Nightly Business Report

highest point this year as investors bet the Federal Reserve will keep interest
rates at their lowest level in years. The Dow gains more than 102 points. The
Medicare bill is now the law of the land. President Bush signs the landmark
measure, calling it the greatest advance in health care since the program
began. But opponents are calling it a hoax.

KANGAS: Chrysler hopes its new minivans will result in maxi sales. But even the
company’s chairman admits it’ll be a challenge boosting its 38 percent market
share for those vehicles. We talk with Dieter Zetsche about what’ ahead for
the auto maker.

GHARIB: Then, it’s a couch potato’s dream holiday gift: a 50-inch plasma
television set. And despite the $8,500 price tag, they’re flying out of the
stores. We look at this season’s hottest gifts and gadgets.

KANGAS: I’m Paul Kangas.

GHARIB: And I’m Susie Gharib. This is “NIGHTLY BUSINESS REPORT” for Monday,
December 8.

Good evening, everyone. A positive but cautious day on Wall Street today. The
Dow rose 102 points and the NASDAQ added 11. Investors played it safe, a day
ahead of the Federal Reserve’s last policy meeting of the year. But as Suzanne
Pratt reports, analysts are unanimous in forecasting no change in interest
rates tomorrow.

are at their lowest level in 45 years and it looks like they will stay that way at least for the foreseeable future. Federal Reserve policymakers have made it clear they see no reason to raise the Federal funds rate, which currently
stands at 1 percent. Sure, the economy grew by more than 8 percent in the third
quarter, but the job market is still lagging the overall economy in a big way. On top of that, inflation poses no real threat.

written on his tombstone that he squashed the recovery because he was afraid
that inflation was going to double from 1 t to 2 percent. That’s a bad trade in
his opinion, so he’d be better off waiting.

PRATT: Still, it wouldn’t be a Fed meeting without something to dissect. And
tomorrow, the big question is whether the central bank will back off its pledge
to keep interest rates low quote, for a considerable period, end quote.

LEAHEY?: Either it’s going to be replaced or substantially modified. However,
if the phrase “considerable period” makes it into tomorrow’s document, even
heavily modified, that will probably be bullish for bonds, thinking that the
Fed can’t move until the third quarter of next year at the earliest.

PRATT: And many experts think the Fed will keep rates unchanged possibly until
after the presidential election in November. But others say Wall Street should look for higher rates as early as May or June.

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR’S: My guess right now is they’ll
move in June. That would be handy because that allows the chairman to explain it at the midyear monetary policy review to Congress. And it’s far enough away from the election that it’s not going to have major political consequences.

PRATT: Assuming the Fed does nothing tomorrow, the next opportunity to take
action won’t come until late January. That’s when policymakers hold their first
meeting of the new year. Suzanne Pratt, “NIGHTLY BUSINESS REPORT,” New York.

KANGAS: Wall Street opened higher on a technical rebound from Friday’s sell-off
and on optimism the Fed would leave interest rates and monetary policy
unchanged tomorrow. After an hour of trading, the Dow was up 35 points. NASDAQ
Index rose nine. By the way, we don’t have a market chart tonight due to some
technical glitches.

In any case, the market turned mixed in midmorning as the blue chips, led by
G.E., General Motors, Boeing and 3M, added to their early gains, while the
NASDAQ was undermined by weakness in the tech sector. In early afternoon, the
Dow was up 50 points but the NASDAQ index was down six. Unusually low volume
made for more upside volatility in the blue chips and that eventually helped
the NASDAQ market. So the Dow Industrial average surged to a closing gain of
102 1/2 points putting it at 996.27 (ph). The NASDAQ Composite closed up 11
points at 1948.85. Standard & Poor’s 500 up 7.80 at 1,069.30.

In the bond market, the 10-year note fell 10/32 to 99 27/32, lifting the yield
to 4.27 percent.

President Bush signed the controversial Medicare Act of 2003 into law this
morning, overhauling the old system to add a prescription drug benefit for
seniors. But as Stephanie Woods reports, even though the deal is now done, the
fight is far from over.

the $395 billion Medicare bill as an advance in health care for seniors.

older Americans better choices and more control over their health care, so they
can receive the modern medical care they deserve.

