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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: RR who wrote (40583)	8/25/2001 12:46:43 AM
From: Boplicity	Respond to of 65232

hmmm I have never heard that one before. Good to see you out and about. It's all in the vol. and follow though, with out that, it's just another tooth, in long line of saw tooth formations. B

To: RR who wrote (40583)	8/25/2001 2:29:21 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Consumer Seen as Best Hope for Economy Aug 25 8:11am ET By Glenn Somerville WASHINGTON (Reuters) - The U.S. Federal Reserve's fast-fire campaign of interest-rate cuts may be nearly over, analysts say, leaving it to consumers to pick up the spending torch to ignite a recovery. Eight months into one of the most determined rate-slashing campaigns in the U.S. central bank's history, with interest costs the lowest since 1994, debate remains whether the economy is on the cusp of renewed growth or spiraling down. But after seven straight rate cuts, including a quarter percentage point reduction on Tuesday that dropped the key federal funds lending rate to 3.5 percent -- 3 full percentage points below its Jan. 1 level -- the Fed's ammunition may be running low. "The Fed has done the majority of what it can do," said economist David Orr of First Union National Bank in Charlotte, N.C. "It's job is to make sure that there is lots of liquidity in the system and that interest rates are not an impediment to spending. They've done that." Yet the Fed acknowledged, after its Federal Open Market Committee meeting on Tuesday, that the mighty U.S. economy remains beset by problems and that its best hope is the consumer. "Household demand has been sustained, but business profits and capital spending continue to weaken and growth abroad is slowing, weighing on the U.S. economy," the Fed said. MARKETS UNNERVED BY WEAKNESS That was reflected in the performance of U.S. equity markets, which sank after the Fed rate-cut announcement, though normally such action bolsters stock prices. Policymakers seemed to be shifting their hopes onto consumers' shoulders, with some reason. "The Fed has been aggressive in bringing the federal funds rate to where it was in 1994 and so you have to ask how much farther can they go," said economist Kathleen Stephansen of Credit Suisse First Boston in New York. "The answer is that they can go further but now we really are looking at the tax cuts and rebates coming into the system and at the Fed's observation that household spending was being sustained," she added. Credit Suisse estimates that over the next four quarters tax cuts will boost household cash flows by $50 billion in the second half of this year and by about $80 billion next year -- a healthy shot if the money is spent instead of saved. "If there is enough evidence that the money is being spent, then you can make the case that the Fed is essentially done," Stephansen said. "But if there is no evidence of that or if it is disappointing between now and October, then the Fed most likely will continue easing." The policymaking FOMC next meets on Oct. 2 and 14 of 25 primary dealers in U.S. government securities, surveyed by Reuters on Tuesday, predicted at least one more rate reduction this year. CHECKS IN THE MAIL Orr said there was reason to be optimistic that consumers, who fuel two-thirds of national economic activity, will keep the economy out of recession. "The pipeline is pretty full of stimulus," Orr observed, though he cautioned that a pickup in economic activity will be gradual and less than robust, in part because consumer spending has not taken an abrupt downturn. Second-quarter growth in gross domestic product, originally reported at a 1.7 percent annual rate, is widely expected to be revised down to virtually flat. Orr said he expected third-quarter GDP to advance at a 1.5 percent rate and then to gain to 2.4 percent in the final three months of the year in a slowly accelerating pace. "There's a fairly good probability that we'll get a little pop in retail sales in the next few months," he said. "It will come as a pleasant surprise that tax rebates are going to help in company with lower gasoline prices to get spending up." Stephansen offered a similar view, suggesting that third-quarter GDP likely will increase at about a 2 percent rate after being revised to flat in the second quarter and climb to a 3.1 percent rate in the final quarter as tax rebates spur more spending. But she predicted "a sub-par type of recovery," since the normal snapback in consumer spending will be absent. "The risk is that since we had no genuine contraction in spending, we won't in turn get a genuine boost from pent-up demand," Stephansen said. ___________________________ RR: Hope you and your family enjoy the weekend...nice to have you back on the porch...=)