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

To: Dwight E. Karlsen who wrote (42702)	3/10/2000 1:32:00 AM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 99985

Also don't forget the new minimum wage increase passed today. That should help ease the wage pressure reported inteh beige book report from yesterday. <g> Robert Graham, thanks for the in depth analysis! I was only watching GE as a break of resistance indicator as I was also eyeballing the 125 level as critical. I wasn't actually looking to trade it though and what I was asking for was if they bought their own stock on the first or second Wednesday of teh month. The correct answer apparently was the first Wednesday which explained the pop last week and then the weakness this week. I am now watching a few other DOW stocks but most have max pain at their current levels so I will wait except for one but I want te get in it first. <ggg> Everytime I post one, it jumps before I can get in! I may not be making 400% in the high flying techs but these dead cat bounces in teh DOW issues for 10% aren't too bad and if I have to hold them an extra day, at least I can sleep at night. PS - I was not posting today nor will I be for a while since I had to go back to the grind and can't post during the day. Good Luck, Lee

To: Dwight E. Karlsen who wrote (42702)	3/10/2000 9:10:00 AM
From: John Madarasz	Read Replies (2) \| Respond to of 99985

Are Energy Costs Being Left Out of the CPI?? this article was forwarded to me. We are trying to check the validity of what Crudele is alleging. --------- Article from the NYPost, mar 07,00 CPI REPORT DID NOT INCLUDE ENERGY COSTS By JOHN CRUDELE --------------------------------------------------------------------------- ----- DID Washington eliminate the rising price of oil from the last Consumer Price Index? If you have a car, you know that the price of gasoline has beaten up the family budget in recent months. Homeowners who heat with oil haven't missed that point either. In fact, the fear is that every industry from airlines to the makers of widgets will try to pass on their energy-cost increases to consumers in the months ahead. Yet Washington is showing very little official inflation. How can that be? We may have found the answer. In a tactic that's reminiscent of the old Soviet Union's method of stat-keeping, officials in Washington seem to have simply eliminated the nasty effect of energy prices from their figures. I say "seems to have" because it is virtually impossible to understand what the ledger-keepers in Washington are doing, even after they've explained it. But here's what I know. The Bureau of Labor Statistics reported two weeks ago that the nation's Consumer Price Index rose just 0.2 percent for the month of January. That bit of good information for the markets came shortly after we found out that producer (wholesale) prices were unchanged for the month. Let's concentrate on the CPI in this column. Buried deep in a footnote in the CPI report, under a section about seasonal adjustments, is this statement: "Effective with the calculation of the seasonal factors for 1990, the BLS has used an enhanced seasonal adjustment procedure called Intervention Analysis Seasonal Adjustment for the CPI series ... Ï. For the fuel oil and the motor fuels indexes, this procedure was used (in January) to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonal adjusted data for those series." If this footnote really means what it seems to say, this disclosure is astounding. Washington has been assuring us that that inflation is under control, but it has been reducing -- and maybe even eliminating -- the impact of the rising price of oil in its calculations. That's like leaving the rain out of a weather report. Or the visitor's runs out of a box score. If this is what BLS is doing, it would produce a meaningless number. The financial markets actually pay attention to these CPI reports, even though -- as I've explained before -- the Federal Reserve has come to distrust them and now relies on inflation information gathered from private sources. Last week, in fact, Alan Greenspan publicly said that he'd no longer take the CPI into consideration. But as far as I know, Greenspan doesn't know about this footnote. John Williams, an economist who runs the Shadow Bureau of Government Statistics in Hawthorne, N.J., was the one who brought this matter to my attention. Williams did his best to estimate what inflation would have been had the government not used Intervention Analysis. His guess? Instead of a 0.2 percent jump in the CPI, the number would have jumped a full percentage point for the month. And the producer price index would have been up 2.5 percent instead of zero. Williams is particularly amazed by the rest of the footnote that states that "extreme values and/or sharp movements which might distort the seasonal pattern are estimated and removed from the data prior to calculation of seasonal factors." "This is incredible. If only those people using heating oil had their bills handled by the Bureau of Labor Statistics, they'd have no trouble paying them." It isn't that the statisticians are doing something sneaky. They are, after all, explaining everything right in the report. It's just that nobody knows this statement is there. What they are doing is wrong and dangerous. Message 13126559 Best Regards, John M.