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To: Jim Willie CB who wrote (19262)	5/19/2003 5:11:45 PM
From: Sully-	Read Replies (1) \| Respond to of 89467

US CREDIT OUTLOOK-Waiting for Greenspan's high-wire act Mon May 19, 2003 04:53 PM ET By Ros Krasny CHICAGO, May 19 (Reuters) - A slow week for economic data releases leaves U.S. Treasuries dealers focused on what is likely to be a tricky balancing act on Wednesday by Federal Reserve Bank Chairman Alan Greenspan. "Tuesday's trading will be mostly anticipation of Greenspan's comments on Wednesday," said John Shin, economist with Lehman Brothers. "Greenspan will be forced to toe a very delicate line," Shin said. "He needs to address market concerns about inflation but in a way that is not alarmist. It's almost a lose-lose proposition." Greenspan will testify on the U.S. economy before the Joint Economic Committee at 09:30 a.m. EDT (1330 GMT) on Wednesday, his first economy-focused comments since the May 6 FOMC meeting, when the central bank assessed that the balance of U.S. economic risks was weighted toward slowing inflation. The Treasuries market has rallied virtually unchecked since then, factoring in the potential for a rate cut. The Fed is "very close" to deciding on a rate cut, said William Quan, director of research for Mizuho Securities in Hoboken, NJ. There is even a decent chance of an intermeeting rate move in advance of the June 24-25 FOMC meeting, Quan said. Still, because the next rate cut was likely to be "the last traditional easing before a shift to quantitative monetary policy," its timing becomes even more opaque, he said. In terms of possible policy initiatives, William Poole, St. Louis Federal Reserve Bank President, said on Monday the Fed "has monetary tools" to prevent sustained deflation. Similar comments by other Fed officials recently have been interpreted to mean that the central bank was prepared to buy U.S. Treasuries if deflation became a reality. Frontrunning the Fed has helped drive this month's rally. For Tuesday, economic releases will be mundane. "After last week's breakneck pace, when it seems like we were getting new data every hour, Tuesday is just the lull before the storm," said Lehman's Shin. Two weekly retail sales reports, the Redbook and the Bank of Tokyo-Mitsubishi/UBS Warburg, will be issued early Tuesday for the week ended May 17. If form holds true, the reports will show soft growth in retailing as a weak jobs market and various weather problems trim shoppers' appetites. Also due is the monthly budget balance for April. The U.S.. Treasury typically runs a surplus in April because of personal income tax receipts due on April 15. A Reuters survey of economists, taken Friday, looked for an average surplus of $47 billion; estimates ranged from $35 billion to $53 billion. In April 2002, the Treasury ran a surplus of $67.2 billion. Christopher Low, chief economist at FTN Financial, said in a report that at about $50 billion, the April surplus would be the smallest for that month since 1995. Still, with interest rates at record lows, the potential for U.S. yields to be driven up by the ballooning budget deficit seems far away. Also on the radar for Tuesday is the U.S. stock market. For weeks, financial traders have shaken their heads as both Treasury and equity prices have rallied. One sector, sources reasoned, was cruising for a bruising. Stocks suffered the first blow Monday, handing back most of the month's gains. But Monday's decline at the long end of the yield curve suggested the Treasury rally might be petering out as well. reuters.com

To: Jim Willie CB who wrote (19262)	5/19/2003 5:22:48 PM
From: Sully-	Read Replies (1) \| Respond to of 89467

Palyh Worm Spreads Worm purports to be E-mail from Microsoft to lure victims. By InformationWeek May 19, 2003 (02:19) URL: informationweek.com Antivirus vendors are warning of a new mass-mailer virus that's spreading around the globe. As of 11 a.m. EDT Monday, MessageLabs said it had intercepted more than 40,000 copies of the Palyh or Mankx worm in 89 countries. While many viruses and worms use "social engineering" such as pegging the E-mail to current news events, claiming to contain pornographic pictures, or even as posing as antivirus updates, the Palyh worm uses a forged support@microsoft.com E-mail address to attempt to fool users into opening it. The worm also spreads through Windows network shares. Most antivirus vendors have updated their software to stop this new threat. According to antivirus experts, the worm's payload seems to be only to propagate itself. "The worm's spread will begin to subside as computer users update their antivirus solutions and the word is spread that any E-mail arriving from an address like 'support@microsoft.com' with an attachment in tow should scream the message like a huge billboard: 'I am a virus.' This is especially important since Microsoft's support policy is to not exchange files via E-mail," says Ian Hameroff, security strategist at Computer Associates. Antivirus vendor McAfee has Palyh as a medium risk for both home users and businesses. According to McAfee, the worm sends itself to E-mail addresses it finds on the victim's system and uses its own SMTP E-mail engine to distribute itself to those users. According to McAfee, the subject line could include number of subjects, including "Re: My application" and "Your Password." The body of the message simply states: "All information is in the attached file." The virus has about a dozen file names for that extension, most .pif. However, the file extension may be truncated to only ".pi" because of the way the virus constructs outgoing messages. "Based on the reports to our eTrust Target labs, the worm has had the greatest impact in the home-computer space since most, if not all, enterprises employ a policy of blocking attachments types like .pif," Hameroff says. "Even so, we all need to be wary of anything that arrives unexpectedly and includes executable attachments."

