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

To: Haim R. Branisteanu who wrote (52348)	5/27/2000 9:58:00 AM
From: Techplayer	Read Replies (2) \| Respond to of 99985

Haim, What is your opinion of Joe B fromGruntal? tp Gruntal & Co.'s Joe Battipaglia Today's topic: Bullish Case Intact Despite Rate Increases Joe Battipaglia Ask the Analyst Despite the recent half-point hike in short-term interest rates by the Federal Reserve Board, the fundamental case for U.S. equities remains solid. Strong operating performance here and abroad has resulted in a 24% increase in first-quarter profits and is setting the stage for what I believe will be the most profitable year ever for the S&P 500. This is even more impressive given the Federal Reserve?s attempts to restrain growth in the economy through a series of six tightenings. These rate increases are now beginning to take hold, with the economy, having slowed from the robust 7.3% pace in fourth-quarter 1999 to 5.4% in first-quarter 2000, now expected to achieve a 4% annualized rate of growth by year-end. The real questions now are (1) will the Federal Reserve force a recession by excessively raising short-term interest rates? and (2) will inflation begin to accelerate meaningfully from here? I do not believe that, ahead of an election, the Federal Reserve would attempt to force the economy into a recession to control an inflation menace without considerable evidence of one existing. Against this backdrop, the consumer price index (CPI) and producer price index (PPI) data continue to show no troublesome signs of resurgent inflation. At present, the year-over-year core CPI and PPI have risen just 2.2% and 1.3%, respectively. Therefore, I remain optimistic that the bull market in U.S. equities will resume as the year progresses and achieve higher highs by year-end. My year-end targets remain 12,500 for the Dow Jones Industrial Average, 1,625 for the S&P 500, and 5,500 for the NASDAQ composite. Ask The Analyst! Submit a question and get a free report! What's your opinion, Investor? Discuss today's Analyst Corner topic. Joe Battipaglia Chairman of Investment Policy Joseph V. Battipaglia conducts strategic market and economic analysis in support of the Firm's retail network and growing institutional presence. He graduated Magna Cum Laude from Boston College (B.A., Phi Beta Kappa, Economics), and earned his M.B.A. at the Wharton Graduate School of Business, University of Pennsylvania from multex..