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Although we predicted late last year that the Dow would end 2000 around 13,000, we're now looking for a flat year. The major indexes have seen their peaks. The Dow will end the year around 11,000-11,500, and the S&P 500 will close near 1500. These targets reflect our expectation that tech stocks have further to fall. But we believe the Dow will move up to 14,000 next year, from roughly 11,000 now, and that the S&P will trade in the neighborhood of 1800, about 20% above current levels. Overall, for the next few years, I think we're going to see a lot more interest in large-cap value rather than large-cap growth. That's partly because the global economy is picking up again. The meltdown in many foreign economies in the late 1990s was perhaps the toughest blow to deep cyclicals such as capital-goods and basic-industry stocks.
According to the Fed's preliminary first-quarter estimate, an unprecedented 34% of the first-quarter's net foreign purchase of US assets consisted of equities, which was a tad above fourth-quarter 1999's old record of 33%. For all of 1999, 13% of foreign net investment in the US was allocated to stocks, compared to a 7% share for 1996-1998. For the year-ended March 2000, foreign net purchases of US stocks approached 19% of total net foreign investment in US assets. By comparison, the US' net buying of foreign stocks over the same 12 months ended March 2000 approximated 34% of total net US investment in foreign assets. As of March 2000, foreign investors owned $1.37 trillion of US corporate equities, or about 8% of the market value of all US equity shares. The foreign ownership share of US stocks peaked at the 9.2% in Q3-90. Foreigners were net buyers of $181.4 billion annualized of US corporate bonds in 2000's first quarter. In terms of a 12-month moving average, the foreign net buying of US corporate bonds was a record $169.9 billion for the span ended March 2000. For 1996-1998, the $96.7 billion average annual net purchase of US corporate bonds by foreigners trailed their $197.6 billion average annual net investment in US government securities. Subsequently, the $163.4 billion average annual net purchase of US corporate bonds by foreigners has topped their $101.2 billion average annual net outlay on US governments. As of March 2000, foreigners owned $863.9 billion, of 20.5%, of all US corporate bonds outstanding. The foreign ownership share previously peaked at the 16.2% of year-end 1986 and would eventually temporarily bottom at March 1993's 12.6%. Over the five-years ended March 2000, the 21.5% average annual advance by foreign holdings of US corporate bonds sped past the 12.7% average annual growth rate of US corporate bonds outstanding. The net purchase of US government bonds approached 12% of 1999's total foreign net investment in US assets, which was substantially under its 36% share of 1996-1998.
The stock market has stabilized and it isnĖt pushing valuations up at the hectic pace, but it is hardly a braking force on the economy. Economists believe that wealth effects play out over time, so there should be plenty of wealth-related spending still in that pipeline. In any event, the effect that slower wealth creation and high interest rates should have is to hold back the consumer. And maybe that will happen. But one thing we can say for sure: The July retail sales report doesnĖt seem to foreshadow a slowdown on the part of the consumer in the third quarter. Sorry. If not the consumer, then what? If the economy is to slow but the consumer isnĖt slowing, then what, exactly, is going to slow down? Business fixed investment is running at a very high pace. Even inventory investment is strong (but sales growth has been just as strong or stronger -- removing an inventory cycle as a likely catalyst for a slowdown). Moreover, orders for business capital goods, especially capital equipment, have been very strong, and order backlogs are very deep. This sector seems well underpinned for some time to come. The government sector is past its peak period of squeezing the military, and so it exerts only a moderate drag on growth. Housing has slowed, and I doubt that there is much more drag from that sector, since mortgage rates are now below their 52-week averages. Bottom line: If itĖs not the consumer thatĖs going to slow down, then nothing is. Forecasts of slowing have been one permanent fixture in the economics profession over the past several years. So, if isnĖt working out, we can always forecast next year. But why should anyone believe that? The stock market has been acting squeamish, but other than that (and that is a behavior that is