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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (40423)	12/4/2000 4:00:15 PM
From: michael97123	Respond to of 70976

Well Jacob, If we get a bush ruling from Judge Sauls and a change of bias from Greenspan, we should get a "cat" bounce from here. The problem is how lively the cat will be.

To: Jacob Snyder who wrote (40423)	12/4/2000 4:17:23 PM
From: michael97123	Respond to of 70976

FROM YAHOO RE: FED [ Latest Headlines \| Market Overview \| News Alerts ] Monday December 4, 4:13 pm Eastern Time Fed not "unduly alarmed" about inflation-Broaddus By Barbara Hagenbaugh RICHMOND, Va., Dec 4 (Reuters) - A top Federal Reserve official said on Monday U.S. central bankers were not ``unduly alarmed'' over the threat of rising inflation, signaling a growing conviction inside the Fed that the risks of economic overheating have subsided. With only two weeks to go to the central bank's next interest rate meeting, financial markets are eagerly looking for signs that the Fed will shift to a neutral assessment of the economic risks ahead and ditch its long-standing warning that overheating is the prime danger. Such a move would put the Fed one step closer to cutting borrowing costs next year. Federal Reserve Bank of Richmond President Alfred Broaddus, who in the past has repeatedly warned about the risks of rising inflation, told reporters after speaking to the Richmond Kiwanis Club that the economic data released since the Fed's most recent rate meeting in mid-November had confirmed a much-needed slowdown in U.S. economic demand. ``Many of the numbers that have been released (since then) have confirmed the fact that the moderation of demand is now in place,'' he said after speaking to the business leader group. Although Broaddus cautioned that inflation over the past 12 months had advanced at a faster rate than in the previous year, he said he was not ``panicked yet'' that inflation would derail the record U.S. economic expansion. ``I don't think any of us are unduly alarmed,'' he said. Still, he cautioned that inflation was ``moving in the wrong direction.'' Broaddus is a voting member this year on the Fed's Federal Open Market Committee, which sets key interest rates that affect borrowing costs for everything from cars to new homes. The FOMC next meets on Dec. 19 amid widespread expectations it will leave borrowing costs unchanged for the fifth meeting in a row. Citing a tangible threat of inflation, the Fed raised rates six times from June 1999 until May to their highest level in nearly a decade. INFLATION MANTRA OVER? But Fed watchers are interested in what the central bankers will say, not just what they will do, at this month's meeting. Many believe the Fed will drop its long-standing mantra that inflation poses the biggest risk to the U.S. economy, instead shifting its outlook to a balanced view of economic risks ahead. That would just about close the door on any interest rate increases in the near term and would leave the door ajar for interest rate cuts in 2001. Broaddus declined to discuss if the Fed was likely to change its tune later this month. ``We will look at whatever evidence we have at that time,'' he said. Further evidence of economic moderation came on Monday when the privately-run Conference Board said its Index of Leading Economic Indicators, a key forecasting gauge for the U.S. economy, dipped 0.2 percent in October to 105.5. While unexpected by Wall Street, the drop continued a recent trend that has suggested slower growth in the months ahead. Except for a modest increase in March, the index has either remained flat or has declined since January. The data added to the stack of numbers pouring in which suggest the U.S. economy has lost some steam, a development welcomed by the inflation-wary Fed. Claims for jobless benefits have increased in the last several weeks, consumer demand has softened and housing and manufacturing activity has declined. Economists also note that with stock prices well off from their year-ago levels, consumers are likely to cut back on spending, thus bringing demand more in line with potential supply and further cutting the risk of inflation. ``UNUSUAL FLUX'' Broaddus noted that this was a tough time to predict the future course of the economy, which he said was in a state of ``unusual flux.'' However, he said a ``soft landing'' of more moderate growth and reduced inflationary pressures was still the most likely outcome. ``I believe the soft landing scenario is still the scenario with the highest probability,'' Broaddus told the Richmond Kiwanis Club members. ``I personally think that the chances that we'll get something like this are still very good, despite the clouds on the horizon.'' Broaddus said the clouds included a recent run-up in energy prices and uncertainty about the future course of productivity gains, which have received widespread credit for allowing the U.S. economy to power ahead while keeping inflation at bay. The Richmond Fed chief said he was not worried that the slowdown will be too pronounced, leading to an excessive, painful softening of the economy, and potentially a recession. But Broaddus said he could not entirely rule out the possibility that the economy, which until recently was growing at a breakneck speed, could return to a torrid, inflationary pace and give way to a ``hard landing.'' Broaddus's remarks had little immediate impact on financial markets, where investors were awaiting a speech by Fed Chairman Alan Greenspan in New York on Tuesday for fresh clues on the central bank's thinking.