POCATELLO’S ELECTRONIC NEWSLETTER
July 1997
Volume 1 * Issue 7
WELCOME to the seventh edition of POCATELLO’S ELECTRONIC NEWSLETTER.
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Michael James Johnston, Associate Broker, ABR, CRS, GRI, CIPS (candidate)
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THE ECONOMY & FINANCE UPDATE
by Larry Bell with Citizens Community Bank
Senior Vice President, Manager Mortgage Lending
Phone: (208)232-5373
Email:
Site Address:
Larry Bell is just helping to open up Pocatello's newest Bank: Citizens Community Bank and will fill us in next month…. GOOD LUCK LARRY!!
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PUBLIC SCHOOLS
by Chris Williams, Public Information Officer
School District #25
Phone: (208)235-3257
Email: mailto:williach@d25.k12.id.us
Site Address: http://www.d25.k12.id.us
The New Horizon High School
Setting a new standard for students in School District No. 25
Take 60 high school students at risk of dropping out of school and put them in a school of their own. What will occur?
One of the district's most innovative and successful programs.
That's the outcome following the September 1996 opening of the New Horizon High School.
The school- created and organized at the direction of Dr. Carole McWilliam, the district's director of secondary education, and John Raukar, the district's director of pupil personnel- is geared for at-risk students who have had a history of little success in a regular high school setting.
What type of history? Poor attendance, failing grades and a general dislike for school.
But put those same students in a disciplined setting in which they are allowed only two absences, receive a lot of individual help because of smaller class sizes (15 students to each teacher), can concentrate on one subject for two-and-a-half hours and can earn two credits toward graduation after just six weeks and their view of schooling changes.
For instance, after just one year, students at New Horizon boasted an average attendance rate of 95 percent, meaning students on the average missed one day every six weeks. Six of the students had perfect attendance, and one student, who missed 45 days the previous year, had perfect attendance for the entire first semester.
That same student's grade point average improved from an "F" to a solid "B" average as a result of his new high school setting. His counterparts also performed well on standard achievement tests.
"The beauty of this program is that the students can get some instantaneous feedback in terms of how well they are doing," said Rauker. "In a six-week block of time, they get a pay check, so to speak, and we say, 'Look what you have done.'
"…There's a certain sense of immediate reward," Raukar said, "and these kids who had, by and large, not been successful in classrooms can get that paycheck.
"Consequently, attendance, where it was a problem originally at other schools, all of a sudden wasn't a problem," Raukar said. "It was kind of like it was magically removed because kids wanted to be there because they were experiencing success. So it's kind of like one thing feeding another and another and it's on-going."
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REAL ESTATE
by W. James "Jim" Johnston, Associate Broker
Coldwell Banker Landmark
Phone: (208)232-9010
Email: mailto:jimj@mykro.com
Site Address: http://www.HomeSpecialists.com
Jim wants to remind you to take a look at all the listings that are available. A few real estate sites are:
http://www.HomeSpecialists.com
Happy house hunting!!!
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WEATHER HISTORY
by Steve Cannon, weatherman
KIDK TV 3
Phone: (208)522-5100
Email: mailto:kidktv3@msn.com
Site Address: http://www.srv.net/~kidktv3/homen.html
July, the month of high summer, is named after the roman emperor Julius Caesar… a hot topic at the best of times. Like the name, July means warm, summer-like temperatures, and fairly dry conditions. Statistically, July is the driest month of the year, with an average high temperature pegged at 88.6! Overnight, our average temperature for July is 53.8… also the yearly high.
With all this talk of heat, July can be chilly at times. In 1921, snowfall was recorded in July at the Pocatello weather station. More recently, snowfall was reported in the foothills near Idaho Falls on July 4th, 1978, as well as July 4th, 1984.
Still, July means heat. The all-time record high for Pocatello was recorded on July 21st, 1931, with a sweltering 105 reading! The record low temperature for July goes back to July 8th, 1981, with a reading of only 34. However, just a few days ago, on July 2nd, 1997, the Pocatello weather service office recorded a temperature of only 35… that set a new record low temperature for the 2nd. The wettest July on record was 1925, when over 3 inches of rain… 3.33 inches to be exact, fell on the city.
