Joe and all, here's something else to turbocharge
your enthusiasm, even you strictly TA technicians:
I smell network/telecom boom time coming up in '99-'00.
The world will have more change in the next 5 years than the
previous 25 years. 3Com will be a big part of that.
POLL--Fed ease done in '98 but more eyed next year
Reuters, Friday, November 20, 1998 at 17:45
By Dawn Xavier
NEW YORK, Nov 20 (Reuters) - The Federal Reserve has
finished cutting interest rates this year, but a majority of
U.S. economists polled by Reuters expect at least one more
easing to ward off potential economic slowing due to global
turmoil.
The Fed will monitor the impact of its three precautionary
rate cuts since late September for a few months before altering
policy again, most economists agreed.
"There certainly is room for a cut, but I think that the
Fed is more likely to wait for more information to see how the
economy responds, see how the stabilization progresses," said
Dan Seto, senior economist at Nikko Securities Co., who
forecast a 25 basis point ease in February.
Only one of 19 economists that specifically pinpointed a
federal funds rate target in the Reuters poll believed the rate
would be cut at the December 22 Federal Open Market Committee
meeting. Three other economists said there was a chance the Fed
might cut rates again this year. Twenty economists in all were
surveyed in the poll.
The minutes of the September 29 FOMC meeting, released
Thursday, showed committee members believed mounting risks to
the U.S. economy required action in order to calm financial
markets. The FOMC voted to cut the target federal funds rate by
25 basis points in both September and November and agreed to a
rare inter-meeting cut of 25 basis points on October 15. Fed
funds now stand at 4.75 percent.
In 1999, 17 of the economists in the Reuters poll targeted
fed funds rates ranging from 3.00 percent to 5.00 percent. The
clear majority, even those that eventually thought the Fed
would adopt a tightening bias, were forecasting another easing
move sometime early in the first half of the year.
Ethan Harris, senior economist at Lehman Brothers Inc., was
forecasting a slowdown in U.S. gross domestic product growth
amid ongoing global economic troubles.
"We still see the Fed having a lot of work to do" in terms
of relaxing interest rates, Harris said, with a rate cut
possible by year end and a low of 3.0 percent fed funds by fall
of 1999.
Consumers will play a role in shaping fed policy plans, in
addition to the global scenario, several economists said.
"Domestic consumption remains strong...once you see that
consumption does slow down, we think that the Fed will start
easing again," said Bill Quan, vice president and senior
economist at Aubrey G. Lanston and Co. The Fed is, "focused on
what the global financial economic situation will do to the
domestic economy sometime next year," he said.
The poll was conducted November 18-19. Full survey results
follow:
Fed Funds Rate DEC 22 1999 SCENARIOS
FOMC
ABN-AMRO 4.50-4.75% 4.25% by mid-year
Aubrey G. Lanston 4.75 4.00-4.50 by late summer/fall
Bear Stearns 4.50 --
BT Securities 4.75 Steady
Barclay's Cap 4.75 No change; tightening bias
CIBC Oppenheimer 4.75 Chance for a cut
Citicorp 4.75 4.00 by summer
CS First Boston 4.50-4.75 4.50 possible at Feb. FOMC
Daiwa 4.75 4.50 possible at Feb. FOMC
DLJ -- 4.50 in first quarter
First Chicago 4.75 Steady, next move to tighten
Goldman Sachs 4.75 4.00 by year end end
JP Morgan 4.75 3.50 by mid-year
Lehman Brothers 4.50-4.75 3.00 by fall
Morgan Stanley 4.75 4.25 by Q1; 5.00 in Q4
Nationsbanc 4.75 4.50 by February, then steady
Nikko Securities 4.75 4.50 by February
Nomura 4.75 4.50 by February or March
Paribas 4.75 4.50 by February;4.25 by Fall
Zions First Bank 4.75 4.25 in first half
---------------------------------------------------------------# of respondents
19 19
Copyright 1998, Reuters News Service
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