Kit Menkin's Leasing News

                   www.leasingnews.org  Friday, June 21, 2002

Accurate, fair and unbiased news for the equipment Leasing Industry

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Headlines----

Dollar Hits a 2-Year Low Against Euro

 Pay Pal---Wells Fargo Sets the Stage 

  Fed May Not Raise Rates at Least Until September

   Mortgage rates dip; rates 30-year mortgages lowest since mid-November

     U.S. trade deficit hits record; jobless claims fall;

             gauge of economic activity rises

      Friday---Odds and Ends

     25 Annual Commute Trips in United States

       Fleet confirms Stephens buyout talks

         Vendor Leasing Market

             Jeff Taylor Complimented by Colleague

              Fleet confirms Stephens buyout talks

  Amtrak May Begin Shutdown in Days (This is serious!)

   David Gunn---Amtrak

      Zinke Joins IFC Credit as VP/Legal Affairs

### Denotes Press Release

  Tumbles, the stock market

   Winds from East

       Scream

 ---- Al Gamper

 (Hey, Al, didn’t you hear, good guys finish last? Only joking, predict

here in Leasing News, CIT CEP Al Gamper will have a great July

4^th with his extended family.  Gamper and his board of directors

are winners. Bet with the winners. Editor)

Dollar Hits a 2-Year Low Against Euro

By RICHARD W. STEVENSON

New York Times.

WASHINGTON,  — The dollar, after rising sharply in value for years in a reflection of American economic might, is weakening markedly, mirroring concern about the fragility of the economic recovery and the nation's financial condition.

The dollar fell to a two-year low against the euro today and also edged down against the Japanese yen, continuing a months-long slide. The decline came after new data showed that the United States trade deficit had widened to what some economists said was a worrisome level.

The monthly trade deficit in goods and services rose in April to $35.9 billion, a record, as rising exports were swamped by an even bigger increase in imports. A broader measure of the country's international financial standing — the current account balance, which measures investment flows as well as trade in goods and services — also posted a record deficit of $112.5 billion for the first quarter, the Commerce Department reported.

In late trading today, the euro was worth 96.52 cents, up from 95.67 cents a day earlier. The dollar was worth 123.37 yen, down from 123.82 yen.

Since January, the dollar has lost 7.8 percent of its value against other major currencies, according to an index compiled by the Federal Reserve, after rising 33 percent since the mid-1990's. While the dollar is still strong or even overvalued by some measures, its downturn has become pronounced enough that many economists judge it to be at the start of a correction that could continue for some time.

A declining currency would have both positive and negative effects. It would help American manufacturers by making their products less expensive in foreign markets, thereby increasing exports, and could allow domestic manufacturers to recapture sales in the United States by making competing imports more expensive.

But a steady fall in the dollar could put upward pressure on inflation by pushing up import prices, and would make foreign travel more expensive. If the fall in the dollar led investors from abroad to stop putting their money into stocks and bonds in the United States — and there is already evidence of such a pullback — interest rates could rise and stock prices could fall further.

Analysts said the dollar's decline appears to have been driven in large part by concern among investors that the United States is not bouncing back as strongly as first hoped from last year's recession.

But they said it was accelerated by other factors, including fear of terrorist attacks and concern after the Enron scandal that more companies will turn out to have overstated their earnings and hidden their liabilities. The Federal Reserve's decision to hold interest rates at very low levels has also held down returns on dollar-denominated investments.

While sticking to its official position that it supports a strong dollar, the Bush administration has shown no inclination to intervene in currency markets to support the dollar's value. As a result, investors have concluded that the administration is content to allow the currency to slide, at least for a while.

The crucial question for the economy is whether the erosion in the dollar, should it continue, will be gradual and orderly, as it has been so far, or whether it will turn into a rout that could destabilize the financial markets and endanger the recovery.

"We're probably going to see a substantial decline in the dollar over the next 12 months," said Robert D. Hormats of Goldman Sachs International, the investment firm.

"A gradual decline in the dollar shouldn't be surprising and shouldn't be disruptive," he said. "It would be helpful in improving the outlook for the U.S. economy by boosting U.S. exports. But a very sharp decline would induce foreign investors, and indeed U.S. investors, to get out of U.S. financial assets."

When countries run large trade and current account deficits — in effect consuming more than they produce — they must make up the gap by borrowing and attracting investment from abroad.

