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

To: Benkea who wrote (33760)	11/19/1999 12:20:00 PM
From: Imuah	Respond to of 99985

>Oh, just pay more to drive and heat houses <g>. < Not to worry. Stock market profits will more than cover the extra expense. -g-

To: Benkea who wrote (33760)	11/19/1999 10:50:00 PM
From: Dwight E. Karlsen	Read Replies (1) \| Respond to of 99985

Benkea, don't you get it? Inflation is dead. In the New Era, you may have to "pay more for certain things", like gasoline and heating oil, airfares, plastics, etc. However, if the "core rate" is up substantially, but the "overall rate" is up only a little bit due to a one-month dip in oil prices, then we look at the overall rate, which includes gasoline: Voila, no inflation--You paid only a little bit more overall for all things. If the "core rate" is down, but the "overall rate" is up, that also means no inflation because in that case, you just paid more for certain things, like gasoline. And even if higher fuel products increases airfares, that's related to "non-core", and hence, higher airfares won't count as part of "real inflation". You'll just have to "pay more" for those things.

To: Benkea who wrote (33760)	11/20/1999 1:03:00 AM
From: Jacob Snyder	Respond to of 99985

Will the Fed Be Hawkish vs. Dovish? That's the Debate Near Turkey Day An INTERACTIVE JOURNAL News Roundup November 19, 1999 Will they or won't they ... again? Federal Reserve policy makers Tuesday had barely finished announcing a boost in interest rates when the debate began over when their next move will occur. The Fed's neutral stance on future rate increases had some investors convinced that another move was many months away. But other central-bank watchers aren't so sure. The Fed's decision to raise its target for the federal-funds interest rate, or the rate banks use to lend to each other overnight, to 5.5% from 5.25% was somewhat controversial. Critics said the policy makers acted unnecessarily, because recent economic indicators have shown anemic inflationary pressures. "If this were a football game, they would draw a penalty flag for 'piling on,' " said Martin Regalia, chief economist for the U.S. Chamber of Commerce. The anti-increase argument gained credence Wednesday, when a report showed October consumer prices advanced at their slowest pace since June. The Fed, however, defended its move, saying that "although cost pressures appear generally contained, risks to sustainable growth persist." The bank also made clear it was ready to resume its campaign against inflation early next year. Its position gained support Thursday, after a often unnoticed survey by the Philadelphia Federal Reserve Bank found that price pressures in its region were increasing. So what should the Fed do next, and when? Many economists don't see any action in December. They believe Fed policy makers will use caution because of uncertainty surrounding the year-2000 computer changeover. Deliberations from Tuesday's decision won't be known for some time, but a look at the minutes from October's policy-making meeting showed that even Federal Open Market Committee members were divided at that time on the best rate action. The panel eventually decided to leave rates alone at that session, setting up this week's move. The October minutes, as well as recent comments by Fed Chairman Alan Greenspan, make it clear what will push future increases. Another drop in the unemployment rate or continued evidence of rapid growth in wages or prices would spur policy makers into action. David Orr, an economist with First Union Corp. in Charlotte, N.C., said officials have "drawn the road map quite clearly": Either the pool of jobless Americans "stops going down or the fed-funds rate keeps going up." Also, a prolonged stock-market rally could prompt another rate increase, with officials already concerned that climbing share prices have triggered an out-of-control spending spree by consumers. But stocks this week showed no signs of ending their meteoric rise. Investors ignored any gloom surrounding the rate increase, and instead snapped up shares. The Dow Jones Industrial Average jumped 2.2% for the week. So the bets are on. Some economists are predicting the next tightening to come in February. J.P. Morgan & Co.'s chief economist, William Brown, said he's looking to March, and expects a half a percentage-point rate increase. "We think it's not over," Mr. Brown said. "We do feel reasonably confident the Fed will be back."