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So what's the reason for an out-of-nowhere decline in non-farm payrolls, which have averaged increases of 183,000 in the last six months and 210,000 in the second quarter? `We have reason to believe that job growth is topping out,' offers Jim Glassman, another skeptic on the latest labor number. `If GDP growth is slowing from 4% to 3%, as it did in the first half, then employment growth should slow, too.' Related: Wes Goodman, Bloomberg 10-8 The job loss may be a concern for bond investors, since some analysts say it's a sign employers are finding it harder to hire workers. Bonds now yield about 3.89% after inflation, shy of the 4% level that many investors say is attractive.
The Disappearing Inc. software is designed to work with any e-mail program, such as Outlook, Netscape Mail or Eudora. It can be programmed to scramble some or all messages, which are sent along with a unique key code to unscramble the e-mail. Messages, however, must be sent as attachments. If the recipient has installed Disappearing's program, the message opens as a normal e-mail. If the recipient does not have Disappearing software, the attachment launches a Web browser that automatically links to a program on the Web that activates the decoding key. But the sender can program the software to destroy that key at any time --seconds, days or years later. E-mail messages that are deleted can still exist on a computer hard drive, server or backup tape and be retrieved later. But Disappearing officials claim e-mail encrypted by their software would still be as unreadable as shredded paper without the decoder key.
The economic text books tell you that inflation occurs when demand increases beyond supply. But many of the latest price increases don't have to do with demand increases that might spur more-serious inflation worries. With copper and oil, production cuts are the issue. Gold also has moved on supply cutbacks - after 15 European central banks said they wouldn't sell or lease additional gold for the next five years. There are three more reasons commodities are less a harbinger of inflation. (1) In the energy sector, Americans since the 1970s are using about 40% less power per dollar of GDP - a sign that fuel costs hold much less sway than they used to over the rest of the economy. (2) Commodities' role as an inflation indicator has diminished in recent years as the economy has become more service-oriented and technology-driven. (3) In recent years the commodity price of everything from grains to lumber has become less of a component in the price of finished goods. If you buy a loaf of bread, the cost of the wheat to make it is something like five cents of the price. Labor, which makes up 70% of the cost of many finished goods, have become more important.
There was no mention of deflationary forces, and policy-makers in no way believed that the risks were balanced, the minutes from the meeting revealed. The Fed was only neutral in the Clintonian sense of the word. Yesterday, the Fed voted an asymmetrical directive in favor of higher interest rates but went out of its way to remind us that the bias was no guarantee of action. What the Fed has done, in an effort to provide more transparency, is to inject another layer of doubt. Now there's a policy action, a directive and a qualifier, which are outlined in the table below:
`The problem right now is that the timing is awkward,' Jim Glassman, senior economist at Chase Securities, claims. `Everyone knows that the forecasts for the next round of price data are bad, and it will be harder to dismiss a tobacco-related spike' now that the Fed is leaning towards tightening. `They've lowered the bar on the November meeting,' he adds. Over the next few weeks, the economic data will be key in the market's determination of whether the Fed will raise rates in November or not. Right now, the November federal funds futures contract places the odds at 62.5%. Related: Fed to Study Bias Disclosure Policy: USA Today 10-8 The Federal Reserve, concerned about the impacts on financial markets of its new disclosure policies, is forming a task force to recommend improvements. The working group will examine what modifications should be made to a policy it began in May of announcing immediately any significant changes in its policy directive or bias. That directive signals the possible future direction that interest rates may be headed at upcoming meetings of the FOMC. Financial markets have had trouble interpreting the signals the Fed is trying to send. A change in the directive from neutral to one leaning toward increasing interest rates or reducing them is often not followed at the next meeting by actual change in rates. The FOMC is not contemplating scrapping its new policy of making announcements, only looking for ways to clarify what the policy directive signifies about Fed intentions. Related: David DeRosa, Bloomberg 10-6 Transparency is a funny concept. The act of publishing the bias could be classified as part of the Fed's longstanding efforts to improve its communications skills. Still, listen to some of Federal Reserve Chairman Alan Greenspan's speeches before the U.S. Congress before you decide how big a fan the Fed is of transparency. Maybe the thinking at the Fed is that there is both good transparency and bad transparency. Bias appears to have been selected for the good transparency bin. A cynic might conclude that the bias allows the FOMC an opportunity to get the market to carry its own water. Once it is announced, a change in the bias begins to get built into interest rates immediately. How much is incorporated in capital markets depends on how much credibility the bias is accorded. The Fed, in effect, can use the bias to engineer a non-tightening tightening. Hence the 41 days until the next FOMC meeting are likely to be colored with a slightly higher than normal level of anxiety about whether the Fed is going to put another knife into the bull market's back. Related: Caroline Baum, Bloomberg 10-5 At the Fed's last meeting, policy-makers claimed that the second 25 basis point rate increase in two months `should markedly diminish the risk of rising inflation going forward' and retained a neutral stance. Have things changed markedly in the last six weeks? Since the release last Friday of a strong manufacturing survey showing a spurt in an index of prices paid and a 20% rally in gold prices? If, in the Fed's view, they have, then it gives credence to suspicions that the Fed is suffering from an acute case of current-itis, a disease that afflicts central bankers who have lost their way.