History suggests that no country can go on financing an expanding trade deficit forever. And though there is a spirited debate among economists about when the United States might reach that point, the dollar's current slide suggests that foreign investors are already scaling back the flow of capital into the United States and putting more of their money into stocks, bonds and business ventures elsewhere.

One outcome, economists said, is a cycle in which a growing current account deficit spurs an exodus by nervous foreign investors, pushing up inflation and interest rates and putting the already weak economy into a stall.

But even a more benign result, in which the dollar remains under pressure but does not collapse in value, could still leave Wall Street on edge.

"Let's be clear: the ballooning trade deficit is reason to sell the greenback," said Kenneth T. Mayland of Clear View Economics, a consulting firm in Pepper Pike, Ohio. "We risk seeing a flood of dollar selling as everybody tries to get through the door at the same time."

Jay H. Bryson, an economist at Wachovia Securities, said there were signs in today's report on the current account deficit that the pace of foreign investment in the United States was slowing substantially. He said that private foreign purchases of American securities ran at an annual pace of about $260 billion in the first quarter, compared with $400 billion last year, a 35 percent decline.

Clyde V. Prestowitz Jr., president of the Economic Strategy Institute, a Washington research organization, said it was impossible to know for sure how lengthy and pronounced a slide was in store for the dollar.

"But we've known for a long time that the dollar has been at the way upper range of its value," Mr. Prestowitz said. "We've known for a long time that the trend of the current account deficit is unsustainable, and we've known that the longer it goes on the greater the chance that the adjustment could be disorderly. Now we're at the beginning of an adjustment and we have to hope it's an orderly one."

Laurence H. Meyer, a former Federal Reserve governor, said the currency's strength was likely to be influenced mostly by whether the American economy rebounded convincingly this year.

"It's not that there's a better place to invest right now," he said. "It's just that people are concerned about the vulnerabilities of the U.S. economy."

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Pay Pal---Wells Fargo Sets the Stage 

(Pay Pal---we use this and highly recommend it. To pay bills or

accept payments from lessees. Editor)

By Beth Cox   Internet.com )

Taking some steps to solidify its position in the e-payments and billing space, the venerable Wells Fargo signed two deals in two days, one with PayPal and the other with CheckFree Corp.

San Francisco-based Wells Fargo (NYSE:WFC), the fourth-largest U.S. bank, said its deal with Mountain View, Calif.-based PayPal (NASDAQ:PYPL) makes it the provider of secure Internet payment-processing services on the popular P2P transaction service.

Separately, Wells Fargo signed a multi-year contract with Norcross, Ga.-based CheckFree (NASDAQ:CKFR) for online banking, e-billing and payment processing services.

Wells Fargo replaces the Electronic Payment Exchange subsidiary of financial services software maker InterCept (NASDAQ:ICPT) as PayPal's credit card processor.

For the six months ending May 31, EPX is said to have recorded average monthly revenue of about $185,000 from processing PayPal's domestic and international transactions. InterCept has said its earnings will not be materially affected.

PayPal, which just signed a deal with UPS to combine its online payment process with digital shipping tools, employs e-mail to let senders notify recipients of a payment. Money is then directly transferred to the recipient's account using Wells Fargo's secure payment processing service.

PayPal reportedly does not plan to transfer its international credit card services. Financial specifics of the Wells Fargo deal were not disclosed.

Meanwhile, the multi-year deal with e-commerce financial services company CheckFree calls for Wells Fargo to provide online banking, e-billing and payment processing via CheckFree.

CheckFree and Wells Fargo have had a business relationship since 1996, and this agreement, which includes unspecified monthly revenue commitments, will allow CheckFree to participate in the latest version of Wells Fargo's bill pay service.

CheckFree's services will help offer increased Electronic Bill Presentment and Payment (EBPP) options for Wells Fargo customers, alongside the bank's other partners including MasterCard, Metavante and Spectrum. The relationship with CheckFree will give Wells Fargo customers access to CheckFree's network of more than 200 national and regional billers.

Wells Fargo, a $312 billion diversified financial services company, says it has three million active online users.

--- 

Did you know you can send money online with PayPal?

PayPal lets you send money safely and securely to anyone with

an email address. You can settle restaurant tabs with colleagues,

pay friends for movie tickets, or buy a baseball card at an

online auction. You can also send personalized money requests

to your friends for a group event or party.

PayPal, the world's #1 online payment service, is accepted on

over 3 million eBay(TM) auctions and by thousands of online shops.

Over 16 million people in 38 countries worldwide use PayPal.