highly reversible) there is no discernable brake for the economy. The rate effect is, I believe, played out. There has actually been a decline in rates (the prime rate and some money-market rates excepted). Capital market rates are falling. But the corporate yield curve is still steep. That says more growth and more rate hikes lie ahead. And donĖt get caught up looking at the Treasury yield curve; that is a product of scarcity. It works this way: Bigger-than-expected fiscal budget surplus means more bond buybacks. If there is any message, itĖs that growth and tax revenues are faster than had been expected. Why does that make you think the economy is slowing? Stronger foreign growth will support more growth in the United States, too. So donĖt be so quick to look for that long-overdue slowdown. Until the Fed hikes rates more, there is no reason I can see to expect one. The silver lining is that maybe the economyĖs speed limit is a lot higher. Maybe the productivity gains will continue apace. Maybe, but maybe not. And that is why the Fed is edgy and why we continue to live from economic report to economic report. Related: John Lonski, Moody's 8-14 The latest retreat by fixed-rate borrowing costs should help to limit the severity of the current economic slowdown. Mortgage applications have already moved higher in response to lower borrowing costs, while consumer sentiment has improved. A rebound by home sales may not be that far behind. Previously, the 10-year Treasury yield had generally remained under 6% during March 1993-February 1994, November 1995-February 1996, and November 1997-September 1999. For each of these three episodes, the US economy's credit worth was sufficient for the purpose of allowing lower fixed-rate borrowing costs to spur domestic expenditures. Ultimately, the rejuvenation of domestic spending would boost both inflation risks and credit demands by enough to push the 10-year Treasury yield back above 6%. For the quarter-ended July, the prospective yearly increases of 8.6% for business sales and of 8.2% for retail sales are steep enough relative to the 10-year Treasury yield to underscore the vulnerability of a sub-6% 10-year Treasury yield. A quick quarter of a percentage point rise by Treasury yields could materialize if developments no longer favor a less-than-7% annual growth rate for business sales. But There Are No 'One-Handed Economists' Although consumer confidence shows signs of firming, a recent loss of momentum for wages and salaries casts doubt on the nearness of an extended re-acceleration by retail sales. May-July 2000 revealed only 69,000 new private-sector jobs - the fewest for any three-month span since the 61,000 of Q3-92. In turn, wages and salaries may have risen by merely 0.3% per month during the quarter-ended July, the worst such performance since 0.2% of Q4-95. A rebound by private-sector hiring activity coupled with a quickening of wage and salary income would probably trigger a substantive revitalization of consumer spending that sends interest rates higher. The outlook for profits has yet to worsen by enough to rule out the faster expansion of both employment and personal income. Nevertheless, the ongoing deceleration by wages and salaries does not bode well for consumer spending. July's surprisingly steep monthly jump by retail sales did not arrest the downward trend of retail sales' year-to-year increase from the 10.5% of Q1-2000 to the 8.2% of the quarter-ended July. Similarly, the annual increase of wages and salaries has dipped from its most recent peak of 7% for the quarter ended May 2000 to the 6.6% of the quarter-ended July. The rest of the world may not yet be vigorous enough to tolerate an extended deceleration of US domestic spending. Remember 1998's global crisis. A number of foreign economies slumped badly not long after the year-over-year increase of US retail sales slumped from the 6% of the six-months ended Q1-97 to the 3.7% of the six-months ended Q1-98.
Some 17% of high-yield debt was in so-called 'distressed debt' (those with yields to maturity at least 10 percentage points above those of similar Treasury securities) on June 30, compared with 9% at the end of last year and just 3% at the end of 1998. And Moody's downgraded the debt of twice as many companies as it upgraded in the first half of this year, the highest ratio since 1991, when the last recession ended. Still, the cumulative total of defaulted and distressed debt, estimated at 23% of the amount outstanding at midyear, remains far below the 43% in 1992. In fact, some analysts contend that prices on high-yield debt have fallen to bargain levels, with the average yield at 13 percent.
