www.canada.com Canadian Press Monday, March 10, 2003

TORONTO (CP) - Overseas stock markets were down and Wall Street index futures were weak Monday, on the third anniversary of the peak of the technology-stock craze and a week before the March 17 deadline envisioned by the United States in a proposed United Nations ultimatum to Iraq.

American State Secretary Colin Powell said he is close to rounding up the votes for the disarmament deadline, and warned that a French veto would have "a serious effect on bilateral relations."

European stock markets were down, on war worries and after Deutsche Telekom reported the worst corporate loss in European history.

Europe's largest telecommunications company said Monday it lost 24.6 billion euros ($27.1 billion US) in 2002. The net loss was largely on writedowns of such holdings as wireless company T-Mobile USA, but chief executive Kai-Uwe Ricke acknowledged: "There is no way to put a good face on it."

The Deutsche Telekom loss - reported on the third anniversary of the Nasdaq's technology-bubble peak - exceeded the records set last week by France Telecom, at 20.7 billion euros, immediately overshadowed by Vivendi Universal, which lost 23.3 billion euros last year.

The German DAX index was down 1.7 per cent early in the afternoon. The Paris CAC-40 declined 0.8 per cent, while London's FT-SE 100 index was little changed, slipping 3.4 points to 3,488.2

Asian stocks closed down. The key Nikkei index in Tokyo fell to a new 20-year low, down 101.86 points, or 1.25 per cent, to 8,042.26, led down by banks.

The Hong Kong Hang Seng index declined 45.23 points to 8,861.87.

South Korea's main index closed 0.33 per cent lower after North Korea test-fired a missile into the sea in what was seen as a move to raise tensions further over its nuclear programs.

The Canadian dollar was trading at 68.37 cents US, up 0.13 cent from Friday's 32½-month high, after gaining 0.85 cent last week.

The currency got an additional boost Monday morning as Canada Mortgage and Housing Corp. reported that housing starts last month were up 34.5 per cent over the January level.

The euro was solidly above its four-year highs of $1.10 US, while the yen strengthened to 116.5 to the American dollar amid fears that war will wound the already shaky American economy.

In Canadian corporate news, business software maker Cognos has announced an alliance with the Giuliani Group, a consulting firm headed by former New York mayor Rudolph Giuliani.

Canada's largest pension-fund manager, the Caisse de depot et placement du Quebec, reports Monday on what is believed to have been a bad year. Reports say the Caisse lost more than $2 billion on telecommunications investments last year, mostly on cable company Videotron.

Analysts suggest the fund lost $10 billion in 2002, out of $133 billion in assets. The fund's report precedes an expected election call by Premier Bernard Landry.

Talisman Energy has completed its retreat from Sudan, with the sale of its 25 per cent interest in the Greater Nile oil project to Indian state-owned company ONGC Videsh for about $1.2 billion. The sale, announced last October, dragged on for more than two months after the original closing date of the end of 2002.

Delegates of the Organization of Petroleum Exporting Counties are gathering in Vienna for a meeting Tuesday to discuss production. Observers see little that OPEC can do to hold down oil prices - at 12-year highs - in the face of looming war in Iraq and continuing production problems in Venezuela.

"For once OPEC is in the back seat, looking out the window," said Leo Drollas, economist at the Center for Global Energy Studies in London. "The U.S. is in the front seat, driving the war wagon."

North American stock markets had an up day Friday at the end of a down week.

Toronto's S&P/TSX index edged up 31.26 points to 6,359.86 - down three per cent on the week.

The Dow Jones industrial average gained 66.04 points to 7,740.03, up from Thursday's five-month low but down 151 points on the week.

The Nasdaq - ahead of Monday's third anniversary of its peak at 5,131.52 - was up 2.40 points to 1,305.29. The S&P 500 was ahead 6.79 at 828.89.

"The international political uncertainties continue to weigh on both the economy and the markets, making it difficult for decision-makers to make long-term commitments," said Edgar Peters, chief investment officer at PanAgora Asset Management in New York.

"The economy can only wait so long for political issues to be resolved before real deterioration begins."

money.cnn.com 10, 2003: 10:01 AM EST

Iran's opposition to free pumping also boosts bid for crude as armed conflict in Iraq looms.

LONDON (Reuters) - War jitters boosted oil prices Monday as the United States seemed confident of gaining U.N. support for a resolution allowing it to disarm Iraq by force.