Weiss studied performance for diversified U.S. stock funds over the 36 years through year-end 1997. The 109 funds that were around for the entire period gained an average 10.9% a year, compared with 11.6% for the S&P 500. Thousands of funds have been introduced during this stretch. To include their performance, Mr. Weiss next calculated results for each of the 36 years, using those funds that were around in each year and are still around today. He then linked together these 36 years and calculated an average annual return, with the average climbing to 11.2%. Over half the funds that were around at the start of the 1970s aren't around today. If you include these now-defunct funds the average plummets to 9.9%. If you weight returns by the assets each fund had at the beginning of each year the average is 10.2%. The bottom line? After adjusting for size and survivorship bias, Mr. Weiss found that funds trailed the S&P 500 by some 1.4 percentage points a year. As it happens, that is what diversified U.S. stock funds currently charge in average annual expenses. Keep in mind a few quibbles. Funds typically take less risk than the index. But Weiss found that funds trailed the S&P 500, even after adjusting for risk. Funds often buy smaller stocks than those in the S&P 500. But this turned out to have been an advantage over the 36 years. During this stretch, the S&P's 11.6% annual gain lagged behind the 14.8% return for smaller stocks, as tracked by Chicago's Ibbotson Associates. Moreover, in his calculations, Weiss ignored both fund sales commissions and taxes, which would have made fund returns seem even more bleak. Historically, funds have been far less tax efficient than index funds, which don't trade actively but instead simply buy and hold the stocks that constitute a market index.
These two regions have come to provide the geographic overlay of a contest between ailing manufacturing services dominated by the North and a booming service economy dominated by the South. The unemployment numbers reflect the trend. The national average is just 5.9%. In greater London, it is only 4.9%, and the Southeast over all is even lower at 3.8%. In the far North unemployment is 7.1%. Manufacturing has shrunk to only 20% of UK's economic output. The South accounts for well over 60% of UK's GDP. This conflict is sharpened by broader economic policy (high interest rates). The official short-term interest rate for the euro hovers around 2.5%, or less than half Britain's current level of 5.25%. The higher rates are largely ascribed to factors like runaway house prices in the wealthy Southeast, where the cost of a home has soared 20% in some areas in the last year. But its impact of those higher rates has damaged a nascent recovery in the North. It made borrowing more expensive. It contributed to the factors that have kept the pound strong against the euro. That, in turn, perpetuated the basic enigma facing British manufacturers: a strong pound makes exports more expensive for foreign buyers, while cheap imports erode the domestic market. Britain is not the only European country with sharp regional differences. Unemployment in eastern Germany is twice that in western Germany. Southern Italy lags far behind the North.
If the ECB felt the need to tighten monetary conditions in the light of the ongoing recovery, it would be less painful under a strong currency regime than a weak one. When central bankers tighten monetary policy solely by raising interest rates, it penalises consumers and investors. It also raises the cost of servicing public debt. It would also be easier for finance ministers to undertake labour, welfare and other structural reforms if their interest bill was low. A strong euro would have a salutary re-balancing effect within the euro-zone, where countries are growing at widely different rates. Coincidentally, the countries that show the biggest risk of overheating - the Netherlands, Ireland and Finland - are also the ones that conduct a lot of trade outside the euro-zone. On average, they export the equivalent of 25 per cent of their gross domestic product to countries outside the euro-zone. The more sluggish economies, such as Germany and Italy, export only 12 to 13 per cent of their GDP to non-euro countries. In other words, the booming economies are very open and would therefore be more selectively cooled off by a strong euro. Related: London Financial Times 10-7 The European Central Bank faces growing pressure to raise interest rates today after Germany reported a 5.1% surge in manufacturing orders in August, the largest month-on-month increase since unification in 1990. Taken with recent figures that show France's economy growing strongly, the data indicate the euro-zone's two largest countries can expect healthy growth next year of about 3%. The surprisingly strong rise followed hawkish statements last week from the ECB's three most important officials, all of whom suggested the ECB might soon raise rates for the first time since the euro's launch in January. However, some economists said Germany would not welcome a rise since it would hamper the government's efforts to bring down its budget deficit and public debt. The euro's weakness has been partly responsible for the rise in foreign orders for German manufacturing products over the past five months. Foreign orders rose by 8.1% in August compared with July, while domestic orders rose by 3.3%.
