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To: Jim Willie CB who wrote (3427)	2/24/2003 9:48:52 PM
From: LLCF	Read Replies (1) \| Respond to of 5423

Let's see if Gold closes lower: Message 18623225 DAK

To: Jim Willie CB who wrote (3427)	2/25/2003 10:09:17 AM
From: 4figureau	Read Replies (1) \| Respond to of 5423

U.S. February Consumer Confidence Index Falls to 64 From 78.8 By Carlos Torres Washington, Feb. 25 (Bloomberg) -- Consumer confidence in the U.S. economy slumped this month to the lowest since October 1993 because of worries about a possible war and a lack of jobs, an industry research report showed. The Conference Board's consumer confidence index plunged to 64 this month from a revised 78.8 in January, the New York-based group said. Except for a 17-point drop the month of the terrorist attacks, this month's 14.8-point decline was the largest since April 1980, when a U.S. mission to rescue American hostages in Iran failed. With three straight months of falling optimism and household incomes pinched by the highest gasoline prices since June 2001, businesses are using discounts to lure buyers. A sustained decline in confidence threatens to weaken consumer spending, which accounts for two-thirds of the economy. ``Consumers are feeling miserable,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York- based consulting firm. Businesses ``need to be as aggressive as possible on pricing and they need to have some luck as well'' in order to maintain sales. Americans were less upbeat in February about their present situation and the future. The percentage of consumers who expect their incomes to increase six months from now fell to the lowest since the Conference Board began keeping records in 1967. Expectations The overall index was the lowest since 60.5 in October 1993. Economists had expected the index would fall to 77 this month, based on the median of 62 forecasts in a Bloomberg News survey, from January's previously reported reading of 79. The lowest estimate was 74. The Conference Board surveys 5,000 households about general economic conditions, their employment prospects and their spending plans. The component of the confidence index that tracks consumers' present situation fell this month to 61.6, the lowest since November 1993, from 75.3 in January. A gauge of consumer expectations for the next six months fell to 65.6, the lowest since February 1992, from 81.1. The percentage expecting increases in incomes six months from now fell to 15.2 percent from 18.4 percent. The percentage of consumers who saw jobs as plentiful dropped to 11.2 percent, the lowest since December 1993, compared with 14.5 percent in January. The percentage that saw jobs as hard to get increased to 30.1 percent from 28.9 percent. Since the recession started in March 2001, the economy has lost 1.66 million jobs. Last month, the unemployment rate fell to 5.7 percent, the first decline in four months, according to Labor Department statistics. Companies added 143,000 payroll jobs, the most in more than two years. Spending Plans The share of consumers planning to buy a home increased to 3.8 percent from 3.6 percent. The percentage planning to buy a major appliance fell to 26.4 percent from 28.2 percent. The percentage expecting to buy a car fell to 6.5 percent from 6.8 percent. Spending may slow as higher fuel costs take a bite out of purchasing power. The prices consumers pay for goods and services rose 0.3 percent in January led by a 4 percent jump in energy prices that was the biggest in nine months, the Labor Department reported last week. Retail gasoline prices were up 6.6 percent and heating oil costs jumped 8.6 percent, the biggest increase since August 2000. This month, the average price of a gallon of gasoline rose as high as $1.701, the highest since $1.715 in June 2001, Energy Department figures showed. ``With gas prices likely to go even higher, the tax on consumers will be quite substantial,'' said Gerald Cohen, a senior economist at Merrill Lynch & Co. in New York, before the report. Energy Costs An average petroleum price of $33 a barrel in the first six months of the year will lower gross domestic product by 0.4 percentage point in the first three quarters, according to Merrill Lynch calculations. Crude oil for April delivery has averaged $33.70 dollars a barrel on the New York Mercantile exchange so far this year. Lower stock prices may also be shaking confidence. The Standard & Poor's 500 index is down 2 percent so far this month, bringing the decline this year to 5 percent. That's why companies are having to entice consumers with discounts and incentives. Automakers raised U.S. incentives such as rebates and loan discounts by 11 percent to an average of $3,250 in this month's first half from $2,936 in January in order to help underpin sales, according to industry data. ``The only good news I can see is that consumers are getting a heck of a deal on cars,'' said J.T. Battenberg, chief executive of Delphi Corp., the world's biggest auto-parts maker, in an interview this week. ``It's what's holding the auto industry up to a large degree.'' The economy is expected to expand at a 2.6 percent annual pace this quarter, up from a 0.7 percent rate in the previous three months, according to this month's consensus forecasts of economists surveyed by Blue Chip Economic indicators. Consumer spending is forecast to rise at a 2.4 percent annual rate after rising 1 percent in the last three months of 2002, according to the survey. quote.bloomberg.com

To: Jim Willie CB who wrote (3427)	2/25/2003 10:11:28 AM
From: 4figureau	Respond to of 5423

