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To: Jim Willie CB who wrote (3948)	8/5/2002 4:29:33 PM
From: stockman_scott	Read Replies (3) \| Respond to of 89467

Growth curve of the adjusted monetary base (top chart) research.stlouisfed.org

To: Jim Willie CB who wrote (3948)	8/5/2002 4:33:05 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

DJ BIG PICTURE: Services Look Weak, But Not Double Dippy By John McAuley Of DOW JONES NEWSWIRES 05 Aug 15:13 NEW YORK (Dow Jones)--The services sector can be praised with fainter damns than those reserved for the factory sector. The service sector doesn't look as badly unsettled as the manufacturing sector, but it's not exactly flourishing and there's at least a danger that it could accompany or follow the factory sector to a more pervasive bout of weakness. For now, however, the risk of the much-feared double dip emerging seems to be held at bay, if only barely. The Institute for Supply Management's report on manufacturing, released last Thursday, showed a steep 5.7 point decline to 50.5 and on Monday, the ISM reported that the business activity index for non-manufacturing declined by 4.1 points to 53.1. In each case, the index remained above the threshold of 50 that separates an increase in the sector from an outright decline in sectoral activity. But the decelerating rate of increase - the way the decline in the index really has to be looked at - was disconcerting and raised concerns that the next reading could show a fall below 50. The two measures differ from each other in a more fundamental way. The manufacturing purchasing managers index is a weighted composite of five component indexes: new orders (30% weight), production (25%), employment (20%), supplier deliveries (15%), and inventories (10%). By contrast, the non-manufacturing business activity index is a separately asked question in the survey, rather than a composite index. Lou Crandall, chief economist at Wrightson Associates computes an "alternative composite non-manufacturing index using the same weighting as in the manufacturing report and substituting the business activity index for production." That basis shows a decline as well, but a smaller one. This proxy for the PMI moved down to 51.3 in July from 53.0 in June and a peak of 54.6 in May. Crandall points out that all of "these readings are consistent with moderately positive growth." Indeed, he believes that the economy "hit an air pocket" in July and that there will be slow growth, but growth nonetheless, in the second half of the year. Indeed, that sentiment echoes a comment made by Ralph Kauffman, chair of the ISM non-manufacturing business survey committee in a telephone conference after the release of the report "with the growth slowdown in recent months, the mood of many of our members has turned more cautious. It reflects a change in our members' perception of the economic outlook through year end." The ISM non-manufacturing report is often scrutinized by economists to get some insight into the employment report, but this month the employment report was released last Friday and, in fact, showed a stronger service sector performance than the ISM report showed. According to the jobs report, there were 62,000 new private service sector jobs created in July, but the ISM non-manufacturing report showed that employment was still declining in July, albeit at a slower pace. The reading of 45.8 for July was 1.5 percentage points above June's reading, but still well below the reading of 50 that indicates unchanged employment "It shows a serious loss of momentum," said Ian Morris, chief economist at HSBC Securities, "but I don't think it signals a double dip." For one thing, Morris believes that auto sales in July were so strong that "no matter how you crunch the numbers, it's difficult to come up with consumption growth much less than a 3% annual rate. That suggests that gross domestic product will grow at a 2% to 3% rate. I can't see a double dip with these data." -By John McAuley, Dow Jones Newswire, 201-938-4425; john.mcauley@dowjones.com (END) DOW JONES NEWS 08-05-02 03:13 PM

To: Jim Willie CB who wrote (3948)	8/5/2002 4:37:39 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

BOND REPORT 2-year yield falls below 2% first time By Rex Nutting, CBS.MarketWatch.com Last Update: 2:42 PM ET Aug. 5, 2002 NEW YORK (CBS.MW) - Treasurys rallied again Monday, driving yields below key psychological levels as stocks tumbled further. The yield on the Fed-sensitive 2-year note fell below 2 percent for the first time ever. The short end of the curve is rallying on renewed speculation that the Federal Reserve would cut its overnight interest rate target to prevent a "double-dip" recession.