REUTERS[ SUNDAY, JANUARY 05, 2003 05:57:02 PM ]

DOHA: Opec president Abdullah al-Attiyah said on Sunday he expected the cartel to increase crude oil supplies by up to one million barrels per day (bpd) in a bid to quell soaring prices.

"An increase could be anywhere between 500,000 bpd to one million bpd... It will depend on consultations," Attiyah, the oil minister of Qatar, told Reuters.

Unless there is a sharp drop in prices, the cartel is on course to lift supplies in mid-January via its mechanism that stipulates supplies be raised by 500,000 bpd if prices for a basket of OPEC crudes stay over $28 a barrel for 20 days.

The group is not bound by the 500,000 bpd volume. Opec's crude basket was last valued at $30.05 on Thursday, the 13th day the reference price was above $28.

It is still not clear whether Opec ministers will have to meet to raise output or decide by telephone to lift supplies.

"We should decide before January 14 whether the mechanism should be triggered automatically or if there should be an extraordinary meeting," said Attiyah, who from January 1 took over the Opec presidency from Nigeria's Rilwanu Lukman.

"We are still in the consultation process."

Oil prices have rallied sharply on fears that political turmoil in Venezuela will spur a supply crunch in the United States and that a war on Iraq will deepen shortages.

Opec agreed in December to raise output limits by 1.3 million bpd to 23 million bpd from January 1 in a bid to legitimise quota-busting that had left actual output running at 24.5 million bpd prior to a strike in exporter Venezuela.

Their pact to curb output was based on the assumption that Venezuelan supplies would resume imminently, but the strike which has crippled the Opec member's oil operations is now in its fifth week.

Of the 10 countries bound by quotas, only Opec's leading producer Saudi Arabia and its Gulf ally the United Arab Emirates have any significant spare capacity.

Their combined excess volume would be sufficient to replace either Venezuelan or Iraqi exports. But analysts said the unlikely scenario of a simultaneous halt in both countries would test the cartel's supply limits.

From the International Desk Published 1/5/2003 7:08 AM View printer-friendly version

CARACAS, Venezuela, Jan. 5 (UPI) -- Police, the military and the national guard Sunday braced for more gunfire in the streets, after two days of death and woundings have darkened the character of the vast civil divide over whether President Hugo Chavez should go or stay.

Two police officers were hit by ricocheting bullet fragments Saturday in Caracas during a wake held by Chavez supporters for one of two people shot to death Friday, the BBC reported.

CNN reported a woman was also wounded in the jaw Saturday, hit by one of the sniper bullets fired at the funeral home where a Friday's victim was taken.

Although both sides have charged the other with escalating the violence, the source of Friday's deadly gunfire has not been determined.

Pro-Chavez protesters said that on Sunday they would carry the two caskets past the hotel where Organization of American States negotiators have made their headquarters.

During Friday's demonstrations Chavez met with the OAS representatives who have so far have made no progress in trying to mediate the increasingly violent power struggle.

Police have been responding to handgun fire with shotgun pellets, rubber bullets and tear gas.

In the civil unrest now a few days into its second month, the Caracas police try to separate the camps of street demonstrators, but not necessarily as strong allies of the national government, which tried to take control of the police force last last year. Caracas Mayor Alfredo Pena opposes Chavez.

Vice President Jose Vicente Rangel Saturday accused the police of being implicated in Friday's two deaths of what CNN reported were pro-government demonstrators.

Chavez, who shows no sign of stepping down, has said the first opportunity provided under the country's constitution for a referendum vote on his future is August. His government has gone to court to block a non-binding vote Feb. 2 being paid for by private donations. Protestors want him to either resign or schedule a new election.

The demonstrations oon each of the past 35 days had been disorderly up until Friday but not deadly, as managerial and middle class marchers protested Chavez moves toward a left leaning government more resembling that of Cuba as well as of corruption and mismanagement.

As increasing numbers of supporters, mostly drawn from Caracas' strongly pro-Chavez poor, turned out to counter the opposition, gunfire has become more frequent and news videotape after Friday's confrontations showed one man appearing to fire a handgun in the direction of demonstrators.

