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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (7080)	4/15/1998 9:10:00 PM
From: Kip518	Read Replies (1) \| Respond to of 18691

From London Evening Standard Fed may be forced to spoil the equity party Lauren Chambliss ASK global stock market strategists what could pop the equity bubble in Britain and America and the nearly uniform answer is the US Federal Reserve. Even the most ardent bulls worry that a jump in interest rates engineered by the Fed could stall the global equity train. Which is why, when Gordon Brown and Eddie George meet other G7 finance ministers and central bankers this week in Washington, they are likely to pay particular attention to what Federal Reserve chairman Alan Greenspan has to say. Every year at this time the financial leaders of the G7 meet at Blair House in Washington to (more or less) candidly discuss the outlook for their economies. The markets might expect Greenspan to stress the positive. The US expansion is entering its eighth year. Unemployment is low, incomes are rising, inflation is contained. Homebuyers are snapping up properties financed by low interest rates. The stock market is surging, adding to family wealth. The expected hit from South-East Asia has turned out to be more like a glancing blow. What Brown and George are likely to hear instead is that the Fed is far closer to raising rates than the bulls on Wall Street think. Sources say Greenspan could barely hold off the inflation hawks at the last Fed policy meeting earlier this month. He convinced them to await further data but the case for not raising rates is getting tougher by the day. From the Fed's perspective, the US economy was far too robust in the first quarter, productivity slowed markedly, the labour market tightened considerably and the Asia crisis did not produce as strong, or as sustained, a drag on the economy as expected. Of particular concern to the Fed is the jobs market. Analys-ing jobs trends is more difficult than usual because El Nino's abnormal weather patterns are playing havoc with the monthly numbers. The odd El Nino wea-ther prompted unusually strong hiring in January and February, which then reversed in March. The Fed fears March's drop in jobs was not the beginning of a trend - as the market anticipates - but a statistical anomaly. Set March aside and the labour market looks tight. The number of people seeking work is slowing. There are fewer part-time workers seeking full-time employment and the number of new entrants into the labour market is declining. Hours worked are rising be-cause companies are forced to hire unskilled workers, or train lower-level ones they have. Training takes time, is expensive and hurts productivity in the short-term. The shrinking supply of skilled candidates portends upward pressure on wages if demand for workers picks up from March's level. Additionally, the Fed thought a flood of lower-priced imports from Asia would shave at least one-half point of consumer prices this year. Now, it looks like that won't happen. Economists think Asia's impact will be largely limited to the second quarter. US exports have been declining since October but the "peak" trade disruption is happening now. Once exports stabilise in a couple of months, however, the strength in the domestic economy could reassert itself, making the third quarter look more like the booming first quarter than the second. That is the Fed's biggest fear and one Greenspan is likely to emphasise this week.

To: Pancho Villa who wrote (7080)	4/15/1998 11:01:00 PM
From: Joey Two-Cents	Respond to of 18691

110 points to the big Kahuna. investor.msn.com Interesting article on droughts, floods and frost threatning China's grain harvests this year and how it mat destroy farmland in some of it's main agricultural regions for years to come. In the northeast, Heilongjiang and Jilin have received less than 4 millimeters of rain since last autumn, while Mongolia and Liaoning recorded no rain at all. Those 4 areas which produce mainly wheat, rice, soybeans and corn accounted for 12% of China's total GDP of 5.8 trillion yuan ($670 B)in 1995. IMO just one more unseen development that will quicken China's move to devalue.