Reno Gazette-Journal from Reno, Nevada on July 3, 1990 · Page 20
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Reno Gazette-Journal from Reno, Nevada · Page 20

Reno, Nevada
Issue Date:
Tuesday, July 3, 1990
Page 20
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Today's tip Learn how to protect your home with a free copy of the booklet "Bless This House: A Home Security Audit," Write Aetna Life & Casualty, P.O. Box 104, Hartford, Conn. 06101-5260. 6B Tuesday, July 3, 1990 Reno Gazette-Journal BUSINESS EDITOR: ALLAN K. RISDON. 788 6322 Dow opens 2nd half of '90 with 18.57 gain NEW YORK - The stock market opened the second half of 1990 with a moderate gain Monday, benefiting from buying that focused especially on blue chips. The Dow Jones average of 30 industrials climbed 18.57 points to 2,899.26. Advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 775 up, 744 down and 472 unchanged. The results of a monthly survey of corporate purchasing executives gave a slightly stronger picture than analysts had forecast of activity in the manufacturing sector of the economy. The National Association of Purchasing Management said its index increased to 51.1 percent in June from 50.7 percent the month before. ", Analysts said they weren't sure how or whether that bit of data might influence policy-makers at the Federal Reserve as they deliberated strategy on money and credit for the third quarter of the year. Another closely-watched indicator of business conditions is due out Friday with the issuance of Labor Department figures on employment in June. Trading set a slow pace throughout the session, suggesting that activity might be restrained for this whole holiday week. The markets will be closed on Wednesday for the observance of Independence Day. Volume on the floor of the Big Board came to 130.20 million shares, against 145.50 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 157.45 million shares. Dollar falls, gold climbs NEW YORK The German mark rose in foreign exchange Monday, the first day of trading after the monetary union in East and West Germany over the weekend, while demand for the British pound also remained strong. Support of the mark and pound put pressure on the dollar, which declined to levels not seen since 1988 against those currencies, according to traders. Gold prices rose on worldwide markets. On the Commodity Exchange in New York, gold bullion for current delivery traded at $358.80 a troy ounce, up 90 cents from late Friday. Republic National Bank in New York quoted a late bid for gold at $357.85 an ounce, 35 cents higher. The dollar traded at 1.6515 German marks in New York, down from 1.66065, and at 1.6580 marks in Europe, down from 1.6653. Registration extended Late registration has been extended for the summer session at Morrison CollegeReno Business College, 140 Washington St. Students may enroll for classes through Monday. Reno Business College offers a variety of associate degrees. Morrison College, the senior division of Reno Business College, offers baccalaureate degrees in business administration. The college offers flexible scheduling with classes available day or evening. Details: 323-4145. People VICKI CLAUSON recently joined Canary Travel & Tour Company's expanded corporate facilities in the Iron Horse Mall in Sparks. She has more than 12 years experience ' in every phase of the travel agency Clauson business and will be specializing in corporate accounts. She was previously with McGinley World Travel for more than three years. TODD NYBOER and ARVID PETTERSEN have been named general managers of the Tony Roma's Restaurant and Lounge at the Holiday Inn Convention Center on South Virginia Street in Reno. Nyboer and Pettersen recently completed a series of courses and seminars, presented by the Roma Corporation of Dallas, designed to assure that the local Tony Roma's meets the high standards of food and service that are expected by the international restaurant chain. Pettersen has been employed at Gene Autrey's Resort Hotel in Palm Springs, Calif., for the past eight years as food and beverage manager. Nyboer also comes from the Palm Springs area, where he was employed by the Desert Hot Springs Resort. Proceeds from Tony Roma's Lounge during grand opening ceremonies will be donated to the Make a Wish Foundation of Nevada. Tony Roma's is scheduled to open to the public on July 5. Wire and staff reports f Fed: Slowdown could hurt state building industry By Susan SkorupaGazette-Journal Nevada's construction and real estate industry could be hard hit if the state suffered an economic downturn, says a newly released federal government report. In an area such as Nevada, where construction is booming and plays an important economic role, the industry will bear more than its share of adjustment if economic growth slows, says a report by the Federal Reserve Bank of San Francisco. And if the building boom in southern Nevada results in overbuilt real estate conditions, a slowdown would not only cut construction employment but also cool markets for existing real estate. The report compares current conditions in Nevada, California and Washington real estate markets with conditions in Texas, Arizona and New England before the start of their real estate market downturns. Manufacturing sector grows 3 months in row NEW YORK (AP) The manufactujfrifc sector of the nation's economy grew ff Uttfe third consecutive month in June, accoi to a survey of corporate purchasing ex tives released Monday. Thp Purchasing Managers Index. leased monthly by the National Associa- Lowe W 4 tion of Purchasing Management, rgaqyli slightly to 51.1 percent from 50.7 in Mayr. the group said. A reading above 50 indicates the econ jf my generally is expanding; below 50, that& I ' it generally is contracting. June marked the third straight month the index wal I - above 50. The 11 previous months the inf dex