Mexico ran a trade surplus of $15 billion with its northern neighbor last year and has already racked up a surplus of nearly $10 billion through the first six months of 2000. But bilateral trade statistics don't measure the increasing integration in US-Mexico production sharing, or the way American multinationals are contributing to US exports world-wide by shifting part of their production cycles to Mexico. US multinationals have already sent nearly $24 billion of components to Mexico this year, or the equivalent of Mexico's entire trade surplus with the U.S. over the past 18 months. For the most part, the gap reported in trade figures is composed largely of the value added to those components, originating in American factories, which then are assembled in Mexico, mostly in US-owned plants. Some economists now see the US-Mexico trade gap as an illusion created by the blurring of boundaries between the two partners' manufacturing bases. 'In some respects, each country is sending the other essentially the same product but at a different stage of production,' says Lucinda Vargas, an economist with the FRB of Dallas. Americans automatically gain in this type of trade, Ms. Vargas says, because the US is importing a final product in which US inputs make up the bulk of the content. However, since the assembled product is always worth more than the mere sum of its many parts, trade statistics appear to favor Mexico. The IBM plant in nearby El Salto exported more than $3 billion in 1999, and analysts say close to 25% of that is non-US exports. In effect, IBM is using Guadalajara as a trampoline to bounce hundreds of millions of dollars worth of US-made components around the world. Because so much of Mexico's industrial capacity is imported from the US, the US shares in any uptick in trade outside the region. Here in Mexico's Silicon Valley, the volume of US-originated components for PCs and other computer products averages about 70% of all finished goods, according to Global Trade Information Services of Columbia, S.C.
The price of digital televisions and receivers is one factor in the slow sales, and there are few compelling reasons for consumers to make the switch. Hardly any of the 150 stations now broadcasting a digital signal offer programming designed for digital televisions, while the cable industry, which services two-thirds of American viewers, has said they will not carry digital channels. In response, manufacturers such as Sony are delaying the introduction of new digital units, while analog channels are offering their digital channels for other uses.
The prime suspect in the model's demise has been corporate share repurchase programs. Such plans were quite rare as recently as the early 1980's. Therefore, record low dividends simply reflect a shift in how corporations distribute their earnings -- hardly a bearish development. But two finance professors, Eugene Fama of the University of Chicago and Ken French of MIT, contend that this argument does not completely solve the mystery. At least half the decline in the dividend yield over the last two decades has been caused by factors having nothing to do with that trend. The professors point to the higher percentage of unprofitable companies -- the kind that have hardly ever paid dividends. Before 1980, rarely were more than 10% of companies unprofitable in any given year. At the end of 1998, more than 30% of companies were unprofitable -- an increase that is difficult to interpret bullishly. Is there any way to square these divergent explanations of the low dividend yield? I think that there is. But first, we shouldn't view the stock market as homogenous; instead, we should focus on the stark differences between companies that repurchase their shares and those that do not. According to two other finance professors, Gustavo Grullon of Rice University and Roni Michaely of Cornell, about 90% of all share repurchases are by companies that also pay a dividend and are relatively large and profitable. The average market capitalization of companies that do both is more than 12 times greater than the average company that does neither. Moreover, the average company that engages in neither activity is unprofitable, while those that do both have an average annual return on assets of nearly 15%. For the companies that do both, repurchases have undoubtedly lowered their dividend yields. To show this, Professors Grullon and Michaely applied a dividend forecasting formula retroactively to 1972 (it did not take repurchases into account). Although there were variations, the formula, on average, was accurate for companies that did not buy back their shares. But for companies that did, the formula called for dividends that, on average, were above the actual numbers. This suggests that for larger-cap, dividend-paying blue chips, a low dividend yield may not be bearish. But be careful not to generalize this finding to the entire market. At the same time that blue-chip companies have been substituting repurchases for dividends, the number of unprofitable companies has grown markedly. That is an ominous development, and bullish investors are blinding themselves to it when they think that the mystery of today's low dividend yield can be explained solely by buybacks.
