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To: SouthFloridaGuy who wrote (10534)	5/25/2000 6:19:00 PM
From: szabel	Respond to of 24042

US stock index futures end lower after late decline CHICAGO, May 25 (Reuters) - U.S. stock index futures ended lower after giving up early gains in afternoon dealings Thursday, as blue chips and some tech stocks skidded. Losses in Microsoft Corp. and in nearly every U.S. equity group dragged all major stock indexes and their corresponding futures contracts down in afternoon trade and spoiled an earlier tech rally. Microsoft added to Nasdaq weakness and fell to a new 52-week low after an influential industry analyst said the software company could be worth less if it is broken up by the government. The Dow Jones Industrial average fell 2.01 percent, or 211.43 points, as the financial sector turned negative, more than erasing Wednesday's 113-point gain. June Dow futures were higher early but dropped 185.00 points to close at 10,380.00, just above support at the 1-1/4-month low settlement price at 10,375.00. June Standard & Poor's 500s futures also erased early gains in a steady descent as the contract broke through support levels at 1399.00 and from 1392.00 to 1390.00, which some traders said could mean a further declines. ``We slowly started walking them down,'' one trader said. Nervousness over a late-session speech by U.S. Federal Reserve Chairman Alan Greenspan may have contributed to losses, the trader said. Bids dried up a half an hour before Greenspan's speech at 2:20 p.m. CDT (1920 GMT), one trader said. ``People started getting nervous, just in case he was going to say something bad,'' he said. However, Greenspan's comment, which warned banks to guard against risk inherent in their business, had little impact. The market also fell victim to profit taking as traders closed out positions in front of the U.S. Memorial Day holiday three-day weekend. Trading volume was low until the last hour of the session. Strong institutional buying was evident in early trade, when several dealers bought more than 1000 June S&P 500s futures contracts, traders said. ``That helped a little bit, but I think we still have more to go to the downside,'' one trader said. ``The sentiment seems to be a nervous bearishness.'' Other dealers were good sellers on the afternoon's decline, the trader said. The Nasdaq contract's long-term trend is still negative, said Raynard Cheng, technical analyst at Bank One. ``The bounce from the April low has been very weak and is in the process of breaking down again,'' Cheng said. The June Nasdaq 100 futures contract will likely stabilise at 2,562.00, the 61.8 percent Fibonacci retracement of the rally from October 1998 to its high in March 2000, Cheng said. At settlement, June S&Ps were off 12.70 points at 1,389.00, Nasdaq 100s off 42.00 at 3,125.50, Dow futures off 185 at 10,380, Russell 2000s off 9.00 at 456.00, Midcap 400s off 3.40 at 460.60 and Nikkeis off 200.0 at 16,045.

To: SouthFloridaGuy who wrote (10534)	5/25/2000 7:19:00 PM
From: taxman	Read Replies (1) \| Respond to of 24042

interesting post. here's a related article on direction of interest rates. i'd be most interested in your (or anyone's) reaction to it. regards 10:10 ET ****** Interest Rates : Everyone understands that the direction of Fed policy is now a critical factor for the market. But understanding the interest rate environment is a more difficult task, and we are currently seeing many contradictory signals. First, there are the economists -- they almost unanimously expect the Fed to tighten several more times. Yet this unanimity should not be accepted as a clear sign that rates are headed higher; economists are notorious hindsight indicators. They always expect rates to head higher at the peak and lower at the trough. They never predict the inflection point in policy. So let's throw out that indicator. Second, there are the brokerage firms' various ratings moves which are related to the interest rate/economic cycle. Today, Morgan Stanley Dean Witter downgraded steel (ROU, IST, CMC) and banking (C, BAC) stocks due to expectations of an economic slowdown. This is actually a confusing call, as steel might get hurt by a slowing economy, but bank stocks typically turn when interest rates peak. And a slowing economy would imply that we are near that interest rate peak. Also today, Goldman Sachs downgraded two gold stocks (BMG, KGC). Despite all of the inflation fears running through the markets and the Federal Reserve, gold prices have certainly not reflected any inflation scare, and the Goldman downgrade is indicative of this complacency. Finally and most importantly, market indications are telling a more mixed story about rates. In addition to gold price weakness, we also see an inverted yield curve from the funds rate out to 10-year yields. No market indicator has a perfect track record in forecasting economic turning points, but the yield curve has been one of the best, hence its addition to the Leading Economic Indicators index a few years back. Inversion from the funds rate to 10-years has typically been followed by a marked economic slowdown. If the Fed were to raise rates another 100 bp, much less 200 bp, the yield curve inversion would be so extreme as to hint at future recession. Similarly, real short term rates (interest rates less the inflation rate) are already at a very high 4.5%, and boosting them to 5.5% or 6.5% would run the risk of inviting recession. In short, while economists and brokerage firms are offering mixed signals on rates, market indicators are hinting that rates aren't headed much higher -- recent declines in retail sales and home sales might be another indication that the market indicators are right. They usually are. - Greg Jones, Briefing.com Copyright ¸ 1999 Briefing.com, Inc.

To: SouthFloridaGuy who wrote (10534)	5/25/2000 7:56:00 PM
From: Hank Stamper	Read Replies (1) \| Respond to of 24042

"By that time the economy will have slowed to a creep. " I vote with the Dipster on this one. The problem here is that no one, not even Greenshades, knows when the economy will slow. This is simply no viable model for this. It is as much of a fact as anything that the Fed's actions (s.t. rates and liquidity) constitute a blunt instrument with no dials and gages or speed indicator. It's like bashing a tomato with a hatchet. Hit it just right and you get a nice slice, otherwise you get juice and you can't tell when it will hit the fruit. I think you alluded to this when you noted that the Bad Times (1930s) was the result of mis-management. Indeed, that is a case in which there was a liquidity bubble followed by a major tightening. We have had the bubble but it is not expected that Greenspan will do the latter. Thank Goodness. Ciao, David Todtman