The street unrest has accompanied the crippling strike by oil industry workers that has sharply cut the OPEC member's oil output, the mainstay of government revenues.

In recent days, Chavez opposition has also begun calling for a boycott of sales tax payments, to further weaken his government. In turn, the government has raised the possibility of martial law.

Chavez has reportedly begun efforts to import a few oil industry workers from Algeria and elsewhere.Five people were injured Friday by the same gunfire that killed two demonstrators outside Caracas' Fort Tiuna, as Chavez supporters threw bottles, fire crackers and rocks at opposition marchers. The opposition demonstrators were showing support for an army general under house arrest inside.

More than six dozen people including seven police officers suffered injuries other than gunshot wounds in Friday's melee.

The government is estimated to be losing about $35 million a day in oil revenues with production at low levels, between 150,000 and 800,000 barrels a day.

Yet the food supply has not been hurt, many small businesses keep operating in the capital city and some gasoline is still being sold to long lines of motorists.

The civil impasse has pressured the world price of oil even as the Venezuelan currency has weakened, getting the attention of countries far removed from South America.

Sun January 5, 2003 09:03 AM ET By Philip Klein

NEW YORK (Reuters) - Stocks could get a boost from positive economic signals this week as the trading year begins in earnest, but fears over international trouble spots Iraq, North Korea and Venezuela will likely temper gains.

Investors are optimistic that 2003 will break the three-year losing streak of major market indexes, and stocks got a head start on Thursday after an upbeat report on December manufacturing sparked one of the strongest opening days ever.

When traders return for the first full week of the year they will be closely watching data on the service sector due on Monday and unemployment figures due on Friday, hoping they will show that last week's positive economic news was no fluke.

"Investor psychology is hoping for a positive '03," said Tim Heekin, director of trading at Thomas Weisel Partners. "I think early on in the year people are going to look to put a little money to work, and I'd like to think we'll have a nice 2 percent to 5 percent move up next week."

For the holiday-shortened week, the Dow Jones industrials .DJI were up 3.6 percent, the S&P 500 .SPX was up 3.8 percent and the NASDAQ .IXIC ended 2.9 percent higher.

President Bush is expected to unveil an economic stimulus package on Tuesday that could include tax cuts on stock dividends.

But uncertainty about expected U.S.-led military action in Iraq, confrontation between the United States and North Korea over nuclear arms and political upheaval in Venezuela will be hanging over the market.

"Based on the landscape globally, even though we do have an improving economy, we're going to see sideways movement and that's all," said Jack Francis, senior trader at UBS Warburg.

WEEK ONE

Next week, investors are expecting volume to improve with institutions returning to full staffing levels after the last two trading weeks were split in half by the Christmas and New Year's holidays.

With signs that the economy is improving and sentiment that the flood of corporate scandals is over, market watchers are optimistic that this will be the first up year for stocks since 1999.

ECONOMIC SIGNALS

The Institute for Supply Management's manufacturing index was well above expectations and spurred a rally on Thursday.

But the report left many analysts questioning whether the numbers reflected real strength in the economy or an aberration.

They may get answers next week when the ISM's report on the service sector is released Monday. If it mirrors the strong manufacturing data, markets could get off to a good start, but a negative report would likely be a major drag on stocks.

"If that number comes out disappointing, you'll probably see indexes test their December lows," said Tom Schrader, head of listed trading at Legg Mason Wood Walker.

As for Friday's release of December unemployment figures, the jobless rate is expected to remain at an 8-year high of 6 percent.

MAJOR CONFLICTS

Schrader said the biggest factor keeping the market down now is that three international crises are happening at the same time -- in Iraq, North Korea and Venezuela.

"It's a general dark cloud, and as much as the Bush administration is trying to play it down, what worries people most is North Korea," Schrader said. "I think most people think we can go in and take care of Saddam Hussein pretty quickly."

The situation in Venezuela is particularly troubling because labor strikes by opposition groups have choked oil shipments from the world's No. 5 oil exporter, driving up the price of crude.

NYMEX crude oil futures ended 4 percent higher Friday at $33.08 a barrel, the highest in more than two years.

"If oil prices remain high, there is clearly a threat to economic recovery in the United States," said Alan Ackerman, senior vice president and strategist at Fahnestock & Co.