declined. The Purchasing Managers Index, a composite figure of survey results on order levels, prices, employment and other areas, averaged 49.1 percent for the first half of the year. If the June index reading is repeated for the rest of the year, it would be consistent with real gross national product growth of about 1.9 percent, according to past experience, the group said. "The manufacturing economy ended the second quarter with a moderate, but solid, increase in growth," said Robert J. Bretz, chairman of the group's business survey committee. The group's production index rose for the fifth consecutive month, although at a lower rate than in May. Its new orders index also rose for the fifth straight month, at virtually the same rate as in May. The new export orders figure increased at a stronger rate than in May, while imports fell for the second consecutive month. $35.5 million offer accepted for Landmark sale LAS VEGAS (AP) A $35.5 million offer from an undisclosed buyer has been conditionally accepted for the bankrupt Landmark Hotel, a hotel official said Monday. Forrest Woodward II, who has been running the long-troubled hotel-casino for a bankruptcy trustee, said the buyer, whom he declined to identify, has made a nonrefundable deposit. But Woodward said competing bids are still being accepted pending a scheduled Aug. 6 auction of the resort. Forstmann, General NEW YORK (AP) Takeover specialist Forstmann Little & Co. will acquire General Instrument Corp., a leading producer of cable television equipment, in a cash deal valued at $1.6 billion, both companies announced Monday. The agreement marked the latest evidence of a mild resurgence in the takeover business, languishing for months largely due to lack of interest in junk bonds, the high-risk securities used to finance many deals in the 1980s. Several prominent takeover deals have been announced recently in industries ranging from food manufacturing to insurance. Acquirers have used their own cash or less risky forms of debt like bank loans to finance the purchases. News of the General Instrument deal "Under new business, we need to discuss the proposal of the young-girl network for a dinner dance with the old-boy network." Carolyn Sherwood-Call, regional economist for the Federal Reserve and author of the study, says a cooling of the current construction boom in the states included in the study "is inevitable, but it is legitimate to ask whether boom times have made these economies particularly vulnerable to the kinds of serious real estate problems that have occurred elsewhere." Local construction and employment experts, however, say they see no building slowdown on the horizon, even if construction activity in southern Nevada slows. They also note that much of the current building is new casinos not housing or commercial construction and that economic diversification and infrastructure improvements will likely keep the building industry on the move. Sherwood-Call noted she's aware that See SLOWDOWN, page 3B r inter treti i I ft JLSjr." s AsSOCIdt6C PfGSS TRY OUR PRODUCT, PLEASE: A staff member of the Houston-based U.S. Rice Council, which seeks to export rice to Japan, displays a package of California rice during a sampling party at a Tokyo hotel. The sign in the background says, "American rice to the world's dining tables." "We've got a sale that we will recommend to the judge," Woodward said. "But if someone comes in with more money, they have a chance to make a deal themselves." U.S. Bankruptcy Judge Clive Jones last month set the Aug. 6 date to auction the hotel, which has been under Chapter 7 bankruptcy liquidation since Janary. At the time, hotel officials said they were in negotiations with several interested parties but had yet to finalize terms for the sale of the 496-room property. Instrument to merge pushed its stock to a 52-week high, and above Forstmann Little's $44.50-a-share cash offer. But Forstmann Little officials, as well as some analysts, said they didn't see the runup as a sign that a competing bid might surface. In composite trading on the New York Stock Exchange, General Instrument closed up $8.75 to $45.25 a share in active dealings. The stock previously had traded as high as $42.12 V2 a share and as low as $29.50 in the past year. Theodore J. Forstmann, general partner of Forstmann Little, said the two companies began merger talks about two months ago. He said his firm, which helped pioneer See MERGE, page 3B Thrift restrictions eased WASHINGTON - Savings and loan regulators on Monday temporarily eased restrictions imposed on thrift institution lending by last year's bailout bill. As expected, the Office of Thrift Supervision said it would give healthy thrift institutions until the end of 1991 to meet stricter limits on the amount of money S&Ls may lend to one borrower. The exemption applies only to loans for residential projects not commercial development. Aiming to crack down on high-flying S&Ls that risked all of their capital on one loan, last year's law said thrifts could lend no more than 15 percent of their capital to a single borrower. However, homebuilders used to borrowing from one thrift complained they were having trouble getting loans for sound projects. Construction spending drops again WASHINGTON (AP) - The construction industry remained in a slump in May as spending dropped 0.4 percent for its second straight monthly decline, the government said Monday. "Private spending has been weak and probably will remain weak for the next few months.'Vsaid David Berson, chief economist for the Federal National Mortgage Association. Government spending on construction also will slow, "given the large budget deficits at all levels." Added David Seiders, chief economist for the National Association of Home Builders: "The second quarter certainly is shaping up to be a negative." The Commerce Department reported "We've