`We have the luxury of being able to be patient about this,' Poole said in an interview Tuesday, suggesting he doesn't see inflation as enough of a threat right now to force the Fed to raise interest rates to keep the economy from overheating. Poole said `A situation in which you've got some ambiguity, is exactly what you want to expect when policy is pretty close to being on the right course. If all the indicators pointed in one direction, then it'd be pretty clear we'd gotten off course.' [..which makes sense, and is a point I have not heard before]
'There has been an erosion of corporate credit worth that investors ought to pay attention to,' said Moody's chief economist, John Lonski. Heightening the risk: US corporations are rapidly taking on new debt. Nonfinancial corporate debt outstanding grew 12.3% in the 12 months ended March 2000 to $4.47 trillion. That is more than double the average annual growth rate of 6.1% in the five years ended in 1997, Moody's said. Debt-to-equity ratios have surged as corporations borrow more to expand their businesses, a smart move when economic prospects are rosy, but more questionable if a slowdown ensues. The debt-to-net-worth ratio of nonfinancial companies was 81% in the first quarter of 2000, the highest since 1993. Debt levels had declined from a peak of 92% in 1990 to a low of 70% in 1997. The biggest reason for the downgrades: investment-grade companies borrowing to buy back stock or purchase competitors, as well as lower-rated companies facing softer earnings and difficulties in the junk-bond market. The rise in debt levels reflects "increasing tolerance of corporate managers for greater risk as they try to satisfy shareholder demands," said Moody's senior economist, John Puchalla. In the year's first half, there were 206 downgrades affecting bonds valued at a total of $312 billion and 95 upgrades valued at $206 billion. The downgrades were most concentrated among the speculative-grade companies that issue high yield bonds; these firms had 144 downgrades worth $61.1 billion, compared with 47 upgrades worth $26 billion. The outlook for credit quality is poor, Moody's said. In the second quarter, 50 issuers were put on review for possible downgrade, while only 33 were placed under upgrade review. Some economists said the figures were not reason for excessive concern. 'So much of this debt expansion is being poured into investments in capital expansion that is driving productivity gains, so it may be more likely to produce profits, rather than financial stress,' said Robert DiClemente, chief US economist at Salomon Smith Barney. 'There will be spectacular successes and spectacular failures.'
That message doesn't jibe with surging durable goods orders in May (up 7%) and June (up 10%). The NAPM new orders index has been leaking air since September, when it hit a five-year high of 63.2. What gives? One word: high-tech. `One industry is accounting for almost all of the growth in output,' says Bear Stearns economist Melanie Hardy. `With a diffusion index, it gets one vote.' The technology sector -- computers, communications equipment and semi-conductors -- accounts for 13% of manufacturing production yet its 64.3% annualized increase was responsible for the entire growth of output in the second quarter, Hardy says. [High 'tech' demand with stable 'non-tech' demand should help hold down prices] `In the old economy, when demand increases prices increase,'' says Norbert Ore, chairman of the NAPM Survey Committee. `In the new economy, increased demand leads to a fall in prices as a new product becomes cheaper to produce.'
