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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (2075)	10/3/2002 1:30:14 AM
From: Wally Mastroly	Respond to of 10065

..and from the CEOs....(read the last line first): Reuters Business Report CEOs See Slower Economic Growth Ahead Wednesday October 2, 7:54 pm ET By Jeremy Pelofsky and Brian Kelleher WHITE SULPHUR SPRINGS, W. Va. (Reuters) - Top U.S. executives expect slower economic growth in the months and year ahead and, while not expecting a new recession, think capital spending will at best stabilize or perhaps fall further, according to a survey out on Wednesday. ADVERTISEMENT About 94 percent of the chief executives surveyed by the U.S. Business Council expect economic growth to slow in the second half of 2002 from the 3.2 percent tallied in the first half of the year. And almost two-thirds, or 65 percent, expect that growth will fail to top 3 percent next year. "The best case next year ... is for a very modest economic recovery," Bill Harrison, CEO of J.P. Morgan Chase & Co. Inc. (NYSE:JPM - News) said. "It is clear that respondents' firms are concentrating on cost containment." The elite chief executives of companies like McDonalds Corp. (NYSE:MCD - News), Hewlett-Packard Co. (NYSE:HPQ - News), and Goldman Sachs Group Inc. (NYSE:GS - News) who belong to the U.S. Business Council were gathering at the posh Greenbrier resort nestled in the mountains of West Virginia for a semi-annual discussion about the economy and security. Oh yes, and a round or two of golf. The U.S. economy began recovering late last year but the recovery has been uneven, with annualized growth of 5.0 percent in the first quarter dwindling to a rate of 1.3 percent in the second. The economy contracted in the first three quarters of 2001, ending a record decade-long expansion. Clouds on the economy's horizon include the reluctance of many companies to increase capital spending and possible U.S. military involvement in the Middle East. "This is just another negative ... with respect to the capital markets and the equity markets," said Harrison, who is also vice chairman of the council. STAYING AWAY FROM MOST RISKS "We are in an environment that is so much more risk averse," said Carly Fiorina, CEO of computer giant HP. "It's still looking a little murky out there, so we're going to stay more risk averse as opposed to risk prone." The vast majority of CEOs expect capital spending to stabilize or drop next year. Some 65 percent of executives expect wages to remain stable next year, while 31 percent expect wage gains to slow. About 40 percent of executives expect the pace of hiring to remain stable, with only 19 percent predicting work force reductions. But 79 percent of respondents said unemployment, currently at 5.7 percent, will rise next year. Yet, those executives were more upbeat than many analysts about their sales outlook. More than half of respondents believe their company's sales will grow "somewhat" or "notably" in the coming year. Expected to attend the confab were a myriad of CEOs from a variety of companies, including Bank of America Corp. (NYSE:BAC - News), Sprint Corp. (NYSE:PCS - News; NYSE:FON - News) and Walt Disney Co. (NYSE:DIS - News). Past attendees who were notably absent this year included Kenneth Lay, disgraced Enron CEO, and former Tyco boss Dennis Kozlowski, who has been indicted on corruption charges. More than half of the 75 chief executives surveyed believed the Federal Reserve was done cutting interest rates and almost all of them believed Fed policymakers would begin raising rates again next year. But still, a large minority -- 40 percent -- are holding out hope that the Fed will add to last year's 11 rate reductions, but do not expect a cut of more than 25 basis points. More than half, or 53 percent, said they saw the Fed raising rates 50 basis points next year while almost one-third of respondents predicted the central bank would hike rates more than one-half of one percent. CEOs expect government spending and consumers to drive the U.S. economy over the next year, while business capital spending and commercial construction would lag. FOCUS ON COSTS Executives don't believe their long-constrained power to raise prices has much chance of improvement -- only 21 percent think it will increase -- but about 80 percent are expecting stable or rising profit margins. Nonexistent or decelerating wage gains and cost cuts are the primary reasons for that optimism. Energy costs, however, are expected to crimp the bottom line, as 59 percent of respondents expect those to rise. Investment bankers have spent much of the last two years bemoaning the lack of stock offerings, which carry fat underwriting fees for Wall Street. And there seemed little improvement in this area. Half of the CEOs said they have delayed or altered business plans because of the stock market's dreadful performance, and 30 percent said they had changed their long-term strategy because of stock values, which have tumbled amid the weak recovery, geopolitical events and concerns over corporate scandals. But even the titans of industry are grasping at straws to guess the economy's future, as Sun Microsystems Inc. (NasdaqNM:SUNW - News) CEO Scott McNealy said he thinks most executives have little confidence in their predictions. "Even the economists have proven they have no clue," the gregarious boss said.