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To: Sonny McWilliams who wrote (26303)	7/31/2000 10:34:25 PM
From: William Hunt	Respond to of 27012

Treasury to Pay $45 Billion of Debt, Post $50 Billion Balance for Quarter Dow Jones Newswires WASHINGTON -- The Treasury Department Monday said it expects to pay down $45 billion on the federal debt in the third quarter, with a cash balance of $50 billion on Sept. 30. The Treasury also said it projected a net paydown for the fourth quarter of about $10 billion, with a $30 billion cash balance at the end of December. The new estimate of the third-quarter paydown is slightly below what the Treasury Department had previously anticipated. In May, the Treasury Department projected a $47 billion paydown, with a $45 billion ending balance, for the quarter. The Treasury Department said the downward revision to the estimate was driven by an increase in outlays. However, the estimate is further evidence of the flush cash position in which the government finds itself as chronic budget deficits have turned to surpluses in recent years. In late June, the Office of Management and Budget estimated surpluses totaling $4.193 trillion through 2010. The projected fourth-quarter debt paydown would mark a reversal from the $47 billion in net borrowing seen in the same period of 1999, driven in part by concerns over the year-2000 date changeover. The Treasury Department also said it paid down a record $192 billion on the federal debt in the second quarter, with an ending cash balance of $57 billion on June 30. The Treasury Department had originally expected to pay down a smaller $185 billion in the quarter, with a quarter-end balance of only $50 billion. The quarter typically sees government coffers bulge as individual tax bills are paid. The government attributed the larger-than-expected second-quarter paydown to higher receipts. The borrowing estimates are the prelude to Wednesday's quarterly refunding press conference. BEST WISHES BILL

To: Sonny McWilliams who wrote (26303)	7/31/2000 10:38:21 PM
From: William Hunt	Respond to of 27012

The Outlook WASHINGTON Interest rates are rising. The stock market is slumping. The expansion is well into its 10th year. It's a classic recipe for an economic slowdown. Yet as Friday's jolting growth report shows, this millennial boom is now being driven by an unusually powerful engine: corporate America's insatiable appetite for high technology. Nearly a third of the increase in gross domestic product in the April-to-June period came from business spending on information-processing gear and software -- even though those products make up just a 20th of the economy's total output. While the expansion itself is old, the Internet-driven phase still is in its infancy. Corporations are scrambling, for example, to reap the efficiency gains from business-to-business e-commerce networks that barely existed just six months ago. High-tech investment soared at a 31% annualized pace in the first half of this year. In contrast, total business investment has been increasing by a solid but more modest rate of 10% per year in recent years. With the overall economy growing at a developing-country-like 5% annual rate so far this year, it's easy to overlook the fact that there really is a slowdown under way, at least in some key sectors. Thanks to six Federal Reserve interest-rate increases over the past year, new-home sales have slipped. Industrial production -- excluding computers, telecommunications equipment and semiconductors -- was flat through the first half of the year. The wealth gusher behind the great 1990s household spending spree has dried up, with the broad-based Wilshire 5000 stock index down 10% since the year began. In other words, monetary policy is working precisely as it should: raising the cost of capital to the point where many consumers and investors are turning more frugal. Nor has the tech sector been entirely insulated from the Fed, as worries of slumping demand and weak earnings have hammered the New Economy Nasdaq anew in recent days. It's important, though, to make a distinction between the stock market and the real economy. Many tech companies' stocks are being punished because their growth isn't quite as stellar as investors had hoped, yet their expansion by conventional standards remains spectacular. Telecom giant Nokia Corp.'s stock suffered last week because a 62% second-quarter profit rise on a 55% revenue increase from the year earlier hadn't met expectations. Ford Motor Co., by contrast, won kudos for a 6% increase in sales. Demand for tech products remains unusually strong, in part because the Fed's 1.75% rate increases to date still look puny compared with the huge returns that companies anticipate from Web-related investments. "Customers can save the equivalent of 5% of their revenues by putting supply chains on the Web," says Chris Stix, a technology analyst at Morgan Stanley Dean Witter. He's aware of one pharmaceutical company that's planning to increase sevenfold its purchases from Internet supplier Cisco Systems Inc., wiring up everybody from employees to physicians. While the economy's zip over the past year has made Fed officials nervous about inflation, many analysts say high-tech investment-led growth at this speed is OK. Economists make a distinction between consumer-demand-led growth -- which can push up prices if too many people chase too few goods -- and supply-led growth. Computers expand the economy's capacity to produce, thus raising the speed limit. Indeed, despite the outsized second-quarter expansion, inflation actually moderated during the period. That doesn't mean the central bank will calmly keep rates on hold as expectations of a slowdown fade. Rapid growth, whatever the source, can tax an economy's resources. In testimony before Congress earlier this month, Fed Chairman Alan Greenspan cited two early-warning signs of strains that, if aggravated, could prompt more rate increases. One was the swelling current account deficit. American households aren't saving enough of their paychecks to fund American business's high-tech investment binge, forcing a perilously high dependence on foreign capital. The second concern cited by Mr. Greenspan was the ever-tightening labor market, which could touch off an inflationary wage-price spiral. True, the Web allows employers to squeeze more out of each worker. But companies are also hiring more and more workers to make and use new computers and software. If the Labor Department reports Friday that the jobless rate fell in July, the odds would jump for a further nudging-up of interest rates on Aug. 22. That would further damp the nontech portions of the economy. Whether the tech sector would cool is an open question. "There's been a shift of capital out of the so-called Old Economy into the New Economy," Mr. Greenspan told Congress. He's helping accelerate this transformation. BEST WISHES BILL

