Morning Market View for November 20, 2001 ,
 Charles Schwab & Co., Inc.
Email Alert

Morning Market View(TM) 
for Tuesday, November 20, 2001
as of 9:30AM EST
Information provided by Schwab Center for Investment Research


SOFTER OPEN FOR EQUITIES

Equity index futures were pointing to a lower open for the 
market amid a quiet news day. The trade deficit narrowed more 
than expected, owing primarily to one-time effects of insurance 
claims related to the Sept. 11 attacks, but had little effect on 
the markets. In corporate news, P&O Princess Cruises PLC 
(POC,18.10) and Royal Caribbean Cruises Ltd. (RCL,15.01) 
revealed merger plans while office supply giant Staples 
(SPLS,18.66,f1) matched earnings expectations and offered upbeat 
guidance.

P&O Princess Cruises PLC and Royal Caribbean Cruises Ltd. 
announced merger plans in an effort to address the demand 
slowdown for leisure cruises in the wake of September's 
terrorist attacks. As part of the roughly $2.89 billion 
agreement, each Royal Caribbean share will be worth about 3.46 
shares in "Loveboat" owner, P&O Princess. The two cruiselines 
will continue to trade separately, and the deal gives a small 
premium to Royal Caribbean shareholders. P&O Princess 
shareholders will own 50.7% of the group, while Royal Caribbean 
shareholders will hold the remaining 49.3%.

Staples Inc., the second largest office-supply retailer, said 
fiscal 3Q profits rose nearly 8% to $0.20 per share, matching 
the First Call consensus estimate, on a 1.1% rise in sales to 
$2.83 billion. The company credits the elimination of 
unprofitable merchandise and its cost-management efforts for the 
quarter's results, despite a slump following the September 
attacks. Staples says it sees fiscal 4Q results of $0.25-$0.27 
per share, as compared to the Street's $0.25 per share consensus 
estimate.

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TREASURY AND ECONOMIC SUMMARY 

Treasuries were higher but retreated a bit following this 
morning's U.S. trade gap numbers. The U.S. trade deficit fell 
sharply in September to $18.69 billion from September's $27.11 
billion due primarily to anomalous effects of insurance claims 
related to September's attacks, which reduced services imports 
by $11 billion, according to the Commerce Department. Analysts 
per Dow Jones Newswires were expecting a narrowing in the trade 
deficit to $26.00 billion. Overall, imports plunged 14.0% to 
$95.99 billion while exports declined 8.5% to $77.29 billion.

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WORLD MARKETS 

European markets were lower after the Organization for Economic 
Cooperation and Development lowered its growth forecast for the 
euro-zone economy to 1.4% in 2002 from its previous 2.7% 
estimate in May and said more monetary easing may be warranted. 
Telecom service and industrial products stocks led the declining 
issues, while travel and leisure stocks got a boost from the 
Royal Caribbean, P&O Princess merger news. Credit Suisse Group 
(CSR,42) dropped after providing cautious 4Q guidance, even 
though it posted a better-than-expected 3Q net loss. The euro 
was higher against the dollar despite being pressured earlier 
following worse-than-expected Italian industrial orders and 
sales for September. Orders declined 6.6% on the month and 10.0% 
year-over-year, while sales were down 1.9% on the month and 4.7% 
year over year. German factory orders also declined in 
September. The Bloomberg European 500 index was down 1.06% as of 
8:52 a.m. EST.

Asian stocks were also under pressure with technology, 
communications and insurance stocks leading Japan's Nikkei down 
1.4% at the close. The OECD predicts contractions of 0.7% and 
1.0% in 2001 and 2002 respectively, before the Japanese economy 
expands an estimated 0.8% in 2003, noting that the Bank of Japan 
has little stimulative flexibility with lending rates close to 
zero. Nikon Corp. (NINOF,9.13) was lower after posting a huge 
drop in first-half profits and saying that it anticipates a 
full-year loss as demand for semiconductor equipment wanes. The 
yen was trading higher against the dollar.

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FUTURES WATCH 

In the December Globex futures contract as of 8:52 a.m. EST, the 
S&P 500 index was 6.5 points lower (4 points below fair value) 
while the Nasdaq 100 index was down 16 points (8 points below 
fair value). The December DJIA futures contract was down 59 
points (41 points below fair value) and the January crude oil 
futures traded on the NYMEX were up $0.93 at $19.36/barrel.

William Johnson, Market Analyst

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