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To: Sam who wrote (2797)	1/2/2001 11:48:50 AM
From: Robert Douglas	Respond to of 3536

Bear Stearn's comment on NAPM. <<This level of index, if sustained, is consistent with real GDP growth of around 1/2%. According to the NAPM, a reading below 42.4 on the overall index is consistent with recession in the overall economy... New orders fell nearly 6 1/2 points to 42, which is the weakest reading since February 1991 and production dropped more than seven points to its lowest level since March 1991... The odds of an intermeeting rate cut are now well above 50% in our opinion and any such move is likely to take place on or before January 12, and could come as early as January 5 following the employment report.>>

To: Sam who wrote (2797)	1/2/2001 12:52:47 PM
From: Lee	Read Replies (1) \| Respond to of 3536

"Another reason for cutting soon and avoiding a recession would be to try to deflate the argument for a Bush tax cut before it gets any momentum." Sam, This isn't your father’s old recession we are staring down. For the Fed alone to save the day we are looking at 200-300 point cuts. Even had we started in December the Fed will be too late. Given the Federal surplus, and some of the highest effective tax rates of our lifetime, there is some tax cut powder available to help avoid very serious trouble. There will be bi-partisan support for the tax cut, and it will not be because Bush talked us into economic trouble. We are looking at a supply side recession exacerbated by a consumer to spent to consume. A tax cut will help the consumer. Without the tax cut the Fed will most likely need to exceed 200 points and possibly 300. Lee