London benchmark Brent for April rose 24 cents to $34.34 a barrel while U.S. light crude rose 26 cents to $38.04, about $3 under highs hit in the buildup to the 1991 Gulf War.

In Vienna, OPEC oil ministers were assembling to discuss output policy ahead of a possible attack on cartel-member Iraq.

Iran said Monday it will oppose any proposal to suspend output limits should war break out in Iraq as this could imply support for a U.S.-led war.

Saudi Arabia and Kuwait have signaled they could allay supply fears by allowing cartel members to pump oil freely. But Saudi Arabia faces stern opposition from Iran for a plan that Tehran says implies support for a U.S. attack by controlling oil prices.

"Iran will not back politically motivated decisions," Iranian Oil Minister Bijan Zanganeh told the official IRNA news agency.

OPEC should refrain from taking decisions which would imply support for a "U.S. military assault against one of OPEC's member states," Zanganeh said.

"It looks like it could be a very strong week for crude and products as war fears mount," said GNI Man Research analyst Lawrence Eagles. Related stories Kuwait to shut oil fields OPEC: speculation driving oil prices Saudi seeks OPEC plan to stop oil shock

"It's difficult to see oil going lower with the potential of conflict so close. There's really nothing to push prices down very quickly, the risks are all skewed to the upside," said David Thurtell, strategist at Commonwealth Bank in Sydney.

Price hurtled higher Friday after a new draft resolution proposed by the United States and Britain set a deadline of March 17 for Iraq to destroy all weapons of mass destruction, or face war. Iraq denies having such weapons.

The showdown vote could come as soon as Tuesday.

The resolution has sparked a wave of intense lobbying in the 15-member U.N. Security Council and U.S. Secretary of State Colin Powell said there was a "strong chance" of getting up to 10 votes in favor of the document.

The issue of Iraq's compliance with U.N. demands has created a bitter divide in the U.N. Security Council.

The United States, Britain, Spain and Bulgaria seek support for military action from Pakistan, Chile, Mexico, Angola, Cameroon and Guinea, while veto powers France, Russia and China say U.N. arms inspections should continue.

But, analysts say war will go ahead even if the resolution is defeated, as Washington intends to lead a "coalition of the willing" against Iraq even without U.N. approval.

"The U.S. position is no longer about avoiding a veto but of demonstrating that if a veto is used, that a majority of the Security Council members support such action," Eagles said. OPEC Quotas

OPEC, which supplies over a third of the world's crude oil, wants to prevent any oil price shocks that could dampen future global economic recovery, but it is expected to stick to its current 24.5 million barrels per day (bpd) output limit for now.

"There may be no formal suspension of quotas but the two or three who can do so will be given freedom to pump at will to cover any losses," predicted one delegate.

Although OPEC has pledged to fill any supply gap should war halt Iraqi exports of two million bpd, many in the group are already pumping close to full capacity.

Only Saudi Arabia has any appreciable room to turn up the taps and analysts estimate OPEC has little over 1.7 million bpd of untapped capacity -- the equivalent of daily Iraqi exports.

But the war threat, hot on the heels of a strike which crippled Venezuela's oil industry, is coming at a time when stocks in the United States, the biggest oil consumer, are at low levels unseen since the Arab oil embargo of the mid-1970s.

Heating oil stocks are especially worrying as cold weather is expected to persist over the U.S. Northeast in coming days.  

cbs.marketwatch.com By Myra P. Saefong, CBS.MarketWatch.com Last Update: 3:10 PM ET March 10, 2003

NEW YORK (CBS.MW) -- Crude futures closed lower Monday with traders mulling the prospect of U.N. approval to give Iraq just one more week to disarm and OPEC members poised to discuss possible changes to its oil production limits.   CBS MARKETWATCH TOP NEWS Techs slap Nasdaq on anniversary of peak Analysts: Bristol's inventory woes not the norm Stocks painted red on anniversary of Nasdaq high Still sinking after all these years Free! Sign up here to receive our Weekly Roundup e-Newsletter!

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On the New York Mercantile Exchange, April crude fell 51 cents to close at $37.27 a barrel after trading between a high of $37.77 and a low of $37.05. Brent for May delivery closed at $32.92, down 22 cents on London's International Petroleum Exchange.

Meanwhile, gold for April delivery closed at $354.80, up $3.90. See Metals Stocks.

The U.S. and Britain are pushing for a U.N. vote on a second resolution that provides a March 17 deadline for Iraq to rid itself of weapons of mass destruction. A vote could come as early as Tuesday, news agencies reported. See Special Report: Countdown to War.

