Recap of September 29

In Focus: the Business of War

David Asman:  During the week of Sept. 17-21, the Dow was down 14.3%.  The question is: are investors still skittish?

Dennis Kneale, Managing Editor:  I think they are.  Things have certainly calmed down since last week but there's going to be more volatility in the future.  Even with the huge slide, I think we've recovered a third or more of their original decline. 

David Asman:  But Rich, the market has managed to pace itself, right?

Rich Karlgaard, Publisher:  It shows you that capitalism is broad based and has an intelligence of its own.  But all bets are off until we know what the central banks of the major nations are going to do.  We need to re-inflate this economy quite badly.

Bob Lenzner, National Editor:  I think Karlgaard is right.  We are in the worst economic position we've been in thirty years.  I think we have to spend a lot of money on infrastructure, defense, on re-arming our military.  And we need to do this immediately to put some stability into the market. 

David Asman:  Bob, let's talk about specific industries rather than the economy.  Which ones will succeed?

Bob Lenzner:  I think it's clear that big corporations and individuals are going to need more insurance.  And I think they're going to raise the price of insurance.  Fire insurance, those companies will do well.  Defense stocks were already up.  Then there's stocks like Disney that have really gotten battered.

David Asman:  Jerry, tell us how the automobile industry is doing.

Jerry Flint, Columnist:  We're in for several hard years in the automobile industry.  During the Gulf War car sales went from the fifteen sixteen million to the bottom of twelve and a half million.  We've started from a higher level but you can just imagine there'd be a two or three million dollar drop.  Cars are easily postponable.  No one in America really needs a car. 

David Asman:  Dennis, we're going to have to spend a lot of money bailing out, cleaning up.  How do we pay for it?

Dennis Kneale:  Where do we draw the line here?  I worry that this is turning into a grab-fest.  We're giving airlines a $5 billion gift, which they're not even passing along to their employees.  Some airlines are invoking this war-clause to employees they've laid off, saying, sorry we can't pay you your severance like your contract requires.  They've raised the fares.  They treat us like dirt.  They have lousy security and now we're bailing them out. 

The Informer

Casino Stocks

Bob Lenzner:  Las Vegas is going through a travel slump.  The planes are only  about 30% full. They going to have to start firing their employers. 

David Asman:  Two guest appearing earlier on Fox's Bulls & Bears program said Las Vegas was going to pull out of this pretty good. 

Bob Lenzner:  The casinos were down during the Gulf War, and I believe they're going to be down sharper and for a longer period of time.

Quentin Hardy:  I think a lot of companies are going to have awful 3rd Quarters and that they will blame their problems on the terrorist attacks.

Elizabeth MacDonald:  Doubleclick (DCLK) is saying their estimates will be 40% lower but internet advertising was plummeting way before these attacks.

Quentin Hardy:  Sun Microsystems'  (SUNW)  President, Ed Zander, has this wonderful new product and he said he can't get a meeting right now because everyone wants to talk about the World Trade Center attack.  He also said all bets are off about layoffs.

Jim Clash, Associate Editor:  Fiduciary Trust lost 87 people out of 650 from their WTC offices.  They were able to be up and running two days later, because they had a disaster-recovery plan from 1987.

David Asman:  Same thing happened with Oppenheimer Funds.  They had back up systems that allowed them to be up and running fairly soon. 

Data Storage stocks

Jim Clash:  The most interesting company in data storage to look for is SunGard (SDS).  They provide data storage, computer software, support personnel.  Electronic Data Systems (EDS) and Comdisco (CDO) are two others that are good.