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

To: pater tenebrarum who wrote (37432)	1/14/2000 9:27:00 AM
From: Les H	Read Replies (2) \| Respond to of 99985

ANALYSIS: US DEC CPI +0.2%, CORE +0.1%, HELD DOWN BY LOW HOUSING --YOY CPI +2.7%; YOY Core +1.9%, Smallest Since 1965; YOY Energy +13.4% --Slowing in Some Prices: Apparel Flat; Housing +0.1%; New Cars -0.1% --Other Prices Mixed: Airfares -0.7%; Drugs +0.4% By Joseph Plocek WASHINGTON (MktNews) - U.S. December CPI came in at +0.2% and core inflation at +0.1% -- a bit better than expected. But there may not be much financial market reaction since Fed Chairman Greenspan downplayed the importance of CPI in last night's speech. December CPI was held down by flat apparel and +0.1% housing. In housing (accounts for about 30% of the CPI), all three major groups contributed to the deceleration. Rent was +0.4% and owners equivalent rent was +0.2%, but hotel costs (2.4% importance) were -0.9%. Fuels and utilities were -0.5%, with an actual price drop enhanced by seasonals which look for higher costs in winter. In apparel, womens clothing and shoes were lower by 0.5% and 0.6%, respectively, in December. YOY CPI for 1999 was +2.7%, and core was +1.9%. The core increase was the lowest since 1965. It indicates that most of the inflation pressures in 1999 were in oil and related sectors. Energy was up 13.4% in 1999, and the 2000 inflation outlook is likely to depend importantly on whether oil prices continue to rise. In an aside, the Bureau of Labor Statistics said that effective with the January 2000 CPI release, hedonic quality adjustments will be extended to audio and video equipment. Hedonic models decompose prices into implicit prices for a product's features and components so BLS can better determine whether price changes are due to new features.

To: pater tenebrarum who wrote (37432)	1/14/2000 9:29:00 AM
From: Crimson Ghost	Read Replies (2) \| Respond to of 99985

Looks like my view that a meaningful bond rally is impossible as long as stocks skyrocket at the slightest sign of lower interest rates is proving correct this morning. Bonds are only for suckers until the paradigm changes. If they perchance rally a bit, stocks will rally a hell of a lot more. But when bond rallies no longer trigger huge stock market blowoffs -- that will be the time to consider them seriously as investment vehicles again.