Signing up for PayPal is easy.  It takes two minutes, and you'll

even get $5 when you complete PayPal's new account bonus

requirements. To learn more, or get started, visit PayPal's

website at:

https://www.paypal.com/refer/pal=kitm%40americanleasing.com

"Best of the Web"

- Forbes

"Using the service is actually safer than a check or money order."

- Wall Street Journal

You not only can use this for your kids, but also in business to get faster

collections or payments.

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Fed May Not Raise Rates at Least Until September

With Inflation Low, Growth Slow, Some Say Next Year

By John M. Berry

Washington Post Staff Writer

The Federal Reserve now appears unlikely to raise interest rates until the fall, at the earliest, because inflation remains extremely low and the U.S. economy is not growing fast enough to create many new jobs.

At the beginning of the year, some investors and financial analysts expected an initially sharp rebound from last year's recession to cause Fed officials to begin to boost their target for overnight interest rates no later than at their March 23 policymaking session. But the Fed didn't move then, or at a meeting last month, and now virtually no one expects a rate increase to come out of the session to be held next Tuesday and Wednesday.

As forecasters gradually have shaved their predictions for growth for this year, more and more analysts are saying the first rate increase won't come before September and some believe it may not come until early next year. The Fed's target for the federal funds rate, the interest rate financial institutions charge each other on overnight loans, is 1.75 percent, a 40-year low.

In a speech in Los Angeles this week, Robert T. Parry, president of the San Francisco Federal Reserve Bank, rhetorically asked an audience of economists, "Where do we stand now? I think at this point we can be deliberative in approaching the issue of when [monetary] policy has to change and how aggressive it has to be."

The word "deliberative" in this context means that Parry feels the Fed can wait until the course of the economy becomes much more clear before raising rates to make sure inflation stays low – a view shared by his colleagues.

"Core inflation does not appear to be an imminent problem, not only because of . . . faster productivity growth, but also because there's still quite a bit of excess capacity left in the economy," he said. "In addition, there's still some uncertainty about the strength and durability of the recovery."

The minutes of the March meeting of the Federal Open Market Committee (FOMC), the central bank's top policymaking group, spelled this out: "The need to adjust monetary policy during the early stages of a recovery presented a special challenge with regard to its timing and extent in that raising rates prematurely or too precipitately could weaken or abort the recovery, while waiting too long could risk a pickup in inflationary pressures later."

Fed Chairman Alan Greenspan, Parry and other officials expect the economy to continue to expand. But according to numerous public statements, earlier this year they also anticipated that growth would slacken again after a burst of new production orders pushed growth in the first three months of the year to a very strong 5.6 percent annual rate. Those orders were needed to halt a record decline in businesses' stocks of unsold goods, and they accounted for nearly two-thirds of the first-quarter gain in the gross domestic product.

However, the swing in inventories is going to add far less to GDP in the April- June period, forecasters say. Meanwhile, consumer spending gains have diminished, and business spending on new equipment, which fell sharply last year, has stabilized but shows few signs of increasing rapidly. Moreover, stock prices have been falling, hurting both consumer and business confidence, and many corporate executives remain gloomy about their firms' prospects for improved profitability.

The latest economic data, such as a 0.9 percent drop in retail sales last month, have generally been weak, except for various housing sales and construction reports, which remained strong.

Yesterday, the Commerce Department reported that the nation's trade deficit rose in April to a record $35.9 billion, as imports rose twice as fast as exports. Analysts said the import figures were additional evidence that the U.S. economy is expanding, but also that an increasing share of the demand for goods and services in this country is being satisfied by foreign producers. The slower rise in exports may be an indication that foreign economies' growth is lagging behind that of the United States, analysts said.

On the basis of the recent numbers, economists at Macroeconomic Advisers, a St. Louis forecasting firm, have lowered their estimates of growth in the current quarter to around a 2 percent annual rate, less than half the first- quarter pace.

"Combined with the latest inflation data, which are largely benign, signs of weakness in spending and production make it increasingly unlikely that the Federal Reserve will commence with a sequence of interest rate increases as early as the Aug. 13 FOMC meeting," the firm told its clients this week.

"While a series of strong reports between now and then might persuade the committee to raise the target for the federal funds rate in August, we believe it is more likely that they will wait until at least September to begin raising rates," it added.

Peter Hooper, chief economist at Deutsche Bank in New York, thinks the FOMC will wait even longer.

