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To: Robert Rose who wrote (98184)	3/31/2000 3:29:00 PM
From: GST	Respond to of 164684

I don't know where to point you for the track record of this as an indicator -- it is no secret. Could we just have a slowdown -- yes. The issue is "how much of a slowdown". The inverted yield curve gives an idea of how much slowing is priced in by market players. If they underestimate the rate of growth in the economy in the short term, the curve becomes STEEPER as short rates go up. This is because the braking effect needed to slow things down in the short term threatens to stall the whole show. Recognizing this, market players drive short rates higher and long rates lower. Nobody wants this -- anymore than anybody wants to be in a car crash -- but accidents happen, and when you are half drunk and driving ninety on a curving, rain soaked highway, you either slow down or get killed. We are not slowing down -- wait till new data next week shows that we are SPEEDING UP!