Just the Facts [Can lower tax rates cause higher tax revenue?] The capital gains tax rate was lowered to 20% from 28% in 1997, and revenues went from $62 billion in 1996 to an estimated $110 billion last year. [Were the deficits of the 80's due to tax cuts for the rich?] Federal tax revenues doubled during the 80's to about $1 trillion from $500 billion, even as the rich paid a larger share of the total. (Caroline Baum, Bloomberg 8-14) Economist Amar Bhide in his recently published book, The Origin and Evolution of New Business states: "Differences in product attributes cannot easily explain why the chewing gum company Wrigley could build a global brand while lollipop companies did not." Bhide is making a crucial contribution to the theory of industrial organization that is directly subversive of mainstream shibboleths. His chewing gum theorem says that firm size is mainly determined by the actions of entrepreneurs like Wrigley, and not so much by those "exogenous" factors like "barriers to entry" or even that old standby, "economies of scale." (Gene Epstein, Barrons 8-14) Remember the "stealth" bear market of 1999? Even though key stock indexes such as the Dow and Nasdaq rose for the year, the majority of stocks declined. Last week, while the Nasdaq struggled to hold its loss from its March peak to the 25% range, the 2,733-stock NYSE composite index hit a record high. In 5 of the last 7 weeks, the ranks of advancing stocks on the NYSE have outnumbered declining issues. During the last three months, 47 S&P industry groups have risen in price while 40 have declined. In the last month, 53 S&P groups have gained while 34 have lost ground. Has the stealth bear market given way to a stealth bull market? (Tom Petruno, LA Times 8-13) Voluntary turnover is averaging 17% a year at American companies, according to the retention practices survey by the Society for Human Resource Management. The rate is even higher, 25%, at companies with 5,000 or more employees. (NYT 8-13) 'Among the 1,100 largest-cap companies in the U.S., more than half of them have P/E ratios below 20,' writes Ralph Acampora, chief technical analyst for Prudential Securities. 'If you take the technology stocks out of the entire group, (the group's) average P/E is an amazingly low 12.1. If I am right - and all of my research convinces me that I am - then a Dow of at least 20,000 in the foreseeable future is not out of the question.' (Tom Walker, AJC 8-13) Excess world [oil] capacity, what could quickly be brought into production, has ranged between about 7 and 10% over the last 50 years. It reached 18% in 1986, when prices collapsed. Today it's around 5%, and we need 2 to 2 1/2 percent as a cushion against emergency, such as weather or strikes. So we are as tight now as I have seen in my 44 years studying the industry. It's not political maneuvering by OPEC -- the oil physically isn't there. (Charles Maxwell, regarded as the dean of Wall Street's oil analysts, Weeden & Co, NYT 8-13) One striking fact exposed by the Firestone recall is that there's nowhere to turn for ready, reliable information on the safety and quality of tires. Nowhere can a shopper readily see which tire stops best in rain, or gives best traction in mud, or has generated the most safety complaints. Consumer Reports magazine is developing a tire-rating system that could be ready next year. Now, its tests rank performance under various conditions, but can't predict durability or find quality flaws. The government's Uniform Tire Quality Grading system attempts to provide a simple rating system. Tires are scored on how long the tread wears, how well they resist heat and how much traction they have. The scores are stamped on the tire sidewall. But deep-tread tires [like those on SUV's] are exempt. (USA Today 8-11) Corporate brand familiarity and favorability may be linked to strong investment returns, suggests a study by Corporate Branding LLC, a brand strategy consultant. For the 10 years ended Dec. 31, a composite of 32 companies found to have the strongest brands had a return of 402%, compared with 309% for the Dow and 308% for the S&P 500. (WSJ 8-10) Generation Y represents one of the biggest and most voracious movie audiences in history. According to the Motion Picture Association of America, nearly half of kids ages 12 to 17 say they go to the movies at least once a month; only 28% of those over 18 make the same claim. In all, those ages 12 to 24 bought 40% of the movie tickets sold in the US last year. (WSJ 8-10) During the three years ended with 1999, 3.3 million workers on the job for three years or more were laid off while 4.3 million workers on the job for less than three years lost their jobs, the BLS reported in its biennial job displacement survey. This compares