had that case of Y2K.

The country's biggest auto insurer is making some new friends among sport utility drivers today. State Farm announced a major change in its pricing policies as it phases out its discounts for cars with airbags. Marketplace's Sarah Gardner has more on savings for drivers of some of the heaviest and most expensive on the road today.

Gardner: "If you drive a subcompact car and routinely curse the SUV's blocking your view, you may not like this story very much. But State Farm says its new pricing structure simply reflects safety. The company will now offer discounts on the medical part of its auto coverage to drivers of vehicles that State Farm deems safest. Now, that doesn't include all SUV's and trucks, but under State Farm's plan some of the biggest, most expensive vehicles on the road will get the fattest discount: 40 percent. State Farm's Dick Leudke says the new prices are based on State Farms's accident data."

Leudke: "It shows that certain makes and models of vehicles generate lower injury claim payments than other makes and models of vehicles."

Gardner: "The vehicles qualifying for State Farm's biggest safety discounts include some gas-guzzlers like the Chevy Suburban and the Ford Excursion. There's also Chrysler's Town and Country, some Ford pickups and some Volvos, Saabs and Mercedes, among others. State Farm's data shows that big cars are involved in fewer accidents than small ones, for whatever reason. The safety discounts may not mean more than a $50-per-year savings for big-car owners, but environmentalists are already fuming. An official at the Consumer Federation of America says that poor people who can't afford big cars are penalized. The discounts, reasons the official, merely give rich people one more incentive to buy gas-eating behemoths that threaten smaller cars and their drivers. Jason Mark at the Union of Concerned Scientists doesn't think State Farm's discounts are significant enough to really influence consumer behavior."

Mark: "But more hazardous is the signal that it sends. It suggests that we can't have safe and efficient vehicles. And the evidence suggests that we can."

Gardner: "Even so, State Farm's competitors are expected to follow suit. By the way, State Farm's plan won't apply in Massachusetts, Texas, and North Carolina because of state mandates. And if you're one of those small-car drivers cursing the pickup truck or SUV blocking your view, the big guys generally still have to pay more over all for auto insurance. The heftier cars may be safer, but they're still more expensive to replace. I'm Sarah Gardner for Marketplace."

If reality TV starring James Baker III and David Boies, Esq. isn't enough for you, there's this: Starting tomorrow, three 20-somethings will try to outperform each other and evade capture in that great, gothic labyrinth known as New York City. Marketplace's Michelle Brier has the story.

Brier: "Hide/Seek/NYC is a 'Survivor' knock off with a twist. Three fugitives Compete against each other in daily contests, while members of the general population hunt them via the web and try to nab them in person. The game runs for 17 days, with continuous Internet coverage. There's a $10,000 prize for the last fugitive on the loose or the person who captures him."

Van Geisen: "The TV show 'The Fugitive' did it as fiction, we're doing it for real."

Brier: "Jonathan Van Geisen is the show's producer. He says every effort has been made to make the game fun and safe. After all, this is New York and putting a bounty on a person's head sounds a little dangerous."

Van Geisen: "The people trying to catch the fugitives are not allowed to touch them in any way. If they knock one of the fugitives down, they are not eligible to win the money. So, I would imagine they're going to be as safe as any other New Yorker."

Brier: "Hide/Seek/NYC was developed by Sherpa, the Internet company site, to promote its web navigation tools. As for the three contestants who have signed on as fugitives in the game, Zoe, Chris and Jason begin their adventure at noon tomorrow. In New York, but not on the run, I'm Michelle Brier for Marketplace."

And that's the top of our news for Tuesday. Today the Dow Jones Industrial Average fell 38 points and as we said the Nasdaq Composite dropped five percent.

Rundown

Experimental Ethics
Raising some serious ethical questions, aerospace company Lockheed Martin is sponsoring an experiment in California where volunteers are getting $1,000 to ingest perchlorate, a chemical found in rocket fuel, to see if it is harmful to human health. Bob Moon reports from San Bernadino County.


Crumbling Infrastructure
A few months after Russia's main communications tower went up in flames, many other elements of an aging infrastructure are starting to show its cracks. Electricity, water lines, and airplanes are all buckling from lack of repair. Charles Maynes reports from Moscow.


Economic Gauge of America
Some of the necessities in the U.S. are starting to get more expensive, and consumer confidence is at the lowest it's been in a year. Reporter Bill Caitlin went to the Mall of America to test the consumer-retail waters.


Baby Talk
Commentator Peg Bracken muses on the ridiculous names which stores and services still use to market under garments and other essentials to women.


Look-Ahead
Coming up on 11/29/2000: A look at the impact of the Clinton administration's emissions policy on the failed Global Warming Summit in The Hague.