Ackerman also said markets will be eagerly awaiting the details of the Bush economic plan and the strength of opposition to it.

Corporate quarterly earnings reports will begin to trickle in next week as well, including Dow component Alcoa Inc. AA.N . But investors will be especially sensitive to any profit warnings and outlooks for the year.

On Thursday, retailers will report their sales at stores open at least a year for a December holiday shopping season that is seen to have the lowest gains in decades.

But, after warnings by Wal-Mart Stores Inc. WMT.N and Home Depot Inc. HD.N , investors believe that much of the bad news is already reflected in the market.

"It was a so-so Christmas. Everybody knows it and all negative news is probably placed in," Francis said

That hasn't happened since the Great Depression, but it's possible By DANIELLE DIMARTINO Dallas Morning News 1/5/2003

Last year, market prognosticators declared that 2002 would be an up year. After all, the market hadn't seen three down years in a row since World War II.

Now, for 2003, most market gurus are saying the markets can't possibly fall for a fourth straight year. But their optimism seems subdued from a year ago.

If 2003 is another down year, it would be the first four-year losing streak since 1929-33, the throes of the Great Depression.

By all economic measures, the United States is not in a depression. But some analysts say excesses still must be eliminated from the economy after the go-go 1990s.

And more say the future seems harder to read today than it did at this time last year, when the country was emerging from what seemed like an old- fashioned recession.

On the plus side, experts say the nastiest of the corporate scandals are behind us. Two of the Bush administration's goals - a quick end to the conflict in Iraq and an expedited tax cut package - could take some pressure off the markets.

For its part, Wall Street at least appears appropriately sheepish after being fined $1.4 billion for letting stock analysts play both hands of a game that left investors out in the cold.

Now, experts say, if the economy could begin turning in measurable growth in business spending and hiring, the recovery could break out of its funk.

"The outlook was better at the same time last year," said Chuck Hill, Thomson First Call's director of research. "A delay in capital spending was an easy call at the beginning of last year, but now the question is, how much of a delay is enough? Pushing it back one year may not be enough."

Hill's company compiles Wall Street analysts' estimates of earnings growth. Their 2003 forecast is for 14 percent growth among Standard & Poor's 500 companies, although that number usually falls through the year. Hill says normal revisions will bring the number down to about 10 percent.

Tobias Levkovich of Salomon Smith Barney is one of the Wall Street analysts who contributes to the consensus estimates. He is coming off his second year as chief equity strategist at the brokerage. Several of his peers have fallen in 2002, unable to repair images tarnished by their permanently bullish calls.

Levkovich is predicting that corporate profits will chalk up about 7 percent growth in 2003.

If 2002 had any take-aways, it was that the market does not react well to reduced estimates.

"Fourteen percent for the year is not too bad a number," Hill said. "The problem is it's very back-end-loaded to the third and fourth quarters, and companies don't have any visibility for the second half. They just won't say."

Revised earnings estimates may make for yet another bumpy ride in trading in 2003, regardless of the final outcome.

"We are in a trading market," Levkovich said, pointing to the 1974-82 bear market, when six major trading rallies averaged gains of 32 percent.

He calls himself a "rational bull," emphasizing that his expectations for the market's recovery are muted but positive. Although he forecasts stocks to be up as much as 20 percent in the next 12 months, he sees three major hurdles.

"Greed will overcome fear at some point in the future," Levkovich said. "But it will take time."

Cleaning up the excesses:

He cited regional real estate bubbles and unregulated hedge funds that may yet burn unsuspecting investors.

Capitalist disincentives:

The example he gave was "paying an executive $30 million, regardless of performance."

"Every man with a plan could raise $30 million," he said of the ease with which capital could be raised in the late 1990s. Wringing out these excesses is the key, he says, to reaching a new starting point for the next major bull run. "Everything has to be flushed out to clean the system."

One way Levkovich sees companies wooing investors back is with dividends. 2002 marked the second time since 1963 that dividend yields outpaced money market returns. Add to this the attention that President Bush has given to reducing the double taxation of dividends, Levkovich says, and investors have a good formula to count on positive returns.

