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To: Fangorn who wrote (134354)	6/24/1999 12:19:00 PM
From: Mohan Marette	Respond to of 176387

<-OT-> If Abby isn't, I sure am not either. Steven: Well,if Abby isn't worried I sure am not is all I am saying. ============================= Goldman's Cohen not worried about inflation NEW YORK, June 24 (Reuters) - Abby Joseph Cohen, Wall Street seer and chief U.S. market strategist at Goldman Sachs Group Inc. (NYSE:GS - news), said on Thursday a potential hike in interest rates next week by the U.S. Federal Reserve would not cause major damage to markets, although it might cause a bout of temporary pain. ''I don't expect any significant impact on the market but we could see some transitory discomfort,'' Cohen, who is a renowned stock market bull, told a Council on Foreign Relations meeting in New York. ''I would characterize a Fed tightening as a flu shot...I think there could be some temporary discomfort until we all recognize that it really was a good idea.'' The Federal Reserve's policy-setting group is meeting June 29 and 30 and is widely expected to raise short-term U.S. interest rates by a quarter of a percentage point to keep a rein on a rapidly growing U.S. economy. The stock and bond market's recent fears about runaway U.S. inflation was unwarranted and there was scant evidence that wages were rising too quickly, Cohen said. Bruce Steinberg, chief economist at Merrill Lynch and Co. Inc. (NYSE:MER - news), who joined Cohen in speaking at the council, added the risk was that the Fed would become too aggressive and keep raising rates, which could hurt U.S. profits. ''The question is if this is the first of many tightenings to come,'' Steinberg said. Equity markets were caught in a trading range, partly because of investor uncertainty over whether the Fed's actions would help or hinder the prolonged U.S. economic boom over time, Cohen said, adding that the Standard & Poor's 500 index has been stuck between 1300 and 1350 since February. Both Cohen and Steinberg also said the recent slump in U.S. government bond prices indicated that market had already priced in two or more potential rate hikes. ''There has already been a de facto tightening in the intermediate and long bond yields in the United States,'' Cohen said. ''They are already up 125 basis points. Bruce pointed out...that's the equivalent of two or more rate increases on the part of the Fed.'' The rapid growth in electronic commerce likely would be a potent force in keeping inflation at bay, as it pushed prices of goods and services lower, the economists said. ''The Internet is a powerfully deflationary force in the world economy,'' Steinberg said. ''It's going to make prices come down.'' While the U.S. Fed was poised to raise interest rates, Cohen and Steinberg noted growth was slower outside the United States and overseas central banks were lowering rates in efforts to spur economies. ''This has been a very sluggish global economy,'' Cohen said. ''Japan, the world's second largest economy, is still in the midst of a domestic recession and Europe is still a mixed picture...We are no longer on the precipice of something quite dangerous, but we are in a period of slow growth in the rest of the world.'' Last year's economic turmoil that began in emerging markets in Asia and Russia, then spread, damaged profits at U.S. financial institutions that lent to and did business in those regions, while it also hurt U.S. multinational companies that sold goods there.