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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (2410)	6/25/2000 10:12:00 AM
From: Gersh Avery	Read Replies (1) \| Respond to of 33421

Either way .. Either sales have already slowed down enough to make higher unemployment. The new unemployment numbers don't seem to indicate that yet. Perhaps just a very little .. Or the fed is going to keep raising rates until this does take place .. Either way the market will hurt!

To: GROUND ZERO™ who wrote (2410)	6/25/2000 11:33:00 AM
From: KyrosL	Read Replies (1) \| Respond to of 33421

I don't see the Fed going on a warpath, because in addition to interest rate hikes, there are other factors slowing down the economy. The first is the rise in oil prices, which amounts to a hefty $100+ billion tax on the US economy. I think the recent signs of slowdown are primarily due to this. And OPEC's latest action means that oil prices are not going down anytime soon. The second is the swelling budget surpluses that are used to retire debt rather than getting spent. The fact that the politicians have apparently agreed that the Social Security part of the surplus should not be touched makes these surpluses a drag on the economy -- and helps the Fed in its slowdown effort. I see lots of references in the press about the low savings rate of the US consumer. But the swing of government budgets from deficits or 2+% of GDP to surpluses of the same magnitude almost completely counterbalances the low individual savings rate. The third is the overextended US consumer, whose ratio of debt to disposable income is at an all time high. There are signs that the US consumer is approaching satiety, for the time being. For example, I can't see car sales increasing, given that the average age of cars has plunged in the last few years. Also, the fact that the stock market is "behaving", with the broad indexes essentially stalled for the last year or so, moderates the wealth effect. Kyros