Secretary of State Colin Powell said there was still a "strong chance" of getting up to 10 votes in favor of a second resolution on Iraq, even though France, Russia and China are expected to vote against the document.

"The U.S. position is no longer about avoiding a veto, but of demonstrating that if a veto is used, a majority of the Security Council members support military action," Michael Fitzpatrick, an analyst at Fimat USA, said in a note Monday.

And OPEC members are gathering in Vienna to discuss oil prices and production quotas. They'll attempt to balance a possible shortage of oil in the event of war with a possible glut in supplies as demand declines, as usual, in the second quarter. OPEC, excluding Iraq, has an official production quota of 24.5 million barrels per day. See OPEC preview story.

"War will certainly create a shortfall, especially if northern Kuwait and Iraq go offline for a period of ten days or longer," said John Person, head financial analyst at Infinity Brokerage Services.

The world wants to know how OPEC members will "adjust to increasing supplies to offset any potential supply disruptions," Person said.

Bijan Namdar Zanganeh, oil minister for OPEC member Iran, said Monday that Iran opposes a suspension of production quotas in the event of war. "Iran will not back politically motivated decisions," news agencies quoted him as saying.

Heating oil, natural gas close lower

Also on Nymex, natural-gas and heating-oil futures closed with a loss on the session, following hefty gains Friday.

Forecasts call for above-normal temperatures in much of the U.S. over the next few days.

April heating oil fell back by 2.28 cents to close at $1.0857 a gallon, while April natural gas declined 47.8 cents to $6.515 per million British thermal units.

"It remains highly likely that the U.S. and U.K. are going to war this month against Iraq and that event will be hard on fuel prices," said Todd Hultman, president of commodity information and research provider, Dailyfutures.com.

Even if the U.S. releases oil from its Strategic Petroleum Reserve, the release won't help provide much-needed supplies of heating oil or unleaded gasoline in the short term, he said.

Gasoline futures prices eased back from Friday's gain of nearly 5 percent. April unleaded gasoline fell 2.81 cents to close at $1.1286 a gallon on Nymex.

At the retail level, gasoline prices averaged $1.69 a gallon, up from $1.684 on Friday and a stone's throw away from the all-time high of $1.718 seen in May 2001, according to AAA's Daily Fuel Gauge Report.

In the equities arena on Monday, oil-services companies traded mostly lower, as the Philadelphia Oil Service Index ($OSX: news, chart, profile) chalked up a loss of more than 1 percent. See Energy Stocks.

And the Reuters/CRB Index, a broad-based measure of the commodity futures market, closed at 246, down 0.5 percent amid weakness in energy futures. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

rutlandherald.nybor.com March 8, 2003 By KAREN PAUL

It may not surprise you to know that there is no mere mortal on this planet who knows where the stock market will head or what magic number it will close at as dusk falls on the last day of this coming December. Ok, so that’s not a riveting statement nor is it rocket science or brain surgery (although a brain surgeon once told me that brain surgery isn’t really all that complex but I think he just said that.)

Riveting or not, it still does not stop Wall Street from hiring gurus and paying them stratospheric seven-figure incomes to tell us what the stock market is going to do six, 12 and 18 months down the road. You don’t hear Alan Greenspan forecasting interest rates or the stock market but then again, his pay isn’t in the ozone.

There are a great many myths in the investing crystal ball and some have repeated themselves so an argument can be made that they could happen again. Still others are just a lot of hopeful thinking or perhaps praying better describes it. Let’s talk about those that seem possible but really are far from it.

We know that there has been one time in history when the stock market has declined four years in a row. It’s so historical that it garners a title in capital letters, The Great Depression. From 1929 to its low in 1931, the stock market fell over 70% in four years before advancing into 1932.

We are not in the next great depression. I won’t bore you with all the reasons the last three years are different from those dark days around 1930. There is a myth whirling around Wall Street that just because the stock market has already declined 50 to 80%, depending on what average you cry over, the market can’t decline in 2003. We have already sunk low enough. Not necessarily true.

History is a guide, not a law. An argument can be made that valuations are still very high, that the economy is still very weak and that investors still face a deep crisis of confidence in American business and their ability to accurately inform the public. Last but certainly always on our collective minds, Iraq, North Korea and Venezuela loom with the darkness of immense uncertainty. A recent study by some noted British academic economists stated that in the course of “stock market performance shows that across 16 markets, the probability of a fourth down year is 40 percent.” Interestingly, according to market historian Yale Hirsch and others, that is also the probability than any year will be a down year. In other words, while the bullish side may have an edge here, it’s just that and nothing more.