"After 21/2 years of bruising losses, investors are demanding some income up front," he said. "For the first time in 30 years, companies are increasing dividends ahead of earnings growth."

One bear argues that earnings have to get much lower before a true rally can take hold. David Tice, portfolio manager of the Dallas-based Prudent Bear Fund, has been on a tear for two years. Investors in his funds have profited from the bets he's placed on the market's fall.

As he sees it, the main drag that will keep markets down for yet another year is the excess credit that has been extended to corporations and consumers.

"It's like a squirrel before winter - you want it to be saving nuts, not throwing a party by adding on to the kitchen or buying a new car," Tice said, blaming Federal Reserve Chairman Alan Greenspan for encouraging consumers to spend rather than save.

"There's definitely a housing bubble," he added. "Greenspan's notion that there is not one is preposterous."

When Tice puts pencil to paper, he figures that $1.6 trillion has been pumped into stocks since 1990. Estimates show that $100 billion was pulled out in the last year.

"Nobody's sold yet. If we revisit historic lows, it will be very ugly," he said.

The market nearly touched historic averages of price-to-earnings ratios in October, before the market rallied. But Tice predicts that the Dow may have to trade at half of where it is today before it can turn the corner.

"As an individual, if you think you are going to lose your job, save some money, pay off your debts and sell some stock," Tice advised.

Layoff announcements surged in the last quarter of 2002, according to Challenger, Gray & Christmas, a job placement firm.

"October and November were the second- and third-heaviest layoff months of the year - that is certainly cause for alarm. It is very similar to what we saw in 2001. And it's not what we should be seeing if we're in the midst of a recovery," said John Challenger, the firm's chief executive.

For 17 years the firm has offered a free holiday job-search advice hotline. This year, of the 1,600 callers, more than 1,000 told counselors they thought it would be harder to get a job in 2003, Challenger said. Counselors do not remember callers ever being more discouraged, even during the jobless recovery of the early 1990s.

Challenger said companies are unable to comfortably increase their global market share, given the looming probability of war.

"It's more than the Iraq situation; now it's North Korea," he said.

Hill's concerns lie closer to home. "I'm less concerned about North Korea and Iraq than I am about Venezuela. If that turns into a civil war, if the army splits in supporting Chavez, energy prices would become a real problem."

Levkovich downplays such gloom-and-doom notions. "Fear mongers give educated investors opportunities," he said, although he did acknowledge the risks of a sustained rise in oil prices in 2003.

"Energy prices can bite sharply into the estimated $37,000 of after-tax median income," Levkovich said. But he stressed that oil prices usually have to double or triple before a falloff in consumer spending is detected.

And, as he predicted, OPEC announced Monday that it would step in and relieve the supply shortages created by the Venezuela standoff.

Still, he's worried about the ability of consumer spending to continue driving the economy. He noted that last year's recession was the first in which consumers didn't stop consuming.

Like many analysts, Levkovich places his hopes in the new Congress to give consumers a nudge.

"2003 could end up being known as "The Year of the Government' if the federal government solves some economic problems. The American people have said to the Republicans - "OK, this is your shot.'"

Al menos dos personas murieron y más de 20 resultaron heridas el viernes en Venezuela por choques violentos, que incluyeron tiroteos, entre partidarios y opositores del presidente Hugo Chávez, en el día 33 de un paro general contra el gobierno.

La confusa balacera ocurrió durante manifestaciones de ambas partes en los alrededores de la base militar Fuerte Tiuna, en el suroeste de Caracas, en medio de una ráfaga de gases lacrimógenos y perdigones lanzados por policías y tropas para separar las protestas contrarias.

El secretario de salud de la Alcaldía Metropolitana de Caracas, Pedro Aristimuño, informó que durante la noche murieron dos hombres de los seis heridos de bala, cuando eran intervenidos en un hospital.

Además de esos heridos, el comandante de los bomberos de Caracas, Rodolfo Briceño, dijo a Reuters que se registró uno por perdigones; otros 20 con contusiones, especialmente por piedras; y 75 que sufrieron los efectos de los gases.