"The downward revision of growth prospects is enough to move the most likely date for initial Fed tightening from September to November or even later," Hooper said, adding that won't happen until growth becomes strong enough to begin to reduce the current 5.8 percent jobless rate. The latest statistics "tell us the Fed will very likely not see that evidence this summer," Hooper said.

Economist Bob Ried of Ried, Thunberg & Co., an investment research firm in Westport, Conn., said November is the earliest the Fed will move, but he doesn't expect it to raise rates until next year.

"In these parlous times, the Fed can hardly afford to upset the apple cart with a premature tightening of monetary policy," Ried said. "Unless the economic outlook improves considerably, the inflation outlook worsens measurable, and financial conditions stabilize, the first tightening might not come until next year."

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Mortgage rates dip; rates on 30-year mortgages lowest since mid-November

By Associated Press,

WASHINGTON (AP) Mortgage rates around the country dipped this week, with rates for 30-year mortgages falling to their lowest level in five months, according to a nationwide survey released Thursday.

Freddie Mac, the mortgage company, reported that the average interest rate on 30- year fixed-rate mortgages fell to 6.63 percent this week, down from 6.71 percent the previous week. It was the lowest level since the week ending November 16, when 30- year rates averaged 6.51 percent.

A year ago at this time, 30-year mortgages averaged 7.11 percent.

In early November, rates on 30-year mortgages dropped to 6.45 percent, their lowest point since Freddie Mac began conducting its survey in 1971.

Fifteen-year mortgages, a popular option for refinancing, dropped to 6.08 percent this week, down from 6.17 percent the week before. A year ago, 15-year mortgages averaged 6.65 percent.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 4.60 percent, down from 4.67 percent the previous week. This week's rate was the lowest since the week ending March 11, 1994 when rates on one-year ARMs averaged 4.51 percent.

Last year this time, one-year ARMs averaged 5.74 percent.

These rates do not include add-on fees known as points, which carried an average 0.5 percent

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U.S. trade deficit hits record; jobless claims fall; gauge of economic activity rises

By Jeannine Aversa

ASSOCIATED PRESS

WASHINGTON – Americans' appetite for foreign-made cars, TVs and clothes propelled the U.S. trade deficit to a record $35.9 billion in April.

The deficit was 10.7 percent higher than the $32.5 billion trade gap reported for March, the Commerce Department reported Thursday.

Imports in April rose twice as fast as exports. Imports of goods and services increased 4.7 percent to $116 billion as the U.S. economic recovery helped to boost consumer demand for cheaper-priced foreign-made goods.

Exports rose 2.2 percent to $80.1 billion. Although countries around the globe are regaining strength after a worldwide slump, they are doing so less quickly than the United States, thus restraining their demand for U.S. products.

"There is only one easy way out of the trade deficit quagmire – having our trade partners live up to their growth potentials ... which they are not currently doing," said Ken Mayland, president of ClearView Economics. "The next best way to easing the U.S. trade deficit is by breaking down foreign barriers to U.S. exports."

In another report, the number of Americans filing new claims for unemployment insurance last week dipped by 2,000 to 393,000, the Labor Department said. Economists say that's an encouraging sign for workers dealing with a sluggish jobs market.

And the Conference Board said a key gauge of U.S. economic activity rose in May, lifted by continued strength in consumer spending. The Leading Economic Indicators rose 0.4 percent last month to 112.2, after falling a revised 0.3 percent in April.

On Wall Street, that promising news failed to stop stocks from sliding. The Dow Jones industrial average lost 129.80 points to finish at 9,431.77, its lowest close since Nov. 2.

The latest snapshot of trade activity comes as the Bush administration continues to press Congress to pass legislation that would give President Bush greater authority to negotiate new international trade agreements.

The House passed a "fast track" or "trade promotion authority" measure by just one vote in December. The Senate approved a larger package last month that included an expansion of benefits to American workers hurt by free trade. The next hurdle: reconciling the two versions.

Many conservative Republicans were not happy over the Senate bill's worker benefit provisions. Labor and environmental group and many Democrats are leery of the effects of free trade agreements.

Separately, the "current account" deficit, which is considered to be the broadest measure of trade, climbed to a record $112.5 billion in the first quarter of this year, the Commerce Department said in another report.

The current account includes not just the goods and services reflected in the government's monthly trade reports, but also investment flows between countries and unilateral transfers, including U.S. foreign aid payments.

In the monthly trade report, imported cars, parts and engines climbed to a record $16.8 billion in April. Imported consumer goods, including TV, VCRs, toys and clothes, also set a new record of $24.9 billion. So did imports of food, feeds and beverages, which rose to $4.1 billion.

