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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (27870)	7/29/1999 10:01:00 AM
From: Les H	Read Replies (1) \| Respond to of 50167

Employment indicators tend to lag more than other economic indicators. So, it's more likely to be stronger or as strong in the future, especially since the jobless claims have been dropping sharply in the last three months.

To: IQBAL LATIF who wrote (27870)	7/30/1999 4:14:00 AM
From: IQBAL LATIF	Respond to of 50167

Gurus Say Rate-Hike Fears Are Overblown By Mark Gordon Experts says today what Idea's highlighted within 20 minutes of the number.. INVESTORS looking for a reason to jump ship found one in today's employment-cost index data. But the panic could be premature, according to some Street experts. The U.S. Labor Department said the employment cost index rose 1.1% during the most recent quarter, its biggest increase in eight years. In the first quarter, employment costs had risen at a much more modest 0.4% pace. The increase was significantly higher than the Street's prediction of a 0.8% increase -- and investors focused on that inflation signal rather than the more comforting signs that came in Thursday's gross-domestic-product report. The U.S. Department of Commerce said the GDP grew at a 2.3% rate in the second quarter, much slower than the 3.5% rate analysts had predicted and the robust 4.3% growth rate reported in the first quarter of the year. But Maury Harris, chief economist at PaineWebber, said the employment-cost numbers don't warrant an interest-rate tightening from the Federal Reserve next month because they were not broad-based. He said the high employment costs were found almost exclusively in the service and sales area. "These numbers are very volatile," Harris said. "The market is being very shortsighted in looking at things this way." Donaldson, Lufkin and Jenrette analyst Elliot Platt was also not convinced that Fed Chairman Alan Greenspan would raise interest rates next month, especially since employment numbers coming out next week could paint a different picture. "I think [Greenspan] is still open-minded about the interest rate," Platt said. By contrast, Salomon Smith Barney economist Bob DiClemente thinks there could be a rate increase in store. "I think this goes forward to what the Fed is going to do come August," he said. Many investors also took the data as a signal that an interest-rate tightening is on the way. In testimony before Congress last week, Greenspan said the Fed will act "promptly and forcefully" to raise interest rates if it sees signs that labor costs and prices are beginning to accelerate. That memory may have given the employment news particular weight. Rate-hike fears sent the yield on 30-year Treasurys up six basis points, to 6.07%. The Dow Jones Industrial Average dropped as much as 233 points before finishing the day down 180 points, and many companies took hits, including those in the technology, consumer-cyclicals and financial sectors. In the end though, as investors made a mad rush to sell, no one knows for sure exactly what Greenspan will do, or when he will do it. This is just another way of keeping the market at bay, DiClemente said. "You either move one step, or you stay in place," he added, choosing the former as Greenspan's likely next move.