with total layoffs of 8 million, 3.6 million of them on the job for three years or more, from 1995 to 1997. And that is down from a total of 8.4 million in the period from 1993 through 1995. The decline in layoffs is more pronounced when calculated as a percentage of all employed workers. According to the bureau, that rate declined to 6.1% in the last three years, from 6.6% in 1995 through 1997 and 8% in 1993 through 1995. And this 6.1% may be near or even match the low for the survey, which goes back to 1979. (NYT 8-10) The number of people who've been laid off excluding farm workers has remained relatively constant between 1993 and 1997, averaging 2.6 million people per year. (Kristen Gerencher, CBSMarketWatch 8-7) The American Management Association says 73% of major companies monitor online activities, twice the number that did that in 1997. (WSJ 8-8) In spite of low unemployment, the number of people who've been laid off excluding farm workers has remained relatively constant between 1993 and 1997, averaging 2.6 million people per year. Department stores, mortgage banks and brokerages, and textile and apparel makers are among the sectors seeing the most job shrinkage, according to the Labor Department. (MarketWatch 8-6) State and local government coffers have seldom been in better shape; many are running budget surpluses, thanks to robust economic growth and swelling tax receipts. Not only is credit quality improving in muniland, but an increasing number of ratings are going up, not down as many were in the mid-'Nineties. It's equally important to note that better fiscal positions mean less debt issuance in the future. Less supply will only boost demand for existing issues. (William Pesek, Barrons 8-7) Under the intermediate assumptions of the Social Security trustees, over the next 30 years, the number of elderly people in the U.S. will nearly double, while those aged 20-64 who might be equipped to support them will grow by a mere 16%. The ratio between these two groups will plunge from today's 4.7 people aged 20-64 for every person 65 and older, to 2.7 by 2030. (Gene Epstein, Barrons 8-7) And against that lower working base, the combined cost of Social Security and Medicare could jump from this year's 6.5% of gross domestic product to anywhere from 11% to 15% by 2030. A full percentage point of Q-2's 5.2% GDP growth was caused by a rebuilding of previously depleted inventories. Now that inventories are growing at a rate that is more consistent with current economic activity, they may contribute very little to the growth of economic activity in the second half of this year. Almost another full percentage point of growth occurred in spending by the federal government. Some of this reflected a rebound from depleted defense spending during the winter. In effect, this was a rebuilding of our defense inventory, but such a measure is not used in the national income accounts. A continuation of such rapid defense spending is not likely in the next few quarters. Another portion of the government spending reflected the costs associated with the census. This is real economic activity, but it also is one-time spending. Subtract the inventory and federal spending and growth falls to a more sustainable 3.3%. Furthermore, slower housing sales probably will undermine construction activity during the summer and fall. Restraint on some consumer spending, such as for furniture, also can be expected. (Donald Ratajczak, AJC 8-6) Morningstar's database of 7,623 stocks includes 234 companies with yields of 8% or more. At the end of July, the highest average yields came from tobacco companies, 7.6%; real estate investment trusts, 6.6%; and electric utilities and construction companies, each at 3.9%. Also near the top: forestry and wood products companies, savings institutions and banks. (AJC 8-6) After several reports signaling economic deceleration, economists now expect the Federal Reserve to hold interest rates steady this month according to a new CNBC survey. All 12 economists polled believe the Fed will keep the overnight federal funds rate at 6.50 percent at the August 22 and October 3 meetings, and seven of 12 project steady policy at the November 15 meeting. (CNBC 8-4) Like the tortoise passing the hare, bonds are quietly outperforming stocks -- in some cases by a large margin -- since the beginning of this year. The most striking statistic: Long-term Treasurys are up 12% so far this year measured by total return. Municipal bonds have climbed almost 6%, including price change and interest payments, while investment-grade corporate bonds are up 4%, agency bonds 5% and emerging-market bonds a hefty 12%. Junk bonds are a laggard, down almost 0.5%. (WSJ 8-4) Your favorite mutual fund has been turning in