To: Sonny McWilliams who wrote (26303)	7/31/2000 10:43:49 PM
From: William Hunt	Read Replies (1) \| Respond to of 27012

07/31 16:06 Crude Oil Falls, Capping Worst Month Since 1998, on Fuel Supply By Josh P. Hamilton New York, July 31 (Bloomberg) -- Crude oil fell almost 3 percent, capping its biggest monthly decline since November 1998, on waning concern about tight supplies of gasoline. U.S. gasoline inventories are above year-ago levels for the first time since October, according to an industry report last week. Oil prices that rallied to more than $33 a barrel in June fell 16 percent in July as gasoline inventories rose. ``There are no long-term worries about gasoline supply,'' said James Fiedler, a senior vice president at ED&F Man International in New York. The price of crude oil ``still looks a bit heavy,'' he said. Crude oil for September delivery fell 75 cents, or 2.7 percent, to $27.43 a barrel on the New York Mercantile Exchange, the lowest closing price since May 5. Oil prices, which reached a nine-year high of $34.37 in March and traded above $30 for much of June, are now 34 percent higher than a year ago. Gasoline supplies in the U.S. totaled 208.2 million barrels as of July 21, according to the American Petroleum Institute. That's 45,000 barrels more than a year earlier. At the start of June, inventories were 11 percent lower than a year earlier. Even a rally today in gasoline for August delivery on the Nymex wasn't enough to boost the price of crude oil. Traders said the rise in gasoline prices reflected expectations of a short-term disruption to supply, not a lasting shortage. Gasoline Gasoline for August delivery rose 2.69 cents, or 2.8 percent to 97.72 cents a gallon on the Nymex. The contract expired at the close of floor trading today. The September contract fell 0.13 cent to 84.87 cents, and supplies for later months also declined. Gasoline futures represent wholesale prices. Fiedler said today's rally in the August contract was related to a perceived lack of supply in the New York harbor market, where Nymex futures are delivered -- an event that he doubted would last very long. Refiners will soon switch to making winter-grade gasoline. The fuel is easier to produce for the fall and winter season because environmental regulations are less stringent. Demand also drops once the summer vacation season ends. Tosco Corp. has been having trouble since Tuesday in making reformulated gasoline at a 144,000-barrel-a-day unit at the Bayway refinery in Linden, New Jersey, traders said. Saudi Arabia Crude oil was little changed last week, after dropping earlier in the month on expectations Saudi Arabia was planning to make good on a July 3 proposal to add more supply to world markets. Saudi Arabia, the world's largest oil producer, wants to avoid the risk of hurting world economic growth that fuels oil demand. The kingdom hasn't made any public statements on its plans recently. It faces opposition from other members of the Organization of Petroleum Exporting Countries. Ali Rodriguez, the president of OPEC, this weekend warned that the group's members are over-producing by about 700,000 barrels a day, a move that could lead to oversupply and send prices even lower, the El Nacional newspaper reported. Rodriguez, who also is Venezuela's energy and mines minister, didn't identify which OPEC members were over-producing. Rodriguez said non-OPEC members are selling their crude at discounts, further pressuring prices. In London, Brent crude oil for September settlement fell 43 cents to $26.93 a barrel on the International Petroleum Exchange. -------------------------------------------------------------------------------- BEST WISHES BILL