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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (12641)1/4/1998 2:37:00 PM
From: Haim R. Branisteanu  Read Replies (2) of 94695
 
Faulty data cloud U.S. deflation debate--Greenspan

CHICAGO, Jan 3 (Reuters) - A growing debate in the United States over the potential threat of deflation is hampered by faulty price measures and lacks clarity, U.S. Federal Reserve Chairman Alan Greenspan said
on Saturday.

In his most detailed comments on the issue yet, he avoided taking a stand on whether a danger of falling prices existed in the U.S. economy but said this force could be at least as destabilizing as a pickup in the general price level.

''Even if deflation is not considered a significant near-term risk for the economy, the increasing discussion of it could be clearer in defining the circumstance,'' he said in a speech prepared for delivery to the American Economic Association.

Inflation had declined to the point where even an upward bias of a few tenths of a point mattered, he said. ''Inflation has become so low that policymakers need to consider at what point effective price stability has been reached,'' he noted.

A.G. is worried about softness in real prices which will start speculation of an easing in FED policy.

I speculate that on those assumptions the market may rally short term before a reversal from weak earnings reports.

BWDIK

Haim
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