El viernes por la tarde hubo escenas de pánico cuando tanto los manifestantes como los efectivos de seguridad se arrojaron al piso para protegerse de los disparos que atacaron a las personas congregadas en la Avenida Los Ilustres, cercana al Fuerte Tiuna y hasta donde pudo avanzar la marcha opositora, llamada "La Gran Batalla".

"Estamos tirados en el piso, están disparando. No sé de dónde vienen los tiros", dijo una reportera de Reuters en el sitio. Agregó que ambos bandos se lanzaban piedras, palos y fuegos artificiales.

El origen de los disparos no fue identificado de inmediato por las fuerzas del orden. Los testigos dijeron que vieron personas de ambos lados sacando armas después que comenzaron los tiros.

Los enfrentamientos comenzaron cuando cientos de simpatizantes de Chávez colocaron barricadas para impedir el paso de los miles de opositores, que se empeñaron en no abandonar la marcha y rompieron una barrera policial.

Venezuela, quinto exportador mundial de crudo, enfrenta una aguda crisis política en medio de un paro que ha casi detenido las actividades de la vital industria petrolera y exaltado los ánimos en las calles desde su inicio el 2 de diciembre.

El paro petrolero ha generado la pérdida de millones de dólares en ingresos y llevado al gobierno a reducir a la mitad sus estimaciones de crecimiento económico para el 2003 y plantear un recorte de entre 3,0 y 9,0 por ciento en el gasto público, dijo a Reuters el Ministro de Finanzas, Tobías Nóbrega.

SI ME OBLIGAN, ESTADO DE EXCEPCION: CHAVEZ En medio de los choques, Chávez dijo el viernes que si se viera forzado declararía un estado de excepción, que implica la suspensión de algunas garantías constitucionales, pero agregó que de momento no hay condiciones para ello.

"Estoy obligado a proteger el pueblo; yo estoy obligado a proteger el orden público, obligado a proteger la seguridad, la soberanía y la defensa del país, así que si me obligan pues yo tendré que hacerlo", dijo en el palacio presidencial.

Las protestas de ambos bandos, radicalmente polarizados en torno al teniente coronel retirado que asumió el poder hace casi cuatro años, se han vuelto cotidianas en Venezuela.

"No tenemos miedo, no tenemos miedo", gritaban los opositores que marchaban entre las nubes de gas exigiendo la libertad del general disidente Carlos Alfonso Martínez, quien fue detenido el lunes y sigue bajo custodia militar a pesar de que un tribunal ordenó su liberación.

El general no comanda tropas y es acusado de participar en el alzamiento contra Chávez en abril. Integra un grupo de oficiales que el 22 de octubre se declaró en "desobediencia" y llamó a sus compañeros de armas a desconocer al gobierno.

El "chavismo", por su parte, se congregó también en las cercanías del Fuerte Tiuna para apoyar al gobierno y pedir cárcel a los "golpistas", entre los cuales incluyen a algunos militares, líderes opositores que llamaron a la desobediencia tributaria y a trabajadores de la estatal Petróleos de Venezuela (PDVSA) que se sumaron al paro.

"Ellos arruinaron mi futuro pero el futuro de mis hijos no se lo van a robar, eso es un golpe petrolero", dijo el comerciante informal Angel Navarro, de 42 años, uno de los cientos de "chavistas" que se congregó en el lugar.

La medida de fuerza ha perdido vigor entre el sector comercial e industrial, pero ha sido sostenida por los trabajadores petroleros, a quienes Chávez llama saboteadores.

Los promotores del paro --empresarios, sindicalistas, dirigentes políticos y organizaciones civiles-- reiteraron el viernes que no lo levantarán hasta lograr su objetivo: la renuncia de Chávez y el adelanto de elecciones.

"Resistiremos hasta el final", dijo Carlos Ortega, presidente de la poderosa organización sindical opositora, Confederación de Trabajadores de Venezuela (CTV), tras condenar los hechos de violencia de los que culpó al gobierno.

La oposición acusa a Chávez de haber sembrado el odio social entre los 23 millones de venezolanos con sus mensajes de corte izquierdista, de querer instalar un sistema socialista como el cubano, así como de llevar la economía a la ruina.

Ana Isabel Martínez Reuters 3 de Enero de 2003