To: Jim Willie CB who wrote (19262)	5/19/2003 5:59:17 PM
From: T L Comiskey	Read Replies (1) \| Respond to of 89467

ElBaradei Warns of Iraq Nuclear Emergency Mon May 19,11:21 AM ET Add World - Reuters to My Yahoo! By Louis Charbonneau VIENNA (Reuters) - The head of the United Nations (news - web sites) nuclear watchdog agency warned on Monday that a nuclear contamination emergency may be developing in Iraq (news - web sites) and appealed to the United States to let his experts back into the country. "I am deeply concerned by the almost daily reports of looting and destruction at nuclear sites," International Atomic Energy Agency chief Mohamed ElBaradei said in a statement. He said he was especially worried "about the potential radiological safety and security implications of nuclear and radiological materials that may no longer be under control." He said the reports the IAEA has received described uranium being emptied on the ground from containers then taken for domestic use and radioactive sources being stolen and removed from their shielding. "We have a moral responsibility to establish the facts without delay and take urgent remedial action," ElBaradei said. The U.N. agency has warned that stolen radioactive material could end up in the hands of terrorists who could use it to make dirty bombs, which combine radioactive material with a conventional explosive like dynamite to spread it over a wide area and is aimed more at causing panic than physical damage. The IAEA chief first asked the United States on April 10 to secure nuclear material stored under U.N. seal at Iraq's Tuwaitha nuclear research center and was promised by the United States that its military would keep the site secure. One of the sources stored at Tuwaitha is caesium 137, a highly radioactive powder that would be especially dangerous in a dirty bomb. In 1987, a canister of caesium powder found in a Brazil junkyard exposed 249 people to radiation, killing four. After numerous media reports that Tuwaitha and other nuclear facilities in Iraq had been looted, ElBaradei wrote again to the U.S. on April 29 requesting permission to send a mission to Iraq to investigate the looting reports. The IAEA has received no response from Washington and said that the contamination in Iraq could lead to a "serious humanitarian situation." There have already been media reports that residents near Tuwaitha have exhibited symptoms of radiation sickness. There are more than 1,000 other radioactive sources in Iraq, many of which were stored at Tuwaitha.

To: Jim Willie CB who wrote (19262)	5/19/2003 10:13:03 PM
From: Sully-	Read Replies (1) \| Respond to of 89467

The Newest Fear By Joseph Lisanti, Editor, The Outlook Producer prices are up sharply since last year, but the Fed isn't worried about inflation. It's a word that few investors today have ever used, except in describing the 1930s. Yet, people are now openly discussing the possibility of deflation in the U.S. economy. Is the threat real? The Federal Open Market Committee's statement following its May 6 meeting never mentioned the word deflation. But the message was clear: The Fed now fears it more than inflation. We've lived quite comfortably with some forms of deflation. A personal computer cost several thousand dollars 20 years ago. More powerful machines sell for only a few hundred dollars today. Even prices of some more ordinary goods have declined. Since 1993, the average price of apparel for U.S. urban consumers has fallen more than 7.5% (not seasonally adjusted), while the overall consumer price index rose about 27%. Near term, some degree of inflation looks more likely, says S&P chief economist David Wyss. Employment costs jumped 1.3% in the first quarter, boosted by the 2.2% rise in the cost of fringe benefits, including health care. Despite some easing in April, producer prices have climbed much more rapidly than consumer prices since the middle of last year. The recent rise of the euro against the dollar is also inflationary. It not only makes imports more expensive for U.S. consumers, it also gives domestic producers cover to raise prices in an attempt to recoup mounting costs. But the rising euro is deflationary for Europe. Imports from the U.S. cost less in euros and local producers can't easily raise prices because of the competition. Mean-while, Japan has been fighting deflation with little success for more than a decade. Therein, says Wyss, lies the source of the Fed's fear: Deflation in both Japan and Europe could pull the U.S. in. Although the risk is low, Wyss expects the Fed to cut rates in June just for insurance. And another cut should boost stocks.