been dealing with them for several months," Woodward said of the proposed buyer. "We feel comfortable with the agreement we've signed." Woodward said the potential buyer is from out-of-state and does not currently hold a gaming license. He said the agreement calls for Woodward's management team to run the resort while the new buyer goes through the licensing procedure. According to bankruptcy court filings, See LANDMARK, page 3B O J on o Housing slightly more affordable in May WASHINGTON - Rising incomes and falling mortgage rates and prices boosted the typical American family's ability to buy an existing single-family home in May, a real estate trade group said Monday. The National Association of Realtors said its housing affordability index was 105.6 in May, up from 104.3 the previous month. That means a family earning the national median income of $34,142 had 105.6 percent of the income needed to qualify for conventional financing covering 80 percent of the median-priced home costing $94,800. The median income means of half the Coke names new chief ATLANTA The Coca-Cola Co. announced key management changes Monday, including the appointment of M. Douglas Ivester as president of the soft drink maker's U.S. operations. The moves were seen by some industry watchers as a glimpse of who might be running Coke a few years down the road. "We now know with some degree of definitiveness who are the key players for the future president and even chairman of the Coca-Cola Co.," said Jesse Meyers, publisher of Beverage Digest. Ivester has been with Coke since 1979 and president of the company's European Community Group since June 1989. He succeeds Ira C. Herbert as president of Coca-Cola USA. Herbert will continue as executive vice president of Coke and will have corporate responsibility for Coca-Cola USA. that residential, non-residential and government construction spending totaled a seasonally adjusted annual rate of $445.6 billion after falling 2.2 percent in April. The April decline was even worse than the 0.7 percent drop first reported last month. March spending, on the other hand, was revised upward from a 0.7 percent decrease to a 0.4 percent increase. Residential construction fell 2.2 percent to an annual rate of $199.7 billion after a 1.4 percent decline in April. Single-family building dropped 3.9 percent to $115.8 billion on top of a 3.8 percent decline a month earlier. See SPENDING, page 3B sotted Analysts think Fed will act this summer WASHINGTON (AP) - Federal Reserve policy-makers meeting through today will probably lean toward nudging interest rates lower, many analysts believe, giving the economy and President Bush's political fortunes a boost. The Federal Open Market Committee likely will decide to cut rates later this summer if further signs of economic softness emerge, economists said in advance of the meeting. It may even decide to push rates down immediately by a quarter of a percentage point, some analysts said. The July meeting, which began Monday and continues today, is one of eight closed-door gatherings a year at which the committee sets the nation's monetary policy. A move toward lower rates, if it comes, couldn't occur at a better time for President Bush, who abandoned his "no new taxes" pledge last week in an effort to jump-start budget negotiations with Congress. At a White House news conference, Bush explained that unanticipated economic weakness, threatening to end 7 Vi years of expansion, influenced his decision heavily. He said lower interest rates and continued economic growth should result from a lower budget deficit. But Bush by himself cannot produce the promised economic reward for higher taxes. He needs the Fed. With little apparent effect, the president and top administration officials have complained repeatedly to the Fed, which has resisted lowering short-term rates since December in an effort to wring inflation from the economy. This time, many economists believe the administration has a good chance of getting what it wants, although perhaps not as soon as it would like. However, lower rates won't come because of any political pressure on Fed members, who serve set terms and cannot be removed by the president, they said. In recent congressional appearances, Fed Chairman Alan Greenspan has steered clear of promising lower rates, instead predicting that the market would lower rates as a natural response to a budget agreement. Economist Lyle Gramley of the Mortgage Bankers Association of America, a former Fed board member, said the cen- See INTEREST, page 3B families earned more and half less. The median price means half of the homes cost more, half less. Because the national median income in May exceeded the qualifying income, a family earning $34,142 could purchase a home priced at $100,300. The median price of a home declined $800 in May, while incomes rose $110. Mortgage rates edged downward from 10.15 percent to 10.14 percent. "Home buying conditions were good in May and while they could have been better, 105.6 is an extremely healthy level," said Realtors President Norman D. Flynn. Jobless claim payments A yearlong internal audit showed that 91.9 percent of 511 randomly selected unemployment insurance claims filed in Nevada in 1989 were paid properly. The audit, monitored by the U.S. Department of Labor, also showed 8 percent of the claims were overpaid through error.. State Employment Security Department Director Stan Jones said most of the errors detected in the audit were made by the claimants themselves. Conducted by the Nevada Employment Security Department's Quality Control Unit according to guidelines required by the U.S. Department of Labor, the audit is estimated to be accurate within plus or minus 2.3 percent. Quality Control investigators checked out each individual claim in the sample group in detail.

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