Bob short term TA looks still positive to me.
The data coming out this week appear very benign.
cbs.marketwatch.com
Also
cbs.marketwatch.com
Stocks and bonds are heading higher
on the hopes that the not-too-hot,
not-too-cold "Goldilocks economy" is
alive and well.
"This is a freight train that has lots of
momentum," said Tim O'Neill, chief
economist for Bank of Montreal,
---------------------
Market likely to rally tues through thurs.
We may even hit 27 where major near term resistance is.
Possibly down by Fri for options but I don't think much.
The threat of a buyout anytime still hangs overhead which
will continue to support NN IMHO,
TA
cbs.marketwatch.com
MarketWatch
Last Update: 11:25 AM ET Dec 12, 1999
1999 economic data
Latest economic release
WASHINGTON (CBS.MW) -- The good news on the
economy is priced in.
Investors are assuming that the Federal Reserve won't
raise interest rates later this month. Furthermore,
sentiment is growing on Wall Street that strong growth
and tight labor markets in the U.S. economy are no
longer any cause for alarm because inflation has been
whipped.
Stocks and bonds are heading higher
on the hopes that the not-too-hot,
not-too-cold "Goldilocks economy" is
alive and well.
Investors should know by now not to
get too complacent about the Federal
Reserve. Sure, the Fed is probably on
the sidelines until at least February,
but that doesn't mean the Fed isn't
paying close attention to an economy
that's running too fast for its tastes.
"This is a freight train that has lots of
momentum," said Tim O'Neill, chief
economist for Bank of Montreal, who
argued that the Fed needs to tap the
brakes enough times to get the
unemployment rate back up above 5
percent. He sees two more rates hikes
in 2000.
After a benign producer price index
for November (see full story), the
Street is primed for more good news
on the economy in the coming week. The risk to
investors would come from any hints of higher inflation
or strong growth. That could dash the spirit of optimism
and remind folks that the Fed is watching and waiting.
The calendar is a busy one: consumer prices and retail
sales on Tuesday, production on Wednesday, trade on
Thursday and housing starts on Friday.
Consumer prices
The CPI is the star of the week. "If it's
in line with the PPI, that should
reinforce a more positive reading on
inflation," said Lynn Reaser, chief
economist at Bank of America Private
Bank.
Economists surveyed by
CBS.MarketWatch.com are putting
their money on gains of just 0.2 percent
for both the overall CPI and the
so-called core rate, which excludes
food and energy prices. That would
match the October performance.
"Unfortunately, trendlike gains in the
CPI are not necessarily good news for
the Fed or the markets," said Cary
Leahey, an economist at Primark
Decision Economics. "The Fed has
drawn a line in the sand at a 2.5
percent inflation rate."
The risk on the CPI is that higher
energy prices will push the headline number a bit
higher, Leahey said.
If the economy isn't showing any signs of accelerating
inflation, shouldn't the Fed back off?
"I don't think it's a phantom that the Fed is fighting,"
O'Neill said. "The Fed has good reason to be focused
on the possibility of inflation coming out of an economy
growing faster than its potential."
O'Neill argued that "a lot of transitory reasons" drove
inflation down in 1997 and 1998. More importantly, the
temporarily low inflation reduced inflation
expectations, which means workers have been slow to
demand the higher wages they could command in a tight
labor market.
That restraint won't last forever.
Retail sales
If the economy is going to slow, it'll have to show up in
retail sales. Sales were soft in September and October,
but most economists think that was only a pause before a
holiday buying spree. The November data probably
won't be as weak as October's but won't be strong
enough to scare the Fed, economists say.
The CBS MarketWatch consensus calls for gains of 0.5
percent in overall sales and 0.4 percent excluding autos.
December should be even better.
"I expect strong retail spending this Christmas season,"
Reaser said.
Economists know auto sales rebounded in November,
and they know that many big retailers reported only
so-so results in November. There are still a lot of
unknowns in the report, however, so it's possible that an
"upside surprise could cause some jitteriness in the
markets," O'Neill said.
If sales are soft again, Leahey said, investors would
write off any weakness as simply a slow start to the
holiday season.
The rest of the data
Housing starts are expected to nudge up to a 1.64
million pace from October's 1.63 million on
warmer-than-normal weather. Industrial production will
likely slow to a 0.2 percent gain after utility output
soared in October. The trade gap is likely to remain in
its current range near the historic high, with the
consensus looking for a slight dip to $23.3 billion in the
deficit.
Those releases will be the last economic news the Fed
will get before the Federal Open Market Committee
meets Dec. 21. None of it is likely to push the FOMC
into raising rates so close to the turn on the millennium.
February, of course, is another matter. |
