Charles Schwab & Co., Inc.
Email Alert

Morning Market View(TM) 
for Monday, November 19, 2001
as of 9:30AM EST
Information provided by Schwab Center for Investment Research


MARKETS TO START WEEK ON A POSITIVE NOTE

Equities were poised to continue the uptrend from overseas at 
the open on mostly upbeat homebuilding data. October housing 
starts reflected a softening but still robust market for new 
home building, while the more forward-looking building permits 
pointed to a potentially deteriorating situation. In equities 
news, home-improvement retailer Lowe's Companies (LOW,40) posted 
strong 3Q results and gave optimistic guidance, while oil giants 
Phillips Petroleum (P,52,f2) and Conono Inc. (COC,24,f2) 
announced a strategic merger.

Phillips Petroleum has agreed to purchase rival Conoco Inc. for 
$15.4 billion, creating the third-largest U.S. oil company in a 
move to enhance competitive positioning. Conoco shareholders 
will receive 0.4677 shares of the combined company, 
ConocoPhillips, for each of their original shares, valuing the 
shares at $24.30, roughly equal to Friday's closing price. 
Additionally, Phillips' CEO said the company will eliminate jobs 
following the merger in an effort to reign in costs and cut 
duplicate positions. The companies hope to close the deal by the 
second half of 2002.

Lowe's Companies posted a 24% rise in fiscal 3Q net income to 
$0.32 per share, $0.01 ahead of the First Call $0.31 per share 
consensus forecast. Sales rose 21% to $5.45 billion, with 
same-store sales rising 4%. The company's CEO noted strength in 
all product categories across every geographic region and said 
that consumer traffic accelerated during the quarter. Lowe's 
expects fiscal 2002 profits of $1.24-$1.25 per share, ahead of 
the Street's $1.23 mean estimate.

Shares of Andrx Group (ADRX,63,f1) were higher in premarket 
activity after the generic drug maker reported Friday that the 
FDA had granted it permission to market a generic form of 
AstraZeneca PLC's (AZN,46,f2) Prilosec ulcer medication, which 
generated more than $6 billion in global sales last year. 
Although AstraZeneca's primary U.S. patent on the drug expired 
on Oct. 5, the London-based pharmaceutical manufacturer claims 
that generic versions of the drug would violate several related 
patents, which, if upheld, would prolong U.S. exclusivity rights 
for several years.

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TREASURY AND ECONOMIC SUMMARY 

Treasuries rose following the release of this morning's housing 
starts data. Total starts for October fell 1.3% to a 1.552 
million annual rate from September's revised 1.572 million pace. 
Analysts were expecting a 4.7% decline to an annual rate of 
1.500 million starts. The weakness was most noticeable in the 
West. Despite the unexpected resiliency in the housing market, 
buoyed by historically low interest rates, the more 
forward-looking building permits fell 3.6% in October on the 
heels of a revised 2.7% decline the prior month. Permits were 
previously reported as having dropped 3.0% in September.

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WORLD MARKETS 

Despite a Bundesbank report that German economic growth was 
sequentially flat in 3Q and may be weaker in 4Q, European 
bourses climbed higher on renewed optimism that lower interest 
rates and falling crude prices will eventually stimulate 
economic growth in 2002. The Bloomberg 500 index was up 1.3% as 
of 8:56 a.m. EST, led by computer-related and telecom stocks. 
The euro was lower against the dollar after hawkish European 
Central Bank officials commented that current euro-zone interest 
rates are appropriate.

Asian markets were also higher, with Japan's Nikkei-225 index 
closing up 0.74%, in spite of the Bank of Japan's dour 
assessment of the economy, including concerns about the effects 
of declining exports and output on consumer sentiment and 
spending. The yen was lower against the dollar following the 
Bank of Japan's economic downgrade. Nevertheless, enthusiasm 
about an improving outlook in the U.S., as well as a softer yen, 
carried export stocks, including Toyota (TM,50,f2) and Sony 
Corp. (SNE,46) higher. Crude oil trailed lower again amid fresh 
concerns that Russia will offer nothing more in the way of 
concessions than a meager, symbolic production cut.

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FUTURES WATCH 

In the December Globex futures contract as of 8:56 a.m. EST, the 
S&P 500 index was 7 points higher while the Nasdaq 100 index was 
up 19 points. The December DJIA futures contract was up 55 
points (58 points above fair value) and the December crude oil 
futures traded on the NYMEX were down $0.79 at $17.24/barrel.

William Johnson, Market Analyst

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