Marketplace: News Archives

Wednesday, December 20, 2000
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It's Wednesday, the 20th of December. I'm David Brancaccio.

That sibilant sound during the day was the shattering of some stock market portfolios, as the Nasdaq Composite fell 7.1 percent, one of the seven worst days for that index ever. The Dow fell 265 points or 2.5 percent. Many investors remain steamed that the Federal Reserve failed to cut interest rates yesterday and Wall Street is filled with edgy, gallows humor about Fed Chairman Greenspan, none of it repeatable here. The backdrop is that economy appears to be slowing and corporate profits waning. We have two Johnsons on the line, first Hugh Johnson, chief market strategist at First Albany Securities.

Johnson: "It's not just that stocks are going down, but that bonds are going up and interest rates down and message is the economy continues to slow. I think the worry or the concern on the minds of investors is that it's going to do more than slow, that it will actually, possibly have our first hard landing or recession in almost ten years. And at least as yet, there hasn't been anything done to stop the slide. At least anything done by the Federal Reserve."

Johnson number two is Marketplace business analyst, David Johnson in Dallas.

Johnson: "You look at the increase in volume and you look at the kind of stocks that are going down today and it almost looks like capitulation. That's just where you say, 'Alright, I give up. Just sell it.' And they say, 'But it's a blue chip.' 'I don't care. Just sell it. Put in a nice CD someplace."

A situation that can be, perversely, an opportunity.

Johnson: "That's when you get the bargains. Only when your hand is trembling as you put in the buy ticket, do you know you're really getting a good buy. You got to buy 'em when nobody else wants them. And I tell you, the message came clear this morning. Merrill Lynch walks out and puts a neutral rating on IBM and Cisco and Hewlett Packard. I mean, stocks like IBM and Hewlett Packard, you typically don't put out a neutral rating. What that really means is SELL. Maybe that's the sign that it's over with."

One of the noted bears of Wall Street, Gary Shilling, told us today the good thing about the Nasdaq being down 50 percent from its high is that we now know it's half way to its absolute bottom. We trust he was joking….as that would be zero.

The next President has picked his new Secretary of the Treasury. Paul O'Neill, chairman of Alcoa has been named to replace Lawrence Summers. If confirmed, O'Neill will be the point person for the Bush Administration's economic policy, including proposed tax cuts. And, while he might not have been at the top of Wall Street's wish list, he already receiving praise in financial circles. Marketplace's Michelle Brier reports.

Brier: "Calling his choice a straight shooter and an innovator, President-Elect Bush said Paul O'Neill was the right choice to act as the chief financial officer of the nation."

Bush: "Our economy is showing warning signs of a possible slowdown and so it's incredibly important to me to find someone with vast experience, who is a steady hand, who when he speaks, speaks with authority and conviction and knowledge."

Brier: "The 65 year-old O'Neill has served as chairman of Alcoa, a leading producer of aluminum products since 1987. He also served in the Nixon and Ford administrations in the Office of Management and Budget. O'Neill said it was his faith in the President-Elect that compelled him to return to public service."

O'Neill: "I believe in the President-Elect's policies and programs as he's articulated it over the last months and I'm dedicated to helping him achieve the greatness that I believe he aspires to for America."

Brier: "On Wall Street, O'Neill's nomination caught many by surprise. Market players were hoping for a familiar face in the Treasury post. Paine Webber CEO Donald Marron, a devoted Republican fundraiser, was often mentioned as a leading candidate. The choice of O'Neill, with a corporate, not market, background was intentional, says Washington economist Jack Albertine."

Albertine: "I think what is important here is that he represents the Old Economy at a time when people are refocusing on the value of the Old Economy versus the Dot.com economy, which has fallen on it face."

Brier: "Larry Kudlow, chief economist at ING Barings, says while O'Neill was not the choice many on Wall Street wanted, he's someone the markets can probably live with."

Kudlow: "He doesn't really have a history with the financial markets or the financial world. But he has a good name, he's a credible figure. And I think people who follow the company and the stock would give him high marks for restructuring and transforming."

Brier: "O'Neill's long-term relationship with Vice President-Elect Dick Cheney probably didn't hurt chances for getting the job. The two serve together on the board of the American Enterprise Institute, a conservative think tank. In New York, I'm Michelle Brier for Marketplace."

Henn: "This is Stephen Henn in Washington. Just a few hours after unveiling his pick to run the Treasury Department, Bush was back at the same podium to announce that Don Evans, his former campaign chairman, was his choice for Secretary of Commerce. Evans, who runs Tom Brown Inc., a Midland Texas based oil and gas company, was credited with raising close to $125 million for the Bush campaign. But until now, his public policy experience has been limited to chairing the University of Texas board of regents. Bush appointed him to that job after Evans helped run his campaign for governor. As Secretary of Commerce, Evans will be Bush's official liaison to the business community, but according to former Clinton advisor Dick Morris, these days the job is really just a extension of Evan's old gig as Bush's fundraiser-in-chief."

Morris: "This is very much in the same pattern as Ron Brown and Mickey Cantor, Clinton's choice of Commerce Secretary. That's the place you put your major fundraiser, your major political operative."

Henn: "In 1996 Republicans in Congress were so upset at the state of Clinton's Commerce Department they tried to eliminate it. But Bill Frenzel a former Republican congressman and a guest scholar at the Brookings Institution, says the Secretary of Commerce still has an important role to play."

Frenzel: "He often chairs cabinet committees or has a large voice in formulating trade policy."

Henn: "And Frenzel hopes that Evans experience in the oil business will give him an internationalist outlook that will make him into an articulate advocate of free trade. In Washington, I'm Stephen Henn for Marketplace.

Protecting what should be confidential medical information was ordered up by Congress five years ago, but crafting the actual rules to govern this tricky area has taken till today. Helen Palmer reports from the Health Desk.

Palmer: "Privacy experts are cheering the long-awaited rules as a huge victory for healthcare consumers, who in future must give written consent for any sensitive medical records to be shared by doctors, hospitals or insurance companies. Health insurers have a different take. They reckon it will cost them more than the $18 billion government estimate, but others will pay too."

Ignani: "Costs will be highest for patients."

Palmer: "The American Association of Health Plans President Karen Ignani fears the balance between protecting patient privacy and access to vital care information is skewed."

Ignani: "To the extent that we're pursuing privacy by putting in jeopardy some of the disease management activities and clinical research activities, then that from a patient point of view is quite costly."

Palmer: "Meanwhile, the healthcare industry faces one huge technical headache. There's no agreed universal standard software to ensure both security and appropriate access. But Eric Brown, of on-line analysts Forrester Research, says that's not as big a problem as working out the real meaning of the regulations: What is fair use? What exactly does health management cover? But he reckons the regulations really do usher in a brave new world of efficient healthcare."

Brown: "Imagine being able to take aggregate medical information and mine that for the best practices and new medical innovation. The reality is, if implemented well, everyone is continuously in a clinical trial, experimenting and learning, and improving the quality of medical care."

Palmer: "From WGBH Boston, I'm Helen Palmer for Marketplace."

Another bunch who believe the U.S. economy is slowing are oil traders. February crude futures fell $2.19 a barrel to $25.77 today.