Based on careful research by economists J. Nellie Liang and Steven A. Sharpe at the Federal Reserve Board in Washington, the haircut isn't nearly as great as the widely cited estimates of research firm, Smithers & Co. Moreover, even the Fed estimate could be way overblown, because when you think about it, Silicon Valley may have been partly right and perhaps the cost of many of these options ought to be amortized than expensed. Based on data from a representative sample of firms, the economists' findings imply that if the cost of these options had been fully expensed against corporate income, operating earnings for the market as a whole would have run about 8.6% lower in 1998. And the rate of earnings growth would have been reduced by 1.3% from 1994 through '98. Over this period, operating earnings-per-share for the S&P 500 (based on figures from First Call) increased by 8.5% per year. And if we apply that 1.3% haircut, the adjusted rate of growth becomes 7.2%. Smithers analysts have come up with a much higher earnings discount, but at least two crucial parts of their analysis are open to criticism. First, they assumed an option life of 10 years. By contrast, Liang and Sharpe assumed these options last for five to six years. Smithers got the 10-year assumption by simply using the statutory limit on length of life. But Fed economists have found that an expected option life of five to six years is not only reflected in corporate 10-K statements, but has been independently verified in at least two academic studies. And secondly, Smithers also assumed there are no forfeitures; that no employees leave before their options can be vested. But forfeitures occur often enough, which is why Liang and Sharpe began by calculating a figure for net options issuance.
A pattern of unrelenting selling sweeping through the Treasury market in recent weeks is not caused by bad economic news alone. Some of those doing the selling may be foreign investors who see the decline of the dollar hammering their returns. Charles Peabody, bank analyst at Mitchell Securities in New York, says the bond market's behavior reflects a broad unwinding of bets placed by investors who were later caught unware by recent interest-rate increases. Many of these positions are now going bad; as they are unwound, they push rates higher. First was the so-called yen carry trade, in which investors borrowed funds in Japan at microscopic interest rates and bought Treasuries with the proceeds. When the yen spiked up, profits turned to losses and the Treasuries had to be dumped. Last week's disastrous trade was a variation on this theme -- the gold carry trade -- in which investors bet that the price of gold will drop. They borrowed gold from a bank, sold the gold and bought Treasuries, making perhaps 4% on the difference between what they paid to borrow the gold and what they earned on the securities. With gold prices running up this week, those trades had to be unwound. The gold carry trade is nowhere near as big as outright bets made on rates, known as interest-rate swaps, in which one investor agrees with another to exchange a fixed rate for a floating rate. Interest-rate swaps account for more than 80% of derivatives held at American banks. In the second quarter, the notional value of interest-rate related derivatives at domestic banks stood at $25.7 trillion, up 28% from the corresponding period in 1998. As rates climb higher, these holdings become worrisome. Will rates rise further? "Any time you get a trend reversal in the discount rate, that trend remains in force on average for 14 months," Peabody said. "August represents the first month of a trend reversal."
But be aware, he says, that bank stocks also face downward pressure because of Y2K concerns, a slowdown in bank merger activity and concerns about asset quality.