July 3rd marks the beginning of the 'dog days' of summer. Many think that term refers to the hot days, when dogs pant and sit under trees all day, trying to keep cool. That fact may be the case; the real meaning of the term 'dog days' comes from the fact that Sirius, called the 'dog star' rises in the sky shortly after sunrise!
Astronomically, the dazzling planet Venus comes back into view, after being gone since last spring. You can see Venus as the 'evening star,' a little to the left of the spot where the sun sets. Sky-watchers can also see a bright Jupiter in the east, and the red planet Mars in the southern sky.
St. Swithin's day is celebrated on the 15th of July. Notables born in July include presidents' John Quincy Adams, on July 11th, 1767 as well as Gerald Ford, on July 14th, 1913. July 14th is also celebrated as Bastille Day, in France. The first singing telegram was delivered on July 28th, 1933, and the famous Liberty Bell cracked, while pealing at the funeral of U.S. Supreme Court Justice John Marshall, on July 8th, 1835!
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ECONOMIC SUMMARY- STOCKS & BONDS- INVESTMENTS
By Lynn Baldwin
Manager & Regional Trust Officer
U.S. Bank of Idaho
120 N. Arthur * Pocatello, Idaho 83204
Phone: (208) 234-5544
Email: f_baldwin@usbc.com
Site address: http://www1.usbank.com/personal/investing/
SUMMARY
· The most recent flow of economic numbers suggests that the robust economic
growth we experienced during the first quarter of this year will not be
repeated.
· If the economic numbers don’t show additional strength and stay within this
moderate range, the Fed may be hard pressed to increase short-term interest
rates when it meets in early July.
· Investors still have an appetite for stocks, sending the major averages to
all-time highs. The stock market will probably continue to move higher until
something shakes investors’ confidence.
· Small cap stocks are cheaper on a price-to-earnings basis, providing a
cushion if the market starts to decline. We believe it is a good time to buy
small cap stocks.
THE ECONOMY
The most recent flow of economic numbers suggests that the robust economic
growth we experienced during the first quarter of this year will not be
repeated. The economy is more likely to grow in the 2% to 2.5% range during
the second quarter, which would be more in line with the six-year trend.
The economic numbers are indicating slower growth. Factory orders, capacity
utilization and industrial production are all coming in either flat or below
expectations. Retail sales and housing numbers are weak. Even though the May
unemployment rate of 4.8% is the lowest in 24 years, hours worked remained
flat and employment costs did not increase as much as analysts had
anticipated.
The strong first quarter growth of 5.8% for real Gross Domestic Product (GDP)
was influenced by seasonal adjustments. We don’t see factors sufficient to
maintain this growth rate in the second quarter or beyond. In fact, the
consensus is that GDP growth this year will be 2.8% to 2.9%, compared to 3.2%
for 1996. The Consumer Price Index (CPI), a widely watched indicator of
inflation, is well contained at around 2.5% over the past twelve months,
compared to 3.3% for all of 1996. Despite fears of overheating, there
continues to be little evidence of inflation. Interest rates are still
fairly restrictive, particularly on an inflation adjusted basis; real
interest rates in the United States are high compared to most other
countries.
The GDP may be slowing from the first quarter, but even at 2.5% it is still
growing at a healthy rate. The Federal Reserve Board has been worried about
the strength of the economy. If the economic numbers don’t show additional
strength and stay within this moderate range, the Fed may be hard pressed to
increase short-term interest rates when it meets in early July. Such was the
case during the May meeting, when the Fed chose to leave rates alone.
FIXED INCOME
The bond market is reacting to fundamental factors, particularly the evidence
of a slowing economy, but it is also being affected by some technical factors
including an increase in demand from foreigners for dollar denominated assets
and a reduced supply of US treasuries. Foreign demand is high because of
higher yields available in the US than in other countries, better liquidity,
higher quality, and proposed budget deficit reduction. In fact, our budget
deficit is already being lowered by stronger tax receipts due to the strong
economy and rising stock market.
European investors are especially anxious to buy US bonds. The Socialist
victory in France has raised doubts about the time frame and guidelines for
European Monetary Union, scheduled for January 1, 1999. If European Monetary
Union unravels and countries abandon the strict budgetary guidelines which
have slowed growth and led to high unemployment, Europe may start to
inflate. Investors have sought refuge from the fallout by moving into US
bonds.
Technical factors have pushed the 30-year treasury yields from over 7% down
to 6.8%.