WOODS: With the ink not yet dry on the law, Democrats staged a campaign-style
rally to push for more generous coverage.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Instead of reducing costs for
seniors, this Republican hoax does nothing for seniors.

WOODS: But any increase in the benefits will add to an already uncertain cost.
That $395 billion price tag is only for the first 10 years of the plan. For the
next 10 years of the plan, the Congressional Budget Office estimates it could
cost as much as $2 trillion. The actual cost will depend on future drug prices,
if seniors use more drugs, and exactly how seniors will get coverage.

We don’t know the answer. How will they be integrated with the traditional
hospital or physician coverage? We don’t know the answer. And what will the
nature and the cost of the coverage be? Well, we’ll see as the decade evolves.

WOODS: Proponents say Medicare will save money by providing better disease
management and replacing expensive surgery with less expensive medicine.

REP. TOM DELAY (R-TX), MAJORITY WHIP: So we feel very confident that market
forces, choice, and the kinds of principles that we put into this bill will
lower the costs over time, and we’ll just see who is right.

WOODS: But policy analysts doubt reforms meant to spur health plan competition
will work.

MAX PAPPAS, CITIZENS FOR A SOUND ECONOMY: In this bill they’ve been reduced to
demonstration projects in just a few cities sprinkled around the country, and
that’s been tried several times over the last 10 years and it’s failed.

WOODS: Some analysts say those demonstration projects may never even get off
the ground if the groundswell against them by seniors continues to grow.
Stephanie Woods, “NIGHTLY BUSINESS REPORT,” Washington.

GHARIB: The Chrysler group took the wraps off of its next generation of
minivans today, part of its effort to turn around the troubled company. The new 2005 Chrysler Town and Country and Dodge Grand Caravan have redesigned features
including flexible seating, easy entry and exit, and new exterior trim. But
experts say Chrysler still faces an uphill battle after the company’s strategy
to reposition itself as a more upscale brand fell apart this year. Earlier
today, I talked with Chrysler Chief Executive Dieter Zetsche, and began by
asking him how much growth is left in the minivan market.

DIETER ZETSCHE, PRES. & CEO, DAIMLERCHRYSLER: The minivan segment has been
shrinking for some time. Meanwhile, we understand and expect it to be constant,
about half (ph) the size of a million, and we own 38 percent market share. So
this is a huge volume and a tremendous opportunity for us.

GHARIB: Mr. Zetsche, I know that you’ve done a lot in terms of cutting costs at
Chrysler, but what’s going to drive growth and really rev up revenues?

ZETSCHE: Well, obviously as a car company that’s product. And that’s why we are
feeling so confident right now, as we are about to launch nine new products in
2004, more than any manufacturer in the U.S. would ever have launched before in
a one-year period. So this will drive our revenues next year.

GHARIB: Now, I understand that this new launch Chrysler is trying to move its
brand up market, but analysts are telling me that the premium market is very
competitive and also that the traditional core Chrysler customer really isn’t a
premium buyer. What’s your thought on that?

ZETSCHE: Well, I think there’s a little miscommunication perhaps from our side.
What we want to do is offer our customers more content, more refinement, more
quality, more beautiful vehicle, but at very very competitive prices. And I am
absolutely sure that every one of the Chrysler customer and many others are
totally ready for this kind of package.

GHARIB: So you don’t think that you’re going to be alienating the bulk of the
traditional loyal Chrysler customers?

ZETSCHE: We are clearly a volume manufacturer with all three brands. We’ll
continue to be that. But volume manufacturer which is different which offers
more than the competition (INAUDIBLE) product and content and refinement of the
product is concerned.

GHARIB: What about Chrysler market share? It has been slipping. Will this new
line of cars increase that market share? Do you have a number or goal in mind?

ZETSCHE: Well, in the last three years we had a slight reduction in market
share, and I consider that relatively good, with a very small number of new
products being launched and new products are making the gains. Now with all the
new products ahead of us, we are very confident that we would grow market
share. There is no particular number in mind, but we definitely see growth for
next year.