Writing in the April issue of Current Issues in Economics and Finance, Joseph Tracy, Henry Schneider and Sewin Chan (research economists at the Federal Reserve Bank of New York) used the Survey of Consumer Finances to examine the distribution of assets in households. Here are some of their findings: More than 30% of all households are invulnerable to stock and real estate market shocks. For better or worse, they don't own any of either. As a practical matter, the bottom 70% of all households don't have to worry about the stock market. Only households in the top 5% of all wealth holders have more at risk in the stock market than in real estate. Middle-class Americans - arguably the 50% of all households between the 40th and 90th percentiles in household assets - still have far more at risk in real estate than in common stocks. This has occurred in spite of the extraordinary success of defined contribution savings plans such as 401(k)s and 403(b)s. It has also occurred in spite of the remarkable popularity of common stock investing - recent surveys show that average plan participants now have about 85% of their savings committed to common stocks. The researchers conclude that most Americans have an uncomfortable vulnerability to housing prices. And that's the rub. You and I have two windows to watch very closely in coming months - the stock market window and the real estate window. If stocks decline, it will put a real dent in sales of multimillion-dollar houses and other grave concerns of the very wealthy. The more important window is real estate. If interest rates continue to rise, housing prices may flatten. Existing home sales have fallen in four of the past five months. If real estate softens, the flood of consumer spending that has come from the cornucopia of real estate appreciation will slow or stop. Then we'll have something to worry about.
Now the reality check: The pretax median income in 1998 -- the dividing point between those households in the top half of the pay heap and those in the bottom half -- was just $1,001 higher than it was in 1989. That translates into an average annual raise for the 1990s, adjusted for inflation, of $111.22, or a stingy 0.3%. Official statistics say that the fruits of prosperity in this decade have been even more heavily skewed toward the rich than in prior booms. The top 5% of households last year -- those making $132,199 or more -- had 21.4% of all income, well above the 17.5% earned by the top 5% in 1967. Income inequality rose sharply through the 1980s and early '90s, and the level has held roughly constant since 1994. That means the disparity has locked in at a historically high level. The 4.2% unemployment rate may mean work is plentiful, but it doesn't guarantee that jobs are secure or full-time. The proportion of the population living below the poverty level dropped to 12.7% (34.5 million people) in 1998, down from13.3% in 1997. Poverty rates for non-Hispanic Whites dropped to 8.2%, for Hispanics - 25.6%, for African Americans - 26.1%, and for Asians and Pacific Islanders -- 12.5%. Per capita income rose to $20,120. PCI for non-Hispanic Whites was $22,952; for African Americans, $12,957; for Asians, $18,709; and for Hispanics, $11,434. WSJ 10-4-99 Returns in percent through Sept. 30. Returns for 3 and 5 years periods are annualized.
[2] Includes government agency debt WSJ 10-1-99
WSJ 10-1-99 Q3-99 performance (percentage change) of countries in the Dow Jones Global Indexes. Results are listed by performance rank in U.S. dollar terms, with performance in the local currency lasted after.
To test the toxin's effect on the headaches, he tried it on 96 patients with chronic migraines. Forty-nine stopped having any symptoms, and 27 others said the number or severity of their headaches had been cut in half. The shots contained botulinum toxin, the same paralyzing stuff that causes food poisoning and is part of the biological warfare arsenal. Tiny amounts can paralyze individual muscles, stopping tremors and spasms. That is the only use approved by the FDA. However, doctors are allowed to prescribe drugs for uses not listed on their labels, as long as they see a benefit. Doctors using the shots to stop facial tremors noticed that patients' wrinkles were vanishing. In recent years, Binder and many other plastic surgeons have taken advantage of that side effect. About 26 million Americans suffer from migraines, according to the American Academy of Neurology. Most can be helped by one drug or another, but nothing works for 10% to 15%. The toxin, made by Allergan Inc. under the trade name Botox, costs hundreds of dollars per treatment. But that's nowhere near the cost of maintenance migraine medicines.
