Marketplace 5/16/2001

It's Wednesday, May 16, 2001.

Stock market players got a taste today of what is known as a "Bear Trap," a condition where those who are completely convinced that the market had to go down today get swept to their doom. When the market hardly moved yesterday after the Federal Reserve cut interest rates, many investors saw this is a confirmation that nothing can cheer up this market and took positions to profit from its fall. And what did the market do today? It turned briskly around, with the Dow rising 342 points or 3.1 percent to close above 11,000 for the first time since mid-September. The NASDAQ rose 3.9 percent or 80 points.

Still, if you tune in tomorrow, I'll let you know if we'll have to attach the phrase "short-lived" to today's rally.

Chronicle of a holiday purchase foretold: Microsoft said today it can easily sell between a million and a million and a half of its new video game system this Christmas, even though what's been dubbed the "Xbox" won't be on sale until the 8th of November. The software giant made its announcement today at a big video game trade show in Los Angeles. For those of you who are thinking you'd rather be reading Marcel Proust than playing video games, we should explain these video game consoles look set to drive the next wave of electronic media, forget about PCs or HDTVs. Sony, maker of the Xbox's rival, announced today that its Playstation 2 has worked out a deal with a America Online to allow the game player to send and receive email; Also, there's a new deal with RealMedia to allow the Playstation 2 to receive audio and video programs streamed off the internet. Microsoft today set the price for its Xbox at $299, the same as the Sony unit.

News accounts often mention that the video game industry is now bigger than the movie industry. We checked and that's not true. What is true is that video games generate about 7 billion dollars in sales a year, equivalent to domestic sales of movie tickets. Add videotapes, DVD, television rights and other sources of revenue, and movies are still a far bigger business, but not growing nearly as fast as video games. Hollywood doesn't see it as competition says Schelley Olgava, an analyst at IDC. The big high-tech animated feature Final Fantasy due out this summer started as a video game.

Schools, courts and government offices in Terre Haute, Indiana were open as usual, which was not the original plan. This was the day Oklahoma City bomber Timothy McVeigh had been scheduled to be executed and the small Indiana town was expecting a crush of demonstrators, media and other rubberneckers. Today, FBI director Louis Freeh was on the hot seat before a House Appropriations Committee subcommittee explaining why more than 3-thousand pages of evidence were overlooked and withheld from prosecutors and defense attorneys in the case. Freeh accepted responsibility for what he called a "serious error" ... which resulted in a one month delay in McVeigh's execution. Freeh revealed that even more overlooked documents from the FBI's Oklahoma City investigation were found after he ordered a full search last Friday.

A government panel is recommending that millions more Americans take powerful cholesterol-lowering drugs. But public health officials say that recommendation may be a prescription for problems that could affect both the body and the wallet. From the Marketplace HealthDesk at WGBH in Boston, Tanya Ott reports.

Ott: "Pharmaceutical companies are already heavily marketing cholesterol-lowering drugs directly to consumers.

Still, the national panel says not enough people are getting the message that the risk of death from heart disease could be significantly reduced through aggressive treatment, so they're recommending a three-fold increase in the number of adults taking cholesterol lowering drugs. They also say a quarter of all americans should significantly alter their diets immediately. Arthur Levin, director of the Center for Medical Consumers in New York, says it's a drug company's dream."

Levin: "what this recommendation has the potential to do is put millions more americans on a selection of very expensive brand name products."

Ott: "And, Levin says, drug companies won't be the only ones profitting."

Levin: "Insurance companies have already increased premiums and have argued that's in large measure due to the increased cost of prescrition drugs that they're experiencing.many of them have changed the copayment schedule so that brand name expensive drugs entail a hefty co-payment. sometimes as high as 50 dollars."

Ott: "Public health workers worry the recommendation will backfire by pushing people to ignore diet and exercise and rely instead on a magic bullet. I'm Tanya Ott for Marketplace.

And that's the top of our news for Wednesday, the 16th of May. To review, the Dow closed up 342 points to 11,215. The NASDAQ Composite closed at 2166 on a gain of 80 points. More stats when we do the numbers.

Rundown
The R.E.A.L. Index
Michelle Brier travels around the country, talking with real people from different industries. We gauge the current economic climate of the economy by their comments, debuting Marketplace's Econ-O-meter. To meet our R.E.A.L. economists and to view today's reading on the Econ-O-Meter, go to http://www.marketplace.org/features/real/.


Fast-tracking Plant Construction
From the Marketplace technology desk, Laura Sydell takes a trip to an energy plant construction site. She finds out that the lack of generation is even making it hard for energy companies to build new plants. But politicians are streamlining the approval process across the board to give plans like theirs a boost.


Unalternative Energy
With Bush expected to reveal his energy plan on Thursday, commentator David Helvarg observes the Administration's partiality for fossil fuels, despite the improved economy of and research into alternative energies.


Pokemon Jihad
Where some cultures see an innocuous child's game, others see a threat to tradition. Pokemon has invaded the Middle East, and the battle lines are drawn. Steve McNally reports.


Look-Ahead
Coming up on 5/17: WComing up tomorrow on Marketplace, a visit with women who care for tigers. Plus the latest in world business news.