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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: MrGreenJeans who wrote (5709)7/2/1998 9:54:00 PM
From: Investor2   of 42834
 
Thanks for the link to the FOMC meeting minutes. It seems like the economy was purring along. For every sign of potential inflation or pickup in economic activity, there seems to be a second sign of slowing in the economy. Nevertheless, the following paragraph caught my eye:

"At its meeting on March 31, 1998, the Committee adopted a directive that called for maintaining conditions in reserve markets that were consistent with an unchanged federal funds rate averaging around 5-1/2 percent. However, in light of increased concerns that growth in aggregate demand might outpace the expansion of the economy's potential for some time, possibly generating inflationary imbalances in labor markets, the Committee decided that the directive should include a bias toward the possible firming of reserve conditions and a higher federal funds rate. The reserve conditions associated with this directive were expected to be consistent with considerable moderation in the growth in M2 and M3 over the months ahead."

But then there were statements like this:

"The staff forecast prepared for this meeting indicated that the expansion of economic activity would slow considerably during the next few quarters and remain moderate in 1999."

The following quote is relevant to our discussion of emerging market funds earlier this week:

"Some members also commented that unsettled financial and economic conditions in East Asia could tend to exacerbate the economic problems of several important emerging economies in other parts of the world, including major Latin American trading partners of the United States."

All in all, the economy looks pretty good. It's almost starting to feel like 1994 again (slow growth, low inflation, and a sideways-moving stock market).

Best wishes,

I2




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