Charles Schwab & Co., Inc.
Email Alert

Morning Market View(TM) 
for Friday, November 23, 2001
as of 9:30AM EST
Information provided by Schwab Center for Investment Research


STOCKS MIXED IN TURKEY DAZE

Stocks were poised to open mixed on this shortened trading day 
as America awakens from its traditional L-tryptophan stupor amid 
very little corporate or economic news. The National Bureau of 
Economic Research may declare the U.S. economy is in a 
recession, but there is a silver lining. Oil and oil-related 
shares fell overnight as Russia continues to rebuff OPEC 
overtures, driving European bourses lower.

According to The Wall Street Journal, the NBER is meeting today 
and may declare that the longest U.S. economic expansion since 
World War II ended in March, when employment figures signaled 
that a recession may have begun. While a general rule of thumb 
for defining a recession is two consecutive quarters of negative 
Gross Domestic Product growth, the NBER defines a recession in a 
more subjective manner, utilizing key economic indicators.

If a recession did indeed start in March, that could actually be 
a positive development, that is if history is any guide. Of 
course there are no guarantees that the economy will stick to 
historical norms, but the average recession since WWII lasted 
for about 10.5 months, with the longest slump spanning 16 
months. That could mean that a recovery is just around the 
corner. Few economic indicators point to this scenario at this 
time, nor do earnings forecasts, but Ned Davis research shows 
that the markets have historically bottomed during a recession 
roughly five months before the economy and about ten months 
ahead of an earnings recovery. And there is a lot of monetary 
and fiscal stimulus in the pipeline to support a recovery soon. 
So, cheer up... the malls are opening early today!

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TREASURY AND ECONOMIC SUMMARY 

Prices across the yield curve rose in early trading as 
Treasuries remain volatile, following last week's wild ride and 
oil prices fell overnight. Oil prices were higher earlier after 
Norway agreed to cut oil production, succumbing to OPEC pressure 
to cap global production limits. However, Russia once again 
rebuffed OPEC's threat of a price war if non-OPEC producers do 
not cut production by a total of 500,000 barrels per day, 
sending oil sharply lower. Russia said that it would cut output 
by just 50,000 bpd, but it wants to wait until early next year 
to discuss deeper cuts.

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WORLD MARKETS 

After trading higher earlier in the session, oil-related shares 
led Bloomberg's European 500 Index down 1.2%, as of 8:55 a.m. 
EST. The euro rose versus the U.S. dollar after it was reported 
that French Gross Domestic Product rose 0.5% in 3Q, more than 
the 0.3% rise forecast according to Bloomberg, and German 
inflation remained tame in November. The British pound fell 
after UK Prime Minister Tony Blair reignited talk of joining the 
European Union, a move that Blair maintains would benefit the UK 
economy but may require a weaker pound to gain entry.

Japan's markets were closed overnight for a holiday, but other 
Asian markets were generally higher. The yen fell versus the 
dollar after the Financial Times reported that the U.S. would 
support a Japanese plan to buy more U.S. securities to help 
weaken the yen.

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FUTURES WATCH 

In the December Globex futures contract as of 8:55 a.m. EST, the 
S&P 500 index was 1.7 points lower while the Nasdaq 100 index 
was up 3.5 points. The December DJIA futures contract was down 
13 points.

David Kastner, Managing Market Analyst

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