Some trucks and their cargoes have been stranded at Europe's border crossings when rolling into countries that don't allow trucks on weekends. So, the European Commission proposes a "harmonization" of weekend trucking bans. It suggests banning heavy trucks from circulating between 7 a.m. and 10 p.m. on Sundays, rather than the divergent bans now in place. Seven EU governments ban freight trucks on Sundays and five others ban trucks from Saturday to early Monday at various times of year. (WSJ 10-7) Musicians, technology companies and the United Nations join forces to stage NetAid, a worldwide concert event starting Saturday morning at http://www.netaid.org/concert/webcast.htm. (LA Times 10-7) Income thresholds on tax brackets for single filers will rise next year, according to CCH Inc. The 39.6% bracket will start with taxable income of more than $288,350, up from more than $283,150. The 36% bracket will begin with incomes above $132,600, up from $130,250; the 31% bracket will begin above $63,550, up from $62,450; and the 28% bracket above $26,250, up from $25,750. (WSJ 10-6) Demand for U.S. stocks from two key sources has weakened this year, as mutual fund inflows have declined and takeover activity has slowed. The S&P 500-stock index had struggled to a mere 4.4% price gain year to date. You could have earned 3.6% so far this year in a risk-free money market fund. Some investors might wonder if the risk posed by stocks was worth it. Technical analyst Gregory Nie of Everen Securities sees a major market test coming. When the Dow dropped below 10,500 two weeks ago, it was cracking what technicians call a key 'support level.' In Nie's view, this bull market's last chance for survival will come in the next few weeks as it attempts to rebound. 'The next rally carries a heavy technical burden,' he said. For the rally to be convincing from a technical standpoint, breadth--the number of stocks rising versus the number falling--must improve dramatically. 'We're going to confront this in the fourth quarter. It's important not to prejudge. Reserve judgment, but judge harshly when the time comes." (Thomas Mulligan, LA Times 10-5) Users of the Yahoo Careers Web site (careers.yahoo.com) can submit resumes and an essay entering them in a Fantasy Careers contest. Three winners will be picked to do a one-day stint as an ice-cream tester at Ben & Jerry's, a venture capitalist at Hummer Winblad Venture Partners of San Francisco or a professional sports agent at International Management Group of Cleveland. The contest runs through Oct. 24. (WSJ 10-5) Random health statistics: (1)The age-adjusted death rate from HIV infection in the U.S. declined an estimated 21% to a rate of 4.6 deaths per 100,000 in 1998, the lowest rate since 1987, after a 48% decline from 1996 to 1997. (2)Timely prenatal care also reached record levels in 1998 as an estimated 82.8% of women received care in their first trimester of pregnancy. (3) Cesarean deliveries increased from 20.8% of all deliveries in 1997 to 21.2% in 1998. (www.hhs.gov 10-5) Lipper calculates that assets in value-oriented general stock funds total $660 billion, versus $739 billion in growth-oriented general funds. (Paul Lim, LA Times 10-5) The newsletter Dow Theory Forecasts tracked the performance of stocks in the S&P 500 that were trading at P/Es of less than 10 on Dec. 1, 1994. Had you bought those value stocks then and held them through Jan. 20, 1999, you would have earned an average cumulative return of 250%. By contrast, had you invested in growth stocks with super-high P/Es on Dec. 1, 1994 (specifically, the S&P 500 stocks trading at P/Es of higher than 40), you would have earned an average return of less than 50% through Jan. 20 of this year. (Paul Lim, LA Times 10-5) The NAPM report's so-called supplier-delivery-time index could raise eyebrows among Fed policy makers. Slower deliveries (or higher index readings) ultimately serve as a harbinger of rising inflation trends. The September delivery-times reading -- 55.9 versus 51.1 in August -- was the highest since April 1995, a level indicating increased business activity and improving global demand. (William Pesek, Barrons 10-4) The latest CBS MarketWatch/CBS News Poll shows most Americans and investors remain optimistic about the U.S. stock market. Some 47% of all adults said they expected the stock market to rise in the next year or so, 31% said they saw the market falling and 22% weren't sure. In May 1998, 53% saw the market rising in the next year and 32% said they saw a fall coming. Of those who said they were investors, 49% saw the market rising in the next year and 34% saw it falling. In May 1998, 53% were optimistic and 36% were apprehensive about the stock market. (CBS MarketWatch 10-4) 3% of new mutual funds launched in the past three years have liquidated after being open less than three years, according to fund-tracker Morningstar. (Barrons 10-4) Tired of wondering who might have tried to call while you were using the phone to surf the Web? A technology being unveiled today by CallWave will let you find out. Instead of getting a busy signal, callers will hear a recording that sounds like an answering machine greeting. But the message they leave can be heard through the PC's speakers, giving Web surfers the opportunity to log off and return the call right away. CallWave would not reveal the cost of the service but said it will be aggressively priced and will be cheaper than the cost of a second phone line. The software required to use the