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To: bill meehan who wrote (65028)	9/29/1999 1:24:00 PM
From: John Pitera	Read Replies (1) \| Respond to of 86076

some reasonable comments from B.C ~~Developments on the gold front have also been difficult given that so many hedge funds and CTA's were short the metal and long stocks and bonds. Such unwinds have not only weighed on the market, but have also exacerbated inflation concerns going forward. As we have argued on a number of occasions, we do not believe the action in gold is indicative of reflation expectations, particularly with the backward steps we seem to be taking when it comes to global recovery. While we have heard such talk before, there have been rumors that a major international hedge fund has been battered by the recent surge in gold in, what has already been a difficult year. Such talk has even been thrown into the Fed equation, as some have argued that the another hedge fund blowup could prove to be a factor in a steady monetary policy into the new millenium. Sticking with monetary policy, the market is not looking for a rate hike in October, with October Fed funds placing the probability of a tightening at just about 19%. The bottom line however, is that there still seems to be a strong sentiment in the market that fundamentals aside, the Fed is bent on taking back all of last year's 75 bp worth of easing, and with only 50 bp done so far, another tightening is on the horizon. Exacerbating such sentiment is the fact that demand remains strong, oil prices are surging, and producer and consumer price reports have shown some signs of pipeline pressures. ~~