The Philadelphia Inquirer from Philadelphia, Pennsylvania • Page 31

SRe Jpfitlabetpfita Inquirer EBusiness Section AMEX C9 Key Money Rates C2 Mutual Funds C8 NASDAQ National C6 NASDAQ Small Cap C8 N.Y. Bonds C4 NYSE C3 Precious Metals C2 Sunday, March 21, 1993 if ftt 4 Stock The Economy ir A banking specialty! Catering to the affluent Furnishing financial services to the rich can be very lucrative. It's a hot growth area in U.S. banking. 'j i fZf Immmmmmmmmmmmmmmmmmmmmmmmmmm mrnlj gun looking for alternative ways to make money, principally by offering services for which they can1 charge substantial fees.

"The goal of reaching the affluent market is one that just about every bank wishes to pursue," says Albert Piscopo, chief operating officer of the Glenmede Trust Co. in Philadelphia. Glenmede itself has been pursuing it longer than most. Founded to manage the fortune of the Pew family, whose forebears founded Sun Co. early in this century, Glenmede began accepting other affluent clients a decade ago, and now has more than 400 separate account relationships, according to Piscopo.

Recently, the $7.7 billion company has picked See WEALTHY on C2 By Andrew Cassel INQUIRER STAFF WRITER The rich, as Fitzgerald said to Hemingway, are different from you and me. They have more bankers. Private bankers. Trust officers. Investment managers.

Personal financial planners. You could fill a Rolodex. And it would have to be the expanding type, because providing financial services to the wealthy for whom the preferred term is now high-net-worth individuals is becoming one of the hottest growth areas in U.S. banking. With traditional corporate lending flat and American consumers trying hard to pay down their own household debts, bankers have be The Philadelphia Inquirer WILLIAM F.

STEINMETZ Albert Piscopo, chief operating officer of Glerimede Trust founded to manage the Pew fortune. At Glenmede, affluent means at least $1 million in "manageable" assets. "i -4 V. 1 02. I Cm AS lx- w.

Airline industry catches a 2d wind Remember all the talk about shakeouts? Turns out the shakiest carriers may have hung in there long enough to survive. By Tom Belden INQUIRER STAFF WRITER Two years ago, the prevailing wisdom held that the nation's 10 major airlines would shrink to five or six, thanks to the airline industry's $8 billion in losses since 1990 and the dismal economy. After all, Pan Am, Eastern and Midway Airlines had just gone out of business, TWA and Continental and America West had filed for bankruptcy protection, and Northwest and USAir were deeply in debt. But now, Continental and TWA say they are about to emerge, resuscitated, from the shelter of bankruptcy court-New alliances with foreign airlines, such as last week's agreement between USAir and British Airways, are reinvigorating other carriers. And small increases in both business and leisure travel in recent months are helping all airlines to hang on.

"The fact that all the troubled airlines lasted this long is a plus," says industry an- alyst Bruce Thorp of Philadelphia's Provident National Bank. "They've made it through a pretty shaky period." To be sure, most major airlines' still face Deals such as the British Air-USAir pact are providing new life. A new boost for competitiveness "If you want to kill any idea in the world," inventor Charles Kettering once observed, "get a committee working on it." Yet remarkably, a politically bipartisan committee of business, labor and government leaders has managed to advance, not to kill, the cause of U.S. economic competitiveness. A year ago, the Competitiveness Policy Council issued its first report a clear, concise description of America's competitive shortcomings and the scary implications of those shortcomings: a long, gradual slide in the American standard of living.

Competitiveness, as the council sees it, is being able to produce goods arid services that hold their own on global markets while also providing a rising and sustainable standard of living for Americans. Thus, if U.S. companies can compete only by cutting workers' wages, they're not competitive in the broader sense. The first report helped to make competitiveness an issue in presidential politics. Now the council (not to be confused with the defunct White House Competitiveness Council headed by former Vice President Dan Quayle) has issued its second report, with recommendations for policy changes needed to make the U.S.

economy more productive. The report is very much worth reading, even if you don't buy all its conclusions. Some council recommendations, such as increasing job-training programs and reducing federal budget deficits, are in President Clinton's proposals. Some council members don't like Clinton's deficit-cutting plan because it relies so heavily on tax increases. Yet the council said it supported "the basic thrust of (Clin-ton'sl program." Clinton has asked to meet with the council, and they may get together this week, said Howard Rosen, the group's executive director.

It's not surprising Clinton seems comfortable with the council's work. Some of its recommendations have wide, bipartisan support. Also, the Council and its subgroups had a heavy sprinkling of Clintonistas (including Laura D'Andrea Tyson, chief economic adviser to Clinton, and Ira Magaziner, the White House adviser on health-care reform). The council also clearly agrees with Clinton that laissez-faire is passe and that government should actively shape the nation's economic and industrial future. Yet the council found notable shortcomings in Clinton's proposals so far.

Among them: Business investment. The President hasn't gone far enough in providing incentives for investment by business in new equipment, technological research and product development, the council contends. The council would extend to all businesses a permanent tax credit for investment in new equipment. The council prefers a larger credit Clinton proposed. Clinton would give investment tax credits to all businesses for just two years, leaving the credit in place permanently only for tiny companies.

The council recommends making permanent an expanded tax credit for research and development. The credit should be allowed for business spending on process improvements such as manufacturing innovations and not, as now, only for pre-production A credit also should be given for corporate spending on university research. 'Exports. Clinton hasn't issued an 'export policy, but the council says that boosting exports is vital to creating high-wage jobs. It urges Clinton to work with key trading partners to "adopt a global strategy for economic growth, including an effort to stabi-' lize currency exchange rates.