U.S. Reports $11.1 Bln January Surplus, Smallest in 11 Years By Vincent Del Giudice Washington, Feb. 24 (Bloomberg) -- The U.S. government reported its smallest January budget surplus in 11 years as revenue fell in a weak economy and spending rose with the threat of terrorism and a possible war in Iraq. The surplus totaled $11.1 billion for January, down from $43.7 billion a year earlier, the Treasury said in its monthly budget statement. That was the weakest performance for the month since a deficit of $15.7 billion in January 1992. January is typically a surplus month because quarterly taxes are due then. The narrow surplus underscores the new strains on the federal budget brought about by recession, tax cuts and new military costs in the second year of the war on terrorism. Even without a new round of tax reductions proposed by the Bush administration, the budget deficit in fiscal 2003 may reach $270 billion, said William Sullivan, an economist at Morgan Stanley in New York. ``We're looking at a record flow of red ink,'' Sullivan said. ``Expenditures are growing rapidly. Receipts are contracting. We've lost 2 million jobs. Payroll tax receipts are down.'' For the first four months of this fiscal year, which started Oct. 1, the Treasury reported a deficit of $97.6 billion, compared with a surplus of $83.4 billion during the first four months of fiscal 2002. For last fiscal year, the government posted a $157.8 billion deficit following four years of budget surpluses. In January, revenue and other government income declined 7.6 percent from a year earlier to $187.9 billion and spending increased 10.7 percent to $176.8 billion, according to the Treasury. Economists had forecast a $10 billion January surplus, based on the median of 40 estimates in a Bloomberg News survey. Growing Deficits The White House is bracing for a larger annual budget shortfall. On Feb. 3, President George W. Bush said the federal deficit will grow to a record $304 billion this fiscal year, based on expectations that Congress will pass his $690 billion tax cut. The estimate doesn't include any war with Iraq, which could cost $60 billion, according to administration estimates. A recession that started in March 2001, followed by an uneven recovery and tumbling stock market have slashed tax revenue at a time when spending has risen on homeland defense and the buildup for a possible war to oust Saddam Hussein from power in Iraq. The Treasury is also managing challenges in financing the government's debt. Last week, the U.S. reached its borrowing limit, and that has forced the Treasury to shuffle funds until Congress approves a second increase in the $6.4 trillion debt ceiling in less than a year. Debt Limit The limit on debt in recent years has become a lightning rod for lawmakers critical of ballooning budget deficits. Earlier this month, the Treasury sold a record $42 billion in government notes and announced it would bring back three-year notes in May and auction more five-year securities. Federal Reserve Chairman Alan Greenspan has argued that there is no need for tax cuts because the economy could grow by as much as 3.5 percent this year. The budget deficit ``must be maintained at minimal levels,'' Greenspan said Feb. 11 in testimony to the Senate Banking Committee. The U.S. budget deficit peaked in fiscal 1992 at $290.4 billion, when it was about 4.7 percent of gross domestic product and when the president's father, George H.W. Bush, occupied the White House. Last fiscal year's deficit amounted to about 1.6 percent of the $10 trillion U.S. economy, and the White House forecasts that this year's deficit will be about 2.8 percent. Shrinking tax bills and fatter refunds have helped consumer income and spending since Congress passed Bush's $1.35 trillion 10- year tax cut in 2001. The Treasury refunded $38.4 billion to taxpayers as of Feb. 7, up 3.9 percent from a year earlier, the Internal Revenue Service said, and the average refund so far this year is $2,323, about $50 higher than a year earlier. Release of the Treasury's monthly budget statement, which had been scheduled for last Friday, was postponed until today because of a snow storm that closed government offices in Washington last week. quote.bloomberg.com

To: Jim Willie CB who wrote (3427)	2/25/2003 10:15:17 AM
From: 4figureau	Respond to of 5423

UK: Warning over pension fund oversight By Norma Cohen, Property Correspondent Published: February 24 2003 21:59 Oversight of employee pensions in the UK is so poor that it is likely to be only a matter of time before a large company scheme collapses, a pensions conference will be told on Wednesday. John Ralfe - former corporate finance director at Boots and the architect of its pension scheme's move to a 100 per cent investment in bonds - claims that pension trustees have been taking excessive risks in the way they invest scheme assets, which has been exposed by the three-year slide in share prices. "Legal protection for pension scheme members is very weak despite the reforms after the [Robert] Maxwell scandal," Mr Ralfe will say. "If a major UK company with tens of thousands of members goes bust with a big deficit, this will put the cat among the political pigeons." Mr Ralfe said the creation of the US Pension Benefits Guarantee Corporation, which stands behind the pensions of insolvent employers, occurred after several large corporate schemes became insolvent. A panel reviewing pension law after the Maxwell scandal, considered, but rejected, suggestions for the creation of a similar body in the UK. However, the regulatory framework left it to trustees to set pension scheme investment strategy and trustees continued to follow the "cult of equity" while failing to understand its risks, Mr Ralfe says. "If final-salary pension schemes did not exist, we would not invent them," he will say. "Their apparent success over the last generation has been based on the illusion that equities outperform bonds and that this outperformance reduces pension costs." However, he warns that trustees failed to understand that the outperformance was "a reward for risk, not a free lunch". Mr Ralfe joins a growing number of finance directors and actuaries who have warned that companies have been lulled into believing that schemes that invest in equities will incur little or no real pension fund expense. His remarks come amid growing concern that the yawning deficits revealed by new rules on accounting for pensions will prompt employers to wind up schemes, leaving employees with smaller pensions. The BT Group announced this week that it was preparing to inject up to £1.5bn into its own scheme to plug the hole left by a widening deficit. Trustees have persisted with their investments in equities largely because they have been encouraged to do so by their actuaries, who themselves face competition for clients. Most pension funds have carried out reforms recommended by a government- sponsored review, or are taking steps to do so, according to an industry survey to be released on Tuesday writes Tony Tassell. The National Association of Pension Funds said 90 per cent of more than 100 respondents had complied with, or were about to comply with, key principles for pension funds laid down in Paul Myners' review on institutional investment. news.ft.com