Over the short-term, we believe technical factors could push rates even as
low as 6.625%. It is conceivable that, by year-end, yields will fall as low
as 6.375% if the economy continues to slow.
EQUITIES
Large amounts of money continue to flow into the stock market. Investors
still have an appetite for stocks, sending the major averages to all-time
highs. The stock market will probably continue to move higher until something
shakes investors’ confidence.
The stock market thrives on continuing moderate economic growth, with its
growing corporate profits, steady interest rates and low levels of inflation.
These factors have driven the stock market dramatically higher over the past
two years, and continue to drive it today. We do not see many fundamental
reasons for this trend to change so long as the slope of the yield curve for
fixed income securities remains positive. The slope of the yield curve is
positive when interest rates for shorter maturities are lower than interest
rates for longer maturities. If there is little reason for the Federal
Reserve to raise short-term interest rates aggressively, the stock market
should continue its upward path.
Perhaps it will take a catalyst such as an international crisis to shake
investors’ confidence. It could be an anti-democracy crackdown, or any event
which threatened the renewal of China’s Most Favored Nation status when Hong
Kong reverts to China on July 1, which would undoubtedly send negative shock
waves through the surrounding Asian economies and stock markets and could
eventually spread to the West. Or it could be the unraveling or delay of the
European Monetary Union, particularly if the newly elected liberal
governments in England and France start stimulating their economies and cause
higher inflation. Conversely, if monetary union stays on its present course
engendering even higher unemployment, social unrest and upheaval might be the
catalyst.
Passage of new capital gains tax legislation could also be a catalyst. It
looks as though some capital gains tax reduction is probable but it is still
not signed into law. Most investors have not acted on the fact that
legislators have announced May 7 as the effective date of the new capital
gains tax change. This may disrupt the stock market, if a large volume of
selling occurs.
Although any of these factors could disrupt the stock market, support for the
market should continue to be positive, particularly if interest rates
continue to decline. However, the higher the market goes, the higher
valuations become. We don’t see the broad market maintaining these
valuations over the long term. The S&P 500 index of large cap stocks now
sells for over 20 times reported earnings. It’s hard to justify stocks such
as Coca-Cola continuing to sell at an even higher multiple of 40 times
earnings.
We have allowed cash reserves to increase in our value funds because we have
not found many attractive stocks to buy. Health care, drug, and consumer
staple stocks all seem too expensive. We continue to like the financial
companies, as long as interest rates stay relatively low, and we have
recently been adding to cyclical stocks because they have lagged the broad
market.
There continues to be a wide divergence between the large cap and small cap
companies when it comes to performance. The large blue chip stocks may seem
overvalued, but they rarely offer an opportunity to buy on dips. Meanwhile
barely a day goes by without some smaller company’s stock declining by over
50% because the market is so unforgiving if the company’s earnings
disappoint. This has presented opportunities for value investors,
particularly in the small cap arena. Small cap stocks are cheaper on a
price-to-earnings basis, providing a cushion if the market starts to decline.
We believe it is a good time to buy small cap stocks.
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CHAMBER OF COMMERCE
by Sam Nettinga, General Manager
Greater Pocatello Chamber of Commerce
Phone: (208)233-1525
Email: mailto:pocchamber@sisna.com
Site Address: http://www.sisna.com/idaho/pocycoc
Please be aware that in the next few weeks you will be confronted by many signature gatherers who are carrying petitions for the following issues;
While each of the proponents have the right to propose their issue you also have the right to know what the issue would do if it were to become law. Do not be afraid to ask the petition carrier to clearly tell you what their initiative will do if passed. In most cases the only thing the carrier is interested in is how much they will be paid for each signature they gather.
What must be of more importance to you is the fact that you commit a FELONY IF YOU SIGN A PETITION AND ARE NOT A QUALIFIED VOTER. Ask questions and understand the issue before you sign.
This information is from your friendly CHAMBER OF COMMERCE.
Have a great Summer!
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THE LAST WORDS
POCATELLO’S ELECTRONIC NEWSLETTER is published monthly by Michael James Johnston. Any questions, concerns, ideas or criticisms are to be directed to him via Email at mailto:editor@mykro.com
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Copyrighted 1997 by Mykro Computer Company. All Rights Reserved. No part of this material may be used or reproduced in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher except in the case of brief quotations embodied in critical articles and / or review.