I The 150 or so federal programs for promoting exports should be consolidated into a coherent strategy, the "council said, and spending on export promotion and finance should be doubled, to about $20 billion a year. Controls on S. exports, many of which were instituted during the Cold War, should be sharply curtailed or eliminated. Education. Clinton needs to support a national education strategy that would set standards for public education, assess the performance of students and reward students and school districts according to their performance.

Teachers and schools should be held accountable for results, and poor districts should get For The Inquirer STAGEY P. MOHUAN On the bond-trading floor at Merrill Lynch in New York, Bob Flieger works the phones. He is one of about 500 people who work on the largest private bond-trading floor in the United States. Traders vary from high school graduates to MBAs. ays for bond traders Upbeat the election, eyes are on this market.

shell out each year to finance the national debt. "When the rates on U.S. Treasuries come down, that lowers the cost of serving the debt," said Mickey Levy, chief economist at CRT Government Securities Ltd. The Merrill Lynch Co. bond-trading room is a good place to witness how the bond market interacts with policymakers in Washington, and for that matter, in Tokyo and Bonn, Paris and London.

This is the largest private bond-trading floor in the United States, and was the largest in the world until the Japanese built a bigger one. It is perhaps the most famous, however, having been used in the film version of Bonfire of the Vanities. In this one implausibly vast room without wajls are row after row of intent young men, and a few women. About 500 people work here. Although the traders have a reputation as Wall Street's hard-drinking, cigar-chomping, cursing cowboys, the atmosphere here is unmistakably yuppie.

Traders with their shirt sleeves rolled up and ties flipped over their shoulders sip from bottles of Evian water as they work the telephones. Overhead is a blur of electronic tickers carrying news from across the globe. That is in addition to the tangle of personal computers at each trader's work station, flashing yield curves and stock prices and still more headlines of the day. Venezuela's Perez says tax bills to be approved German retail union wants minimum 4.2 percent pay raise South Africa won't rescue African economy. It might seem like an information overload, but all these tidbits can factor into the business of trading bonds.

For example, wage increases in Germany could be inflationary, causing German interest rates to go up. And an increase in German rates puts upward pressure on U.S. interest rates. That could cause bond prices to go down. See BONDS on C7 1 What stocks? Since By Barbara Demick INQUIRER STAFF WRITER NEW YORK It is the kind of bone-chilling March morning when New Yorkers should be at their grumpiest.

The temperatures are dropping into the low 20s; the stock market is opening down six points. From the bond-trading floor at Merrill Lynch Co. you can look out at the wind-swept piers of the Hudson River and at the still-closed towers of the World Trade Center. But on this particular day, the trading floor is filled with light and good cheer. In this vast, white room occupying the space of a full city block hundreds of Merrill traders will barter an estimated $35 billion in securities today.

There is plenty of reason for the traders to be upbeat. The bond market is having a good day, one in a succession of good days that it has enjoyed since the presidential election. For once, the bond market is eclipsing its flashier counterpart, the stock market. Even the White House is paying attention. One of the first questions President Clinton reportedly asked after learning of the World Trade Center blast was how it might affect the bond market.

When the Dow Jones Industrial Average plunged 83 points last month on fears about Clinton's economic package, the President took a dismissive stance. "The bond market's a better indicator. And that response has been very positive," Clinton said. James Carville, Clinton's chief campaign strategist, told the Wall Street Journal recently, "I used to think if there was rein carnation, I wanted to come back as the president or the Pope or a .400 baseball hitter. But now I want to come back as the bond market.

You can intimidate everybody." Indeed, the bond market is absolutely crucial to Clinton's plan to get the economy moving. Rising bond prices go hand in hand with falling interest rates. As interest rates drop on newly issued bonds, investors are willing to pay a premium for existing bonds On the Fiene team of fundamental problems that analysts say have to be addressed before they prosper again. Among the top 10 carriers, only Southwest Airlines avoided all the sins of the 1980s: buying too many airplanes, launching too many routes, operating too many hub airports and having too many highly paid employees for the amount of business available in the 1990s. The difficulties of the whole industry have been aggravated, the analysts say, by the survival of airlines operating in Chapter 11 and the proclivity of all carriers last year to cut into their own revenue by discount, ing their fares.

Nearly all the big airlines again' except for perennially profitable Southwest have reduced their," workforces in recent years, cut back on the number of jets they are flying, canceled orders for new planes and eliminated fat. Even more trimming will be necessary, many analysts say, for the industry to recover. That's because passenger miles flown are expected to grow no more than 4 percent a year in the 1990s, rather than the 5 cent or 6 percent growth rate once expected. "In our judgment, more pain is needed for a true turnaround to occur," analysts Michael Derchin and Hence Orme of NatWest Securities Corp. said in a recent report to investors.

"One only has to look at the measures companies like IBM, Sears and General Motors have taken over the past year to appreciate the fact tha' more needs to be done in the airline industry, plagued, as management: admit, with 'structural deficien But! a turnaround has begun already for several carriers, analysts say. See AIRLINES on C10 -1 i government-bond trading desk at Merrill Lynch, Wayne (foreground) and Joe Filicetti go about their business. A economists is available to advise the traders. carrying the older, high rates. And rates haven't been so low in a quarter-century.

The yield on the 30-year Treasury bond is now hovering around 6.8 percent, the lowest it's been since the government started issuing the bench-mark bond in 1977. Not only do lower rates stimulate investments and home sales, but they also reduce the interest payments the government must more money. To get the report Order "A Competitiveness Strategy for America" from the Competitiveness Policy Council, 11 DuPont Circle NW, Suite 650, Washington, D.C. 20036, or fax a request to 202-328-6312..