a bell-ringing performance when suddenly comes chilling news: the fund's hot-shot manager is moving on to greener pastures. A manager jumping ship, though always cause for extra vigilance, isn't an automatic signal to bail out of a well-run fund. A study by Morningstar found that on average, funds gained 19.06% in the year after a manager change compared with 14.92% in the year before the departure. Because departures of star managers can trigger withdrawals, mutual-fund companies often don't go out of their way to tell investors that their favorite manager has left. The SEC's Free Edgar, Morningstar and Fundalarm detail manager changes. (WSJ 8-4) The nation's phone companies this week began issuing toll-free numbers that start with the 866 prefix to those who want a personal number that people can call for free. After blazing through toll-free phone numbers that start with 800, 888 and 877, the nation's numbering administrators have activated the 866 code. Next up: 855 in November, then 844 and so on. (LA Times 803) The move to trading in decimals instead of fractions will crimp the profit margins of one of Wall Street's biggest cash cows. Bernard Madoff, chairman of the securities firm bearing his name, a specialist in processing trades for other firms, estimates that decimalization eventually may halve market-makers' spreads on the average stock in the S&P 500 stock index to roughly five cents a share from a current level of about 10 cents. While spreads on some of the most actively traded stocks may shrink to a penny, spreads on some less actively traded stocks may actually increase as some market makers pull back from trading such riskier, less-liquid issues. Thomas Joyce, co-head of global electronic equity trading at Merrill Lynch, agrees that spreads might contract by 40% to 50% in the aggregate. (WSJ 8-2) Suppose you sue your employer for age discrimination, and a judge orders the company to pay you $1 million. You agreed in advance to give one-third to your lawyer. How much of your award is subject to taxes? Curiously, the answer may depend on where you live and which federal court hears your case. Some federal appeals courts have decided the entire award is taxable. Nobody likes to pay taxes on damage awards, but plaintiffs especially hate paying tax on their attorneys' income. Winners often can't claim most or all legal costs as an itemized deduction because of the alternative minimum tax and other limitations. (WSJ 8-2) Unit labor costs increased 0.6% year-over-year in Q4-99 and Q1-2000. In the non-financial corporate sector, which is Greenspan's preferred area for monitoring productivity and costs because it excludes industries where compensation is flexible and incentive-based, unit labor costs rose an imperceptible 0.1% in Q1 from a year earlier. (Caroline Baum, Bloomberg 8-1)
If you take the election data too literally, you could persuade yourself that stocks will finish the year down. They have done so, notes Yale Hirsch, editor of the Stock Trader's Almanac, in almost every lame-duck president's last year. Then again, you could just as easily conclude that stocks will rebound this year. After all, just about everyone's research indicates that stocks generally rise in presidential-election years, especially at year's end. (WSJ 8-1) Some $1.6 billion dollars were generated by a 0.2% the payroll surtax last year. A group that includes business, state agencies and labor unions has reached a consensus on long-discussed unemployment-insurance reform. Their proposal would boost state unemployment funds, lower the corporate tax burden and extend benefits to part-time workers. (WSJ 8-1) Investors in June put $22.4 billion of net new cash into stock funds, up 31.3% from May and 18.5% from June 1999, according to the Investment Company Institute, a mutual-fund trade group that published its monthly report Monday. That boosted the total net new cash going into stock mutual funds in the second quarter to $73.4 billion, the strongest showing for the April-June period for stock funds on record. (WSJ 8-1) A study commissioned by Families USA and released Monday said Americans 65 and older pay an average of $1,205 a year for prescriptions - up from $559 in 1992 - and will shell out $2,810 apiece by 2010. Prescription drugs now account for about 10% of seniors' health costs - and will likely rise to 13.3% in 2010. The average senior's cost per prescription has risen dramatically, from $28.50 in 1992 to $42.30 now, and is projected to jump to $72.94 in 2010. The elderly got by on about 20 prescriptions per year in 1992. Now they buy about 29 annually, and are expected to buy about 39 by 2010. The study was based on data gathered by Medicare. (USA Today 7-31) Home Page Previous Factoid Top Sites |