A sharp rise in America's foreign oil bill also contributed to April's trade gap. The average price of imported crude oil rose by $3.30 a barrel, the biggest one-month jump in nearly 12 years.

On the export side, sales of U.S.-made automobiles, parts and engines to other countries rose to $6.7 billion in April, the highest level since August 2000.

Exports of consumer goods, capital supplies, including semiconductors, and industrial supplies, such as chemicals, all showed improvements in April.

Going forward, a weaker U.S. dollar and healing economies abroad should help bolster U.S. exports, said economist Clifford Waldman of Waldman Associates.

But Carl Tannenbaum, chief economist at LaSalle Bank, worries about backlash from Bush's decision to impose hefty tariffs on some imported steel and to endorse a farm bill directing billions of dollars in subsidies to U.S. farmers.

"I think we're on a losing streak," he said. "It will be very difficult to get our exports up if countries are so angry with our policies."

––

On the Net

Trade reports: www.doc.gov/

Jobless: www.doleta.gov/

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Friday---Odds and Ends

From my son Dash in the U.S. Navy

AWARE

WWW.AT-AWARENESS.ORG

your access code is: AWARE

on the BEGIN TRAINING font click on the circled CV.

This is just a basic course, a sample at a service members frame of mind.

I have been thru months of this training, weapons training, hand to

hand etc.

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Federate Capital Services

Heard anything about Federated Capital Services closing? I know they have closed their branch offices.

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HPSC is the new home for the former Amex Healthcare team......and the

exodus isn't over.

The 25 urban areas with the longest

Annual delays per rush-hour driver:

1. Los Angeles, 136 hours

2. San Francisco-Oakland, 92 hours

3. Washington, 84 hours

4. Seattle, 82 hours

5. Houston, 75 hours

6. Dallas-Fort Worth, 74 hours

    San Jose, Calif., 74 hours

8. New York, 73 hours

9. Atlanta, 70 hours

10. Miami, 69 hours

11. Boston, 67 hours

    Chicago, 67 hours

    Denver, 67 hours

14. Orlando, 66 hours

15. San Bernadino, Calif., 64 hours

16. Austin, 61 hours

    Fort Lauderdale, Fla., 61 hours

18. Phoenix, 59 hours

19. Detroit, 55 hours

20. Minneapolis-St. Paul, 54 hours

21. San Diego, 51 hours

22. Baltimore, 50 hours

23. Charlotte, 47 hours

    Portland, Ore., 47 hours

25. Louisville, 46 hours

SOURCE: Texas Transportation Institute

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Fleet confirms Stephens buyout talks

(By Boston Globe Staff and Wire Services)

FleetBoston Financial Corp. confirms it is negotiating with executives of its Robertson Stephens subsidiary about a possible management buyout. The Boston Globe reported yesterday that a deal could be announced next week. ''We are in discussions with Robertson Stephens for a management buyout,'' Fleet spokesman James Mahoney said. ''Those discussions have been going on for some time, and we expect to reach a conclusion soon.'' One executive close to the talks said if an agreement is reached, about half of Robertson Stephens' 950 workers would remain. (Scott Bernard Nelson)

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Vendor Leasing Market

I am responding to Trevor Shaw's comment on the state of the vendor

leasing market.  Unlike Trevor, I deal with much smaller vendors and

franchisors for our franchise finance program.  In the past year we have

also been contacted by much larger vendors in the copier industry,

automotive equipment and other high profile, small ticket industries

that had been the primary targets of the now defunct companies mentioned

by Mr. Shaw. 

While some of these conversations bear fruit, many of them go nowhere.

This is especially true of the large copier vendors.  In my opinion, the

reason that this happens is that these vendors still want to pursue the

unrealistic programs that were, in part, responsible for putting most of

these companies in the tank.  The assumption of a 20% residual for a

copy machine on a 60 month term wasn't reasonable 3,4,or 5 years ago and

it is not reasonable today, nor will it be reasonable in the future.

The vendor sales people have been trained to sell this way, or more

appropriately, take orders this way.  If it sounds like I am picking on

that industry a little, I plead guilty.  In the early 80's I sold

copiers in LA and the Bay area.  The copier business was my intro to the

leasing business.  This was prior to the days of the insanity that

occurred in the 90s with these vendor programs.

The bottom line is that vendors, across the board, seem to be

re-evaluating their options.  Like many of the leasing sales people, the

vendor sales people are going through a di