Shortly after the beginning of this millennium, there was a widespread and wide-eyed belief that if Alan Greenspan would just lower interest rates, all our problems would be solved. Most investors would have thought I was losing my stock market marbles if I told you in 2000 that after a dozen interest rate cuts, the stock market was down over 50 percent. Case in point: lower interest rates do not guarantee a higher stock market. No one thing causes the stock market to go up, at least for very long. Granted, during the Gulf War in 1991, the stock market took off when it appeared we would be victorious but there were other factors in place that perpetuated that advance. An economy recovering from recession, improved corporate profitability, Wall Street expectations for companies that were met or were exceeded, and falling interest rates continued to fuel that rally.

Another investing myth portends that if you just wait long enough, buying and holding a stock will pay off in the long run. That may be true with some stocks but so untrue with so many others. While I might agree that it is possible to have an inkling of the future probability that some companies will be profitable over two or three years, believing that you know what some company will do over 10 or 20 years is unreasonable. You can take a leap of faith and buy a stock and hold it for 20 years, dust it off and hope for the best but that’s what it is. In this same British study, the authors observed that out of those same 16 national stock markets, investors in only five of those markets would have been guaranteed positive annualreturns over every 20-year period during the last century.” Wow, put that in your buy and hold pipe and well, up in smoke.

The ultimate truth is that there is always risk in the stock market. Diversifying can lessen the some of these ugly menaces that can erode returns. Having cash on the sidelines will give you the tool needed to participate in the stock market when your comfort level is reached.

In the meantime, put aside the rumors and the myths and concentrate on the reality, which is that no one has all the answers. You are going to make mistakes on your road to realizing your investment goals. As long as your decisions are diversified and grounded in fact, your rewards will be as well.

www.forbes.com Reuters, 03.07.03, 1:23 PM ET By Alistair Bell MEXICO CITY, March 7 (Reuters) - The head of Mexico's Grupo Bimbo <BIMBOA.MX>, the world's third-biggest bread maker, said he is not overly worried by a recent depreciation of Mexico's peso against the U.S. dollar. "If there is economic turbulence it affect us. We are in a globalized world and everything affects you negatively or benefits you. But I think that is where the value of companies that look for staying power, quality and service come in," Bimbo Chief Executive Officer Rafael Velez told journalists on Thursday night. "Staying power enables you to resolve and confront all the possibilities that arise," he said. The Mexican peso has weakened by more than 6 percent against the dollar since the start of the year, mostly on fears that a war in Iraq would dampen the U.S. and Mexican economies. Mexico's currency also fell almost 12 percent in 2002. Currency depreciations can drag on a company's earnings by reducing the value of revenues earned abroad. For Mexican companies it can also make servicing foreign-denominated debt more expensive. Bimbo has four bonds outstanding, all denominated in pesos. Bimbo, which bakes bread, pastries, cookies and snacks, last year paid $610 million to buy the U.S. baking unit of Canada's George Weston Ltd. In the fourth quarter of 2002, Bimbo's sales came 68 percent from Mexico, 26 percent from the United States and 6 percent from operations around Latin America. Velez said Bimbo was not considering pulling out of any Latin American country, despite political upheaval in Venezuela and the economic crisis in Argentina. "We are where we are, and in those countries we have to deal with the good and the bad," he said. "We are a baker, and I have never heard of Bimbo abandoning anywhere." NO FARGO ACQUISITION Bimbo's profits have slumped in recent quarters due to the cost of implementing an information technology system known as Enterprise Resource Planning. Bimbo's share price has lost more than 3.8 percent since the start of the year. It was unchanged on Friday morning at 14.81 pesos on the Mexican stock exchange. Velez ruled out any bid to acquire Argentina' Fargo bakery, taken over by Deutsche Bank <DBKGn.DE> from an Argentine investment fund last year after Fargo defaulted on its $150 million debt. "Our company is known for its conservative style of administration, so we have a lot to consolidate before going and taking on risks. Now we are investing in systems and I think that is better," he said. Velez said Bimbo's sales were struggling recently but he gave no figures. "Some (sales) rise and some fall; but I think in general if you fight to give the best service, the best quality and the best possible price, then the public will judge you," he said. "We are feeling the sales difficult but we are growing," he said.