GHARIB: How about incentives? Will these new models have incentives or do you
have a timetable for eliminating them altogether?

ZETSCHE: Well, based on tremendous competitive pressure in the marketplace,
which is somewhat structural, the improving economy certainly will help all of
us and we particularly will be helped by the new product because new products
try to complement your showroom, not because of the deal of the day, but
because of the characteristics of the product. There will be incentives.
However, what we are looking for is no further increases and perhaps some
easing back in the (INAUDIBLE) area which would be great.

GHARIB: Mr. Zetsche, it’s been five years since Daimler merged with Chrysler
and there are still questions about whether this was in the best interest of
Daimler and whether it was in the best interest of shareholders and as you
know, there’s a trial that’s examining the very deal itself going on in a
Delaware courtroom. What do you think the impact of this trial is going to be
on Chrysler and how is this whole thing going to play out?

ZETSCHE: Well, I’m not a judge, so I obviously cannot predict that. What we are
hoping for is pretty obvious. The direct impact on Chrysler, whatever the
outcome is, will be very limited. We are focused on our business year. We are
focused on developing the most beautiful vehicles possible, producing them in
the highest quality and selling them with flawless launches and successful
marketing strategies.

GHARIB: Mr. Zetsche, thank you very much. We appreciate your time.

ZETSCHE: Thank you. Thanks for having me.

GHARIB: Communism and capitalism met face to face this morning in New York
City. The premier of China, Win Chao Bow (ph) rang the opening bell here at the
New York Stock Exchange, then spent today meeting with the city’s business
leaders and bankers. Win’s visit comes amid pressure for China to cut down its
massive trade surplus with the United States and to ease its grip on its
rigidly controlled currency, the yuan (ph). There are also growing tensions
over efforts by Taiwan, a U.S. ally, to assert its independence. And Paul, one
of Win’s stops today was at a true bastion of capitalism, General Electric.

KANGAS: Well, G.E. shares were among the most active on the big board today,
Susie, but not because of Win’s visit. I’ll tell you why as we look at our
stocks in the news tonight.

The most active big board issue on a none too active 12.8 milliion shares was
Texas Instruments (TXN) down $0.12. After the Close, TI said its fourth quarter
earnings will be $0.25 to $0.27 including $0.07 from the sale of its Micron
Technology stock. But its October forecast was way down from that, $0.14 to
$0.19. That didn’t include the $0.07 profit from Micron Technology’s sale.
However, in after hours trading, TI stock was at $28.70, up about $0.50 from
the regular close.

Then, second in volume was Health Management (HMA) down $2.89, 11 percent drop.
The company owns 41 acute care hospitals and UBS financial brokerage downgraded
it from “neutral” to “reduce,” citing the fact that the company’s gross charges
are under scrutiny by both Federal and state regulators.

Nokia (NOK) in their with a $0.17 loss.

Motorola (MOT) down $0.18.

EMC (EMC) $0.04 drop there. That was number five in big board volume.

And then G.E. (GE) moving up $0.27. Emirates (ph) Airlines us going to pay $1
1/2 billion for over 100 jet engines from G.E. and United Technologies’ Pratt &
Whitney division, be used to power Emirate Airlines Airbus 380 aircraft fleet.
United Tech stock incidentally moved up $0.82 to $88.55.

Lucent Technologies (LU) dropped $0.03.

But Pfizer (PFE) was up $0.23.

ExxonMobil (XOM) $0.52 gain.

Liberty Media (L), tenth in big board volume, dropped $0.06 a share.

McDonald’s (MCD) closed down $0.37, although in the morning it traded as high
as $26.36. The company reported November same store sales up a respectable 6.4
percent. Total sales up almost 15 percent.

And then somebody rang Avon Products (AVP) bell today, down $5.40. Those
sellers were in there. Even though the company increased its fourth quarter and
full year earnings guidance, but it did say it’s going to have lower sales than
the company’s earlier forecast and that’s obviously what hurt the stock.

Baxter International (BAX) moving up $1.30. Merrill Lynch upgraded it from
“neutral” to “buy,” citing the company’s strong growth potential.

