Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Diamond Jim who wrote (9030)	2/26/1999 1:28:00 PM
From: Jeffrey D	of 42834

Jim/all, Argus research economist analyzes the economy and interest rates. He sees slowing European growth causing no Fed. rate increase and lowering long term rates back to 5.25%. Jeff << U.S. Economy Fri, 26 Feb 1999, 1:21pm EST Economist Yamarone on Federal Reserve: U.S. Economy Comment Washington, Feb. 26 (Bloomberg) -- Comment from Richard Yamarone, an economist at Argus Research Corp. in New York, on the outlook for the U.S. economy and the Federal Reserve after a government report showed gross domestic product grew at a 6.1 percent rate in the fourth quarter: ''With economic growth accelerating at robust 6.1 percent pace during the fourth quarter, many market pundits are claiming the Fed will retract the November rate cut -- we say no way!,'' Yamarone said. ''The Fed cannot raise rates with inflation nowhere to be found. ''That isn't to say that there won't be an adoption of an asymmetric bias towards tightening at the March 30 meeting,'' Yamarone said. ''But a tighter bias does not a rate hike make. There have been numerous occasions where the Fed has instituted an asymmetric bias and not acted. ''What's more, there are currently two concerns on the Fed's radar screens -- Europe and the U.S. agricultural picture,'' Yamarone said. ''Even the Fed chairman recognized that the European economy is weakening. And we believe that it will be the determining factor in the direction of the U.S. economy. ''We feel that Europe will slow and subsequently shed some U.S. exports. This slowdown will bode well for the Fed as the landing strip will be primed for a smooth landing. Weak economic growth in Europe will have investors flock to the safe haven status of U.S. Treasuries and push yields back down to the 5.25 percent to 5.35 percent range.'' >.

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