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To: que seria who wrote (66016)	5/11/2000 9:18:00 AM
From: SliderOnTheBlack	Respond to of 95453

Fed Watch - April retail sales down & fwiw - "MY" walk down main street... April retail sales down = great news. Much of the Fed's work here is to remove the historic liquidity pump from pre-Y2K. I do buy into the reduced effect of Energy on inflation. It does matter, but not nearly as much as it did... re: My walk down Main Street #1: I talked to a friend who is the GM of an Auto Dealership in a traditional All-American Midwestern City of approx 500K population. Sales have fallen off a cliff. They've "been here & done this" rising rate thing before. They've allready reduced their future inventory orders from the factory, are implementing reduced sales force & back office, are having dept head meetings (allready) targeting budget reductions & cost controls - because they know what is coming for the retail Automobile Industry. What makes this take on the Auto Market so important; is these dealers meet quarterly in what is called "Dealer 20 Groups" - where they meet with a group of 20 other Auto Dealers who represent their peer group Nationally. These Dealer Groups were formed as part of the aftermath of the great fallout of retail dealers going under from the Jimmy Carter days... the "Early Warning" & quick reaction of these Dealer Group's has been the single best reality & temperature check on the economy that I know of. I sold Finance & Insurance products to this Industry some time ago and have solid contacts & a frontline understanding of the Business - these guys are not just scared - they KNOW they are going to take a hit here shortly and feel it will be prolonged.... 12 mos or longer. Main Street temperature check #2: I called a former co-worker who is now a regional VP for a Nationwide Mortgage company with his branch network covering 14 states. He has told me that "Nationally" - mortgage originations have "Fallen of the Cliff" - refinancings have FALLEN OFF A CLIFF - quote, unquote ! They are cutting back their telemarketing budget - as the number of people who now have any mathematical advantage of refinancing their mortage has fallen dramatically if not completely disappeared. Their marketing will now be re-directed away from refinancing A+ paper to the "B/C" non-conforming makret where customers are more "need" based and less "Rate conscious." He also told me that "downstream" at the Realtor, Title Company , Builder-Contractor" level - they are quote - unquote -"scared $h!tle$$" - their business has dropped at a unprecedented pace. He told me that ONLY in the major Metro Area's - ie: Atlanata, LA, SF Bay, Chicago,Phoenix and some other select markets are "maintaining" a slow rollover to lower origination levels - but, are definitely seeing the refinance market evaporating, but new construction & purchases are reduced, but not in free fall "yet"; but in smaller markets - new construction & purchases ARE in free fall. He told me that these "hot" major Metro markets have traditionally been the last to fall and they are forecasting reduced levels of mortgage origninations even in those markets going forward. My Walk down Main Street #3. Asked a friend who's wife is a Sales Manager for a Major Dept Store Chain to tell me how "sales" were doing - she is a Regional Sales Manager for "Womens Shoes" - to be honest, I don't know how great an indicator that is - given the Imelda Marco's Nature of Women & their Shoe's (VBG) - but, fwiw - she said sales were soft and in general companywide - storewide sales were "Soft"... People - the FED is going to screw up here royally - bank on it. There was an over-reaction to Y2K - way, way too much liquidity was pumped into the system and if the Fed hikes .50 - it will no longer be a soft landing - but, rather an "Emergency Brake" pull... I am not an economist by any means; but a .50 bp hike that is followed by another .50 bp even if it comes in 2 more hikes - will be way, way too much... There is NOT going to be a soft landing in Middle America folks - there is going to be layoffs, cutbacks, reduced spending and "spot recessions" in many markets... My feeling is that the next 2 qtrs of economic indicators will show dramatically reduced inflationary pressure and that the Fed may actually have to reduce rates by .25 bp in Q4 perhaps; especially if they do a .50 bp hike here. The Fed - if the do .50 bp here in May - will have snuffed out the entire Home Building, Realtor,Mortgage "SEASON" for year 2000 - this is when Mr. & Mrs. America go shopping for their new homes - wanting to close in June, or July & move the kids during the summer months etc... that just got squashed ! My take on this is to buy the Tech Blow off - the Fed isn't stupid; I think they want to quash the "Wealth Effect" to create some fear in the Markets and they just did; but they can NOT stay on a free-wheeling rate hike basis much longer - way too much damange to the core economy on Main Street is about to be done... K Mart just reported a 61% reduction in Earnings for the quarter - folks; do we need any better take on "Main Street" spending than that ? The Fed Can Not & Will NOT continue on this rate hike mode - imho, they got caught between a rock & a hard place with the Y2K liquidity pump that they had to remove and inflationary pressures - that really were not indicative of this level of Fed Hike's. PS - anyone notice that yesterday's blow off was "all to conventient" given the 3 day settlement period falling right on the doorstep to the Fed Meeting ? - lots of put selling & momenteum shorts - not panic institutional selling yesterday fwiw - I think buyers yesterday & in the aftermarket (I did some nice buying on the further selling after hours) will do well. Naz will bottom here imho, the old low of 3241 (?) should hold; I'm targeting a 7.5% over-shot to that - so looking to be fully invested at a NAZ 3000 if seen, or will add on the basing rally. PS - Morgan Stanley just pumped the OS sector ! - maybe we don't see an Oilpatch blow off after all... I think they had PGO in there.... I don't see much need to own much else than FLC & PGO there - as they will vastly outperform the OSX index going forward... 3 days & counting...