And Cleveland-Cliffs (CLF), look at that move, up $6.41. This week’s “Barron’s”
financial magazine quotes money manager at Contine (ph) Associates who sees
iron ore prices going to $4 to $5 a ton and sees Cleveland-Cliffs’ earnings
rising to $4 to $6 a share by 2005, also sees the stock going to $60 a share.

Penn Virginia (PVA) up $4.83. First Albany brokerage upgraded it from “buy” to
a “strong buy.” This company leases out mineral rights and royalties for oil,
gas and coal, as well as timber properties and those are very popular areas
these days.

And Peabody Energy (BTU), a coal producer, up $2.65. Morgan Stanley this
morning was out with positive comments on the coal stock in general. The whole
group was very firm.

Investment Technology Group (ITG) was down $0.87, traded as low as $15.02. The
company’s November U.S. trading volume dropped to 1.4 billion shares from last
year’s 1.9 billion shares.

And the steels were strong. U.S. Steel (X) up $1.78. Merrill Lynch made
positive comments on the U.S. steel industry. This helped a lot of stocks in
the sector, including AK Steel Holdings (AKS) up $0.60, good percentage move.

And Wheeling Pittsburgh (WPSC) a nice move up, $2.57.

Microsoft (MSFT) topped the active list on NASDAQ, edging up $0.26. Soundview
Financial upgraded it from “neutral” to “outperform” with a $33 a share target.

Intel (INTC) down $0.46.

Cisco Systems (CSCO) $0.54 gain.

Amgen (AMGN) down $0.35.

Applied Materials (AMAT) was up $0.11, fifth in volume.

SanDisk (SNDK) rose nearly $2.

Medimmune (MEDI) $0.78 gain there.

Qualcomm (QCOM) down $0.26.

Dell (DELL) up $0.21.

And JetBlue Airways (JBLU) rebounding $1.94. Merrill Lynch upgraded it from
“neutral” to “buy.” Friday the stock off $5.50 after JetBlue issued a fourth
quarter earnings warning. Also Raymond James Financial today, another
brokerage, upgraded it from “market perform” to “outperform.”

CV Therapeutics (CVTX) dropping $4.55. FDA said the company may need to run
more clinical trials on its angina drug, Renexa (ph), before it can be

And Cerner (CERN) tumbling $4.39. The company provides information systems to
health organizations and it was not selected for two major British information
technology contracts. And those are the stocks in the news tonight. Susie.

GHARIB: Paul, Republicans say that with the economy improving, Federal
unemployment benefits are no longer necessary. Most states offer 26 weeks of
jobless benefits. Last year Congress passed a 13-week Federal supplement to the
state benefits to help those laid off as a result of the recession and the
lingering effect of September 11th on the economy. The Federal supplement will
be phased out beginning December 21st.

KANGAS: Tomorrow, looking for a job? They’re out there and we’ll show you

GHARIB: The Supreme Court has turned away without comment an age discrimination
case involving Electronic Data Systems. The high court let stand a lower
court’s ruling that the suit was not permitted under age, Federal age
discrimination laws. The suit was brought by an EDS worker in Alabama, claiming
that the company consistently gave older workers low performance scores so
they’d be first up for layoffs. EDS has denied the allegation.

KANGAS: The head of Coca-Cola is taking on obesity. Chairman Douglas Dapp (ph)
told a beverage conference today the industry must work together to find a
solution because a government plan won’t conquer America’s battle of the bulge.
Dapp suggested providing consumers with choices that support a healthy and
active lifestyle. Soft drink makers have been criticized for adding to the
childhood obesity epidemic.

GHARIB: Here’s a look now at what’s happening tomorrow. As we’ve mentioned, the
Federal Reserve’s open market committee meets on interest rates. Also tomorrow:
October wholesale trade and on the earnings calendar, retailers Costco and
Kroger are scheduled to report.

Economists have known it for years: demographics can be destiny when it comes
to a nation’s population. Well, tonight’s commentator agrees. Here’s Dan
Mitchell, senior fellow at the Heritage Foundation.

