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To: el paradisio who wrote (53068)	6/5/2000 8:55:00 AM
From: KyrosL	Respond to of 99985

el, the current interest rate levels are hardly restrictive in real terms (after subtracting inflation). A much more likely cause of the apparent slowdown is, IMO, last year's rise in oil prices, which essentially amounts to a hefty tax increase on the US economy, as well as the swelling federal budget surplus. Both of these removed some $300 billion of spending last year from the economy. Couple this with the overextended consumer (record debt as a percent of disposable income), and you really don't need interest rate increases to slow down the economy. As I said, at current levels real interest rates are neither restrictive nor stimulative, so the Fed has not yet tightened too much. I think the Fed will refrain from raising rates by more than .25, if that, and they may even lower late in the year. I think the chances of a soft landing are good.

To: el paradisio who wrote (53068)	6/5/2000 9:14:00 AM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 99985

here's another on the dollar....sorry if this got posted already... Monday June 5 6:38 AM ET U.S. Imbalances Leave Dollar Susceptible BASEL, Switzerland (Reuters) - The U.S. current account deficit and a build-up in U.S. external debt both raise questions about whether the dollar's levels can be sustained, the Bank for International Settlements said on Monday. In the conclusion to its annual report, it noted that the dollar ``appears to be stronger than is compatible with the stabilization of longer-term external debt ratios.'' So far, it noted, foreign investors were still willing to help finance the U.S. need for capital. ``Private and official investors apparently remained more than willing to finance the current account deficit in the United States, which rose to $339 billion in 1999,''the BIS said. But the BIS also saw worrying signs ahead, particularly as foreign investment shifts more toward equity. Some factors may help to reduce concerns. For example, foreign exchange reserves held in dollars rose strongly in 1999, particularly in Asia. Private investment flows into the United States also surged. The BIS noted that foreign direct investment was equal to 40 percent of the U.S. current account deficit. But despite this, ``the sharp increase of international flows to U.S. equity markets raised concerns about the impact of possible strains in these markets on the future financing of the external deficit,'' the BIS said. Low Correlation Between Dollar, U.S. Stocks Perceptions that structural changes were proceeding more rapidly in the United States than elsewhere in the world had helped investment flows. But the dollar continued to appreciate this year against the euro despite a pullback in U.S. stocks. The BIS noted that the correlation between currency fluctuations and stock market performance, which in 1999 was fairly high for the dollar, has diminished in 2000. It added that such correlation had been spotty historically. ``Overall, these results suggest that the relationship between exchange rate movements and stock market returns is weak,'' the BIS said. ``Moreover, the time pattern of these correlations does not support the conclusion that they were broadly driven by key macroeconomic fundamentals, such as the cyclical performance, or by the relative monetary policy stance.''

To: el paradisio who wrote (53068)	6/5/2000 10:01:00 AM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 99985

el paradiso, so it is OK to go long for the next 6? 12? months? ( while we are waiting for the slowdown that is ), "In other words,if we add the interest hike to our current job data...in 18 month...the slowdown can be much higher. " :-) TA Message #53069 from el paradisio at Jun 5, 2000 8:24 AM ET Joel,good article,the recent rate increase plus the last week "good" job data = problems. Why,because the first hike, will be reflected in the economy not before 10-18 month. Another words,if we add the interest hike to our current job data...in 18 month...the slowdown can be much higher. el