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

To: Crimson Ghost who wrote (53710)	6/12/2000 1:55:00 AM
From: American Spirit	Respond to of 99985

WASHINGTON (CBS.MW) -- All the economic data will be going the market's way in the coming week as the numbers should show mild inflation and a slower economy. It'll be a full slate of indicators. By the end of the week, the Federal Reserve will have almost all the facts it'll need to decide what to do about monetary policy at its two-day meeting on June 27 and 28. The week ahead Tuesday 8:30 am: Retail sales Wednesday 8:30 am: CPI 8:30 am: Inventories 2 pm: Beige Book Thursday 8:30 am: Jobless claims 9:15 am: Industrial production 10 am: Philly Fed Friday 8:30 am: House starts 10 am: Consumer sentiment See our forecast "They'll be pretty market-friendly figures," said Ken Mayland, president of ClearView Economics in Cleveland. "The market will be looking to see if the incipient signs of a slowdown are real," said Joe Keating, chief investment officer for the Kent Funds in Grand Rapids, Mich. "If they are real and we get the necessary condition that the consumer price index comes in as expected, then I think the Fed's on hold" in June, Keating said. He thinks the data dealing with supply and demand will universally support the theory that the economy is slowing. The big number on the demand side comes on Tuesday with May's retail sales report. After consumer spending expanded at the strongest pace in 17 years during the first three months of the year, consumers have slowed their spending. It's not that they've stopped buying. It's that they aren't increasing their consumption at the same blistering rate. Auto sales, in particular, should show a marked decline from the record pace earlier in the year, but should remain at relatively high levels, Maynard said. Economists surveyed by CBS.MarketWatch.com expect retail sales to have risen just 0.1 percent in May after falling 0.2 percent in April. Retail sales represent about half of consumer spending and about one-third of all economic activity, so it's a vital indicator of weaker demand. The initial report, however, tends to have large (and generally upward) revisions. Already, some retailers, such as Circuit City (CC: news, msgs) and Costco (COST: news, msgs), have either reported or warned of lower earnings. Other companies tied to consumer spending, like Procter & Gamble (PG: news, msgs), are seeing slower demand as well. The week's other big number is the consumer price index. After Friday's tame producer price index, the market is expecting another mild report on inflation on Wednesday. Our consensus forecast predicts a gain of 0.2 percent in both the main CPI and the core CPI, which excludes food and energy. Because of the way it's put together, the CPI should show slightly higher energy price increases in May than the PPI did. Outside of energy, though, inflationary pressures should be moderate, our economists say. MarketWatch.com Chief Economist Irwin Kellner of Hofstra University argues that inflationary pressures will fade as the economy slows. See Kellner's column. The government will release other data on demand during the week. Industrial production is expected to have fallen 0.1 percent after soaring 0.9 percent in April. The production figures are highly correlated to the hours-worked data from the Labor Department's employment report, which showed a decline of nearly 2 percent in the goods-producing industries. Housing starts, too, should show a decline to a level that a couple of years ago would have been unthinkably robust. Our consensus calls for starts of 1.62 million units at an annual rate, with 1.55 million permits issued. The Fed has been anxiously waiting for the slowdown in housing. Thus far, high incomes, stock-market wealth and creative financing have kept home sales (and new construction) healthy. But now the slowdown seems to be real. Boise Cascade (BCC: news, msgs), for one, warned on Friday that weakness in home building would push its profits much lower in the second quarter. The Fed loves all this evidence of a slowdown, but they've got to be a little concerned that it's too perfect. If investors become convinced that the slowdown is here and that the Fed has nothing left to do, the ensuing rally might make the Fed's job more difficult. "A turning point usually has a lot more bumps than we have seen," said Joel Naroff, president of Naroff Economic Advisers. "Don?t be surprised if we get some bad -- i.e., strong -- economic data over the next couple of months that just might induce the Fed to take action again." Investors have another worry. The joy they feel in believing the Fed won't raise rates again might turn to despair once they realize that profits are bound to suffer in even a moderate slowdown. Kent Funds' Keating thinks the major stock indexes have the potential for 8 to 10 percent gains over the rest of the year, in line with the growth in earnings. "Most of the damage is behind us," Keating said.

To: Crimson Ghost who wrote (53710)	6/12/2000 8:30:00 AM
From: Les H	Respond to of 99985

Same with VLE which was the last of the major indices to peak in early May.

To: Crimson Ghost who wrote (53710)	6/12/2000 9:34:00 AM
From: HairBall	Respond to of 99985

George S. Cole: I think we have seen a major top, but who knows for sure if it was the top. But early March was certainly a good time to get out of many NAZ high flyers. The Russell 2000 has already set higher lows and highs, certainly looks like more than just a reverse correction. As always, I just try to be on the right side of the moves. When my stuff says a intermediate top is in, I get defensive. What ever I loose getting in long a little late, I have more than made up for going short on the way down. I know history tells us that this is an election year and the market "always" goes up into the election process! Time will tell... Financials may join in after the next peak...who knows! I do know that volatility can be both profitable and costly. If in doubt sit it out...until a clear trend is established! Regards, LG