DANIEL MITCHELL, COMMENTARY: Politicians all around the world are caught
between the proverbial rock and a hard place. On one hand, they have aging
populations and older voters want more entitlement spending. But on the other
hand, demographic shifts are dramatically altering the ratio of workers to
retirees and this makes it very difficult to boost spending. Indeed, it is
probably just a matter of time before politicians are forced to scale back

By 2030, the U.S. population will mirror the age distribution in Florida today.
And in Europe, the problem’s even more acute because their birth rates are so
low that their populations will be shrinking. This is going to make it
difficult for countries to fulfill existing promises. You can’t provide
generous income transfers when there are only (INAUDIBLE) people in the
workforce for every retiree. The tax burden necessary to maintain such a system
would cripple economic activity. France and Germany have probably already
reached that stage.

Fortunately, there is a solution. Governments should shift to a system of
private retirement accounts based on mandatory private savings. About two dozen
nations have implemented so-called private Social Security systems. Latin
American and Eastern European nations have led the way, but fully or partially
privatized systems have been enacted in Australia, Hong Kong, Sweden, the
United Kingdom, and the Cayman Islands. These personal accounts would be a good
idea for America as well. President Bush endorsed this much-needed reform
during the 2000 election. The time has come to translate talk into action. I’m
Dan Mitchell.

KANGAS: Recapping today’s market action, the blue chips edged closer to the
10,000 level. The Dow gained 102 1/2 points and the NASDAQ Composite closes up
11 points. And please be sure to join us at our worldwide web site,

GHARIB: And finally tonight, just 16 more shopping days until Christmas. And if
you’re looking for the perfect something for that electronics maven on your
list, look no further. Tonight and for the next two Monday nights, Scott Gurvey
has the perfect suggestions as he looks at what’s hot and what’s not in gifts
and gadgets this holiday season.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT: ‘Tis the season of television. What’s
hot is big screen, wide screen and high definition. You should make sure you
get all three in the same product. Avoid enhanced or EVTV (ph) sets. You want
HDTV, high definition, which is the standard.

The other big trend is TV on your PC. Microsoft has worked hard improving its
media centered software.

JIM ALLCHIN, GROUP V.P., MICROSOFT: You’re going to find this year some 40
different manufacturers for this holiday season, an incredible line up of
everything from innovative laptops, if you want to have a media center on a
laptop, to low-cost, less than $1,000 system up to a very, very high end AV
rack (ph) oriented machines that you could use with your home theater system.

GURVEY: Buying an integrated system is clearly the best solution, but you can
also add TV to your current PC. (INAUDIBLE) tuner recorder devices that plug
into USB slots so you don’t even have to open the case.

CHRIS SCHULTZ, MARKETING MANAGER, ADAPTEC: And you basically have a computer
already with a capabilities of driving this product and you basically can
transform your existing product, your existing PC into an media center.

GURVEY: These products turn your existing computer into a media center, but
they are tricky and you should be comfortable with the technology before you
use them. For editing and DVD burning, my favorite by far is the DVD movie
factory from You Lead (ph). Priced at $50, it is easy to use and has features
usually found only in products costing much more.

If audio is your goal, there are several products that turn your PC into a juke
box. (INAUDIBLE) makes a gadget that plugs into your stereo and plays music
stored on your PC over a wired or wireless connection. The player does its best
to read the list of available selections to you.

Prices on those big plasma TV screens have fallen well below $10,000. You do
get what you pay for, so you might want to wait a little longer. The prices are
still falling rapidly. You will find more information on these products on the
NBR website. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.

GHARIB: Paul, I think NIGHTLY BUSINESS REPORT’s broadcast would look great on
one of those 50-inch screens, don’t you think?

KANGAS: Yes, give me an injection of plasma now quickly.

GHARIB: That’s NIGHTLY BUSINESS REPORT for Monday, December 8. I’m Susie
Gharib. Good night everyone. Good night to you Paul.

KANGAS: Good night Susie. I’m Paul Kangas, wishing all of you the best of good

Nightly Business Report transcripts are available on-line post broadcast. The
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Nightly Business Report is not and should not be considered as investment
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