service will be available for download Tuesday at http://www.callwave.com. (LA Times 10-4) Each week, Macroeconomic Advisers surveys 20 economists and calculates a consensus estimate for growth in GDP. In May, the consensus estimate called for growth at an inflation-adjusted annual rate of 2.7% during Q3-99. But in the firm's most recent poll, the consensus estimate was 3.9%. That would be substantially higher than the 1.6% growth in Q2, but less than Q1's robust 4.3% growth. (WSJ 10-4) It is a truism that Internet companies that go public are unprofitable, but that often doesn't stop their stocks from soaring. Taking a page from that playbook, more unprofitable non-Internet companies are deciding to go public, too. According to Thomson Financial Securities Data, a research firm in Newark, the percentage of non-Internet new issues (excluding closed-end funds and real estate investment trusts) that were running losses at their offering rose from 25% in the first quarter of 1997 to 34% in the first quarter of this year, and to 55% last quarter. (NYT 10-3) Since 1915, the Dow has declined 0.68%, on average, in September. For October, the Dow's average performance is a decline of 0.05%. All other months are up. (NYT 10-3) Although some neuroscientists dismiss the trend, business people are increasingly using pop neurology or "neurobics" (brain teasers, puzzles and cognitive exercises) in the belief that mental workouts enhance job performance, just as aerobic workouts build fitness. People who want to test the idea of a mental workout can do so easily at numerous web sites offering memory- and attention-improving products. These include a mind map software program call Mind Manager (www.mindmanager.com), supermemo.com; brain.com; neurobics.com, and enchantedmind.com, which presents a new set of puzzles weekly. (NYT 10-3) Writing and commenting about the market is like writing about the Mafia. You can say anything. Nobody calls up and says, "This is the Mafia speaking," and refutes you. Similarly, there is no official spokesman for the markets, so you can have them swooning, plunging, teetering, whatever you like, and who is to quarrel? (Fred Barbash, Wash Post 10-3) Dyslexic children use nearly five times the brain area as normal children while performing a simple language task, according to a new study by an interdisciplinary team of University of Washington researchers. The study shows for the first time that there are chemical differences in the brain function of dyslexic and non-dyslexic children. The research, published in the current issue of the American Journal of Neuroradiology, also provides new evidence that dyslexia is a brain-based disorder. Dyslexia, a reading disorder, is the most common learning disability, affecting an estimated 5% to 15% of children. The UW researchers used a novel noninvasive technique called proton echo-planar spectroscopic imaging (PEPSI) to explore the metabolic brain activity. (Newswise 10-2) History shows that the third quarter is typically the toughest for the U.S. stock market. Over the last 20 years, the S&P 500 index has, on average, posted a mere 1.4% gain in the third quarter. By contrast, the average gains in the first, second and fourth quarters were 4.3%, 4.1% and 4.4%, respectively. (Tom Petruno, LA Times 10-1) Of 1,205 funds with assets of more than $500 million tracked by Bloomberg Fund Performance, just 256 or 21% made money for investors in the quarter. Of the 2,534 funds with $10 million to $50 million in assets, 26% posted gains. The most widely held top-performing funds of recent years -- index funds and funds managed by star stock-pickers -- also stumbled. Of the 60 funds with more than $500 million in assets that have beaten the S&Ps 500 the past three years, none gained in the quarter. The average fixed-income fund fell 0.69%. Municipals and junk bonds, both down more than 1% in the past three months, were the biggest losers. (Bloomberg 10-1) Rep. Davis says Republicans describe Bill Bradley as "Gore without the charisma." ... Comedian Will Durst asks, "If Al Gore falls in a primary race, does he make a sound?" (WSJ 10-1) The temperature at the center of the Earth is approximately 9,900 degrees, about as hot as the surface of the Sun, the British weekly Nature reported Thursday. Knowing the right temperature at the center of the Earth could be of vital help in understanding such phenomena as earthquakes and volcanic eruptions. This is because the intense heat from the center radiates outward, in turn having an effect on the planet's crust and the tectonic plates that ride on it. (Nando 9-30) Two reasons that Japanese investors could be reluctant to finance our trade deficit: The belief that the US financial markets are in a bubble. In Japan, understandably, people are highly sensitive to asset bubbles, having suffered through the boom and bust of real-estate and equities prices throughout the 1990s. And they have worries about the U.S. consumption boom. To the Japanese, whose household savings rate has remained in the double digits all through the perilous 1990s, the U.S. consumption machine looks unsustainable. Some U.S. experts also fear the consumer boom isn't living just on borrowed money but on borrowed time. (WSJ 9-27) Number of top-rated domestic-stock funds with expense ratios less than 1%: 91. Number of domestic-stock funds with category ratings of 1 that have such low expenses: 27. (Laura Lallos, Morningstar 9-23)
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