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By Ana Garcia-Navarro

Ana Garcia-Navarro is the publisher of AGN Financial Newsletter. Ms. Garcia-Navarro has a first Masters in International Business Administration from Schiller International University, Paris, France and a second Masters in Investment Management from City University in London, UK. She has previously worked as a money manager for high net worth individuals at the New York office of Merrill Lynch International. Ms. Garcia- Navarro is a registered Investment Advisor in the United States. You may visit AGN Capital on the web at: http://www.agnfin.com/news

January 23, 1999

The year of 1999 has started with a few pleasant surprises for investors- many of America’s top companies are again reporting growth in earnings!. Most of the banking sector reported terrific earnings last week and early this week. As expected, the group of regional banks (those banks that are mostly domestic based) outpaced international banks and online brokers continue to fare better than traditional brokerage companies. The better faring groups having less of an exposure to foreign markets during 1998.

This week we also had a number of companies from the technology & health sector reporting strong growth in earnings. Can you imagine, a company the size of Microsoft (MSFT) growing at a 74% rate-unbelievable isn’t it? Well, MSFT closed up 7 points today at a price of $163 a share (sure to split soon). Another big caps reporting stellar growth was Pfizer (PFE), a pharmaceutical sector stock, which saw revenues in the U.S. increase 38% (the U.S. is the largest consumer of prescriptions worldwide). While earnings for the companies worldwide operations went up 42% (excluding one time charges and credits). – Viagra-one of the companies top product launches for 1998 helped propel the company into the number one spot. Among the company’s past successes, is one of the best R&D divisions in the industry- supported by one of the largest budgets and the expansion of it’s worldwide sales force to a 12,300 level (up over 40%).

Next, President Clinton, in his State of the Union address, proposed a new plan for the reform of the social security fund. This is not a new concept, but the specific numbers proposed for the plan were. Under the new proposal, as much as 60% of the budget surplus would be put aside in order to restore the fund to solvency, over the next 15 years or so. The government would also match private saving for individuals that put money into the stock market (with higher contributions for the poor). Social security is now solvent only through the year 2013, after this period of time the baby boomers will have to either rely on their own savings or see their standard of living drop.

Under the new system (along with extensions for the age of retirement), the fund would become solvent again, but more important it would make a generation of Americans, in the future, able to retire with a level of wealth never before amassed by our parents or grandparents . I must say, that I am strongly in favor of this proposal-which strongly benefits the young and future generations. I also support passage of the proposed "free trade-fast track" legislation-another of the slow moving initiatives that is much needed if we are to continue to lead in the new global economy. We will have to see if 1999 proves to be an important year on Capitol Hill.

Also speaking, Chairman Greenspan reiterated that the U.S. economy is growing at a steady & stable pace. The up-coming 4Q GDP; which is due out later on in the month, will give us a better picture of growth in the U.S.. My personal impression, is that it will come in strong. Finally, private housing starts grew at an annualized pace of 12% last month- really quite a strong number. This is a sector that has done quite well for most of the year. Investors should take a look at stocks such as Home Depot and other related areas (such as furniture retail outlets etc.). Finally, top sectors for 1998 were; technology, health and retail sector.

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