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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (5363)	6/26/2001 11:16:28 AM
From: Ilaine	Respond to of 74559

A couple of novel insights from TrimTabs: >>We are tired of hearing ignorant types refer to the $2 trillion in retail and institutional money funds as sideline cash waiting to go into the stock market. The reality is that whatever money is in institutional money funds has nothing to do with potential stock market investment. Further, most of the cash in retail money funds is being used as a new age checking account. So far this year, $40.4 billion has flowed into retail money funds, vs. $37.7 billion over the same time last year. That does not indicate a huge amount of sideline cash waiting to buy stocks. In fact, our guess is that sideline cash at equity mutual and pension funds has been dropping steadily, although the ICI will not report end of May cash levels until the last week of June. CORPORATE INCOME DOWN ADJ. 20% FEB. MAY WHILE INDIVIDUAL UP ADJ. 6.5% - 7.5%. Withheld income and employment taxes collected over the five days ended Thursday, June 14, 2001 are not comparable with the amount collected over the five days ended Thursday, June 15, 2000. The reason, those paid twice per month usually receive their checks on the 1st and 15th of each month. Therefore, after next week's numbers are in, we will compare the fortnightly and four week results. However, over the first four days of last week, the year over year growth rate was the same steady 4+% in withholding plus employment taxes that had been experienced between February through May. To repeat what we have been saying many times before but is still crucial to understanding the US economy income growth is being understated by about 2% to 3% due to the collapse of option conversions this year vs. early 2000. June 15 is also important because both corporate and estimated individual taxes are due. Corporate income tax payments are down an understated 10% over the four months February to May. Understated because while last year's spike in option conversions created higher individual withholding payments, the corporate employer got an equivalent size tax deduction. Therefore, without option conversions this year, corporate payments should be about 10% higher than last year. Thus, the real decline in corporate income tax payments is 20%. Individual Savings Wasted When They Become Unneeded Corporate Capital Expenditures. Since income tax collections are a direct correlate to income, the dichotomy between rising individual and plunging corporate income is astounding. What that points to a lessening in importance of corporate America and the resurgence of individual initiative. The big surge in corporate restructurings in the mid 1990's created a huge pool of well educated individuals who started working for themselves utilizing the developing internet world to make a living and pay their bills. Today, the vast majority of US income is being earned not by those employed at public companies, but rather those who do not. Therefore we can have a corporate recession and growing individual income at the same time. Indeed, at some point the world will realize that the extra savings of individuals being invested in corporate America is being wasted in excess capital expenditures that are attempts to justify the leveraged market caps.<< trimtabs.com