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To: gladman who wrote (103894)	5/24/2000 10:00:00 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Dave, thanks for bringing Brze to my attention. The problem is I'm not buying for a while. All my speculation money is tied up in shorts...even though you might think that to be un-American. Do you really think this market will reverse it self...while we're looking at inflation? >REUTERS May 24, 2000 NEW YORK -- With a global economic expansion lifting oil and commodity prices, U.S. economists are increasingly worried about inflation and see no peak in sight. Oil prices hit their highest level in two months last week, and a key commodity price index reached a two-year high Monday, adding to concerns about inflation pressures from strong growth and a very tight labor market. "Inflation will peak at some point," said Anirvan Banerji, director of research for the Economic Cycle Research Institute, a New York firm that compiles the Future Inflation Gauge. "That peak is not yet in sight. As far as I can see, inflation will keep increasing for the foreseeable future." The FIG factors in measures of underlying inflation such as labor market pressures, commodities, import prices, supplier deliveries, yield spreads and debt growth. It rose last month to its highest level in 11 years. "At this point, interest rates will have to keep going up," Banerji said. The Federal Reserve raised rates by half a percentage point last week, making its sixth increase in less then a year aimed at reining in inflation. Central bank officials have said they are concerned about signs that inflation is picking up. The key force behind rising inflation is the upturn in world economies, Banerji said. In the last decade, there was only one brief period when all the major world economies were expanding in sync. But now Europe, Japan and the United States are all growing, and this phenomenon is pushing up demand and prices for commodities and oil. The benchmark Bridge Commodity Research Bureau's index of 17 commodities rose to a two-year high Monday. At the same time, U.S. officials are concerned about gasoline prices as the summer driving season approaches and want the world's major oil producers to step up production. Crude oil futures rose Thursday above $30 a barrel, a two-month high. Another concern is that low unemployment is driving up labor costs, which rose at the fastest pace in more than a decade in the first quarter. Employers could try to pass those costs on to consumers. The U.S. economy is dominated by the service sector, which Banerji said shows few signs that it is going to slow much. The Consumer Price Index, the nation's main inflation barometer, rose at a 4.3 percent annual pace in the first four months of this year vs. a 2.7 percent rise in 1999. The core rate, which excludes erratic food and energy prices, was rising at a 2.9 percent pace from January to April, vs. a 1.9 percent increase in all of last year. Services outside the energy sector account for 70 percent of the core CPI and were rising at an annual rate of 3.7 percent in the first four months of the year, a percentage point higher than in 1999. Paul Kasriel, chief domestic economist of Northern Trust in Chicago, said energy has been a big contributor to inflation so far but prices in that sector are likely to level off. "I don't think, going forward, that energy is going to be a major contributor to higher inflation," Kasriel said.