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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (25736)	9/14/1999 1:53:00 PM
From: dclapp	Respond to of 99985

patience, Lee, patience....

To: Lee Lichterman III who wrote (25736)	9/14/1999 1:57:00 PM
From: pater tenebrarum	Read Replies (3) \| Respond to of 99985

Lee, you are quite right...the market's resilience in the face of deteriorating fundamentals and internals is amazing. remember '82, when stocks only went down? and remember '87, when they only went up? we are getting closer to some sort of surprise inflection point i believe. one last rally in complete defiance of logic to destroy the remaining bears and suck in the last remaining innocent bystander would surely do it...

To: Lee Lichterman III who wrote (25736)	9/14/1999 2:01:00 PM
From: r.edwards	Read Replies (1) \| Respond to of 99985

here we go I think <g?> in oezvt's oct 700 @ 14.5 lets see what happens.....http://timely.com/t/timelypage?fc=25&fd=1&fb=oex&fe=61&fh=2&fg=2&ff=3&fi=2&fj=50&fk=3&fl=20&fm=0&fn=10&fo=5&fp=5&fq=1&fa=oex

To: Lee Lichterman III who wrote (25736)	9/14/1999 2:04:00 PM
From: Les H	Respond to of 99985

ANALYSTS: STRONG RETAIL SALES HEIGHTEN IMPORTANCE OF CPI FOR FED By Steven K. Beckner Market News International - Wednesday's August consumer price report took on even more significance from a monetary policy perspective in wake of surprisingly strong consumption data from last month in the minds of many analysts. Although it is still considered unlikely that the Federal Reserve will raise short-term interest rates again at its Oct. 5 Federal Open Market Committee meeting, the retail sales surge was viewed as sufficiently alarming that a higher-than-expected increase in the consumer price increase could conceivably force the Fed to raise rates for a third time. Instead of rising 0.8% overall and 0.4% excluding autos, as expected, the Commerce Department reported that August retail sales leaped 1.2% and 0.7% excluding autos. Rebounding sales of building materials and furniture swelled the totals. Moreover, there were upward revisions to June and July sales. Together with inventory building and other factors, economists said the strong consumption figures should yield third quarter real GDP growth of at least 4%. Market interest rates rose on the news while dollar-yen slipped after the retail sales report -- even more after the subsequent report that the second quarter current account deficit was at a record $80.7 billion. Robert DiClemente, chief economist for Salomon Smith Barney, said the evidence of strong consumer demand means the Fed will "certainly have to keep the notion of tightening on the table." He said the question of whether the Fed is "done for the year" is pointless. He said the Fed will do what it needs to do regardless of Y2K concerns. Whether the Fed acts at the October or subsequent FOMC meetings is apt to depend on actual signs of inflation, said DiClemente. "Unless there is something really awful in tomorrow's numbers it is unlikely they would go in October," he said. However, he said he wouldn't rule out Fed action at any time in the months to come. DiClemente said "the Fed is fighting two things." Fed policymakers "know the global revival is taking away some of the positive disinflationary forces." But at the same time, "they have seen how well the economy has been able to satisfy demands without undue strains," so there is an inclination to give the economy "the benefit of the doubt" on inflation. The Fed will stay "on the same very cautious path of balancing risks with the implication that there's probably more snugging to do," said DiClemente, adding that the Fed has to be concerned that financial "windfalls" are stimulating demand. Charles Lieberman, chief economist for First Institutional Securities, said the "strong" retail sales report "will keep the debate [at the October FOMC meeting] intense," but he said "the ultimate determination of any policy change is going to be the inflation data." "Tomorrow's CPI will be more important than today's retail sales," Lieberman said. He considers it likely that, eventually, further tightening will be needed. Bryan Wesbury, chief economist for Griffin, Kubik, Stephens & Thompson, Inc., who has argued against any Fed tightening, agreed that further tightening "depends on the CPI. If we get another benign report they [on the FOMC] can wait another month until November." Wesbury said "a tightening bias is likely" at the October FOMC meeting, assuming there is no rate hike. Wesbury said the retail sales increase was considerably larger than he expected. He said strong retail sales are "a reflection of 4.2% unemployment and very solid gains in real incomes, and both come from strong productivity growth." He observed that over the last three months retail sales have risen at an annualized rate of 8.6%, down from 13.7% in the first quarter, but "still at a very high level." However, "the evidence so far is that we're seeing no inflation pressures from this strong growth," Wesbury emphasized. He noted that the strongest sales growth is coming from areas -- autos, furniture, appliances -- where there has been widespread price cutting. "We're just in a spectacular situation economically," Wesbury said, adding, "It's a very difficult situation for the Fed."