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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Bonnie Bear who wrote (17708)	4/30/1998 1:30:00 PM
From: Oeconomicus	Respond to of 94695

Then, when bankruptcy and exec comp futures soar through the roof, they can introduce social unrest futures (that would be the signal to short immigration futures BTW).

To: Bonnie Bear who wrote (17708)	4/30/1998 1:30:00 PM
From: Byram	Respond to of 94695

I'M SOOOOOOOO CONFUSSSEEEEEEDDDDD!! Can Someone Explain??? Doesn't this appear to say that the fed might change?? I feel crazy as a hoot owl..... BTW this was kicked out this AM on yahoo - Reuters Fed sources: inflation hawks in 'alert mode' By Jose Paulo Vicente NEW YORK (Reuters) - The inflation vigilantes at the Federal Reserve are back in the limelight after a long period behind the scenes and they want to keep their spot on center stage. Fed sources said the strong domestic economy in the first quarter of the year provided evidence of what inflation hawks have been saying all along: strong growth, healthy demand and a frothy stock market are unlikely to slow by themselves, and might fuel inflation in the long run. "First-quarter data showed the economy has kept its underlying strength despite Asia," a Fed source told Reuters, referring to the financial crisis in Asia that had been expected to dampen economic growth in the United States. "That has put the hawks in alert mode," the source, who asked not to be named, added. Meanwhile, a source close to the Fed said the strength in the economy early this year gave the anti-inflation hawks enough room to push for a change in the central bank's stance. It is now leaning toward raising rates from its previously position of holding rates steady. The change came in March. "That's what the hawks were waiting for. They needed some numbers to make their voice heard. And, believe me, they are being heard now," the source said. Reports that the Fed had changed its bias was first reported in the Wall Street Journal Monday. The Washington Post reported Tuesday that Fed sources confirmed the shift in the central bank's leaning. The articles claimed the Fed changed its bias at the March 31 meeting of Fed policy-makers. Normally, that information would have been released to the public two days after the Fed's next policy meeting on May 19. The disclosure roiled financial markets Monday and Tuesday, when the Dow Jones industrial average fell more than 160 points. The index rebounded and rose 71 points to 8,970 Wednesday. While the change in its leaning does not mean the Fed will raise rates, former Fed officials and university professors said a rate hike might be looming. They said the question at this point is not whether the economy will slow down in the second quarter, as is widely expected, but whether that slowdown will endure through the third and fourth quarters. A growing number of economists, inside and outside the Fed, believe the dampening effect of the Asian crisis on U.S. growth will be mostly played out by mid-year, which suggests the economy could roar back after a summer lull. "That's the main concern now. The possibility of demand remaining strong in the third and fourth quarters is what is having the Fed hawks worried," the source close to the Fed said. If the economy does not slow, there will be little left for the Fed to do but raise rates in a bid to slow growth and ward off inflation. "The question at issue is what is going to happen after the second quarter slowdown," said Lyle Gramley, a former governor at the Federal Reserve Board. "The negative impact of the Asian slowdown will largely be over by mid-year, and then the issue is whether the economy's underlying strength reemerges. My guess is that it will, and the Fed will have to tighten policy," he said. Robert Forrestal, a former president of the Federal Reserve Bank of Atlanta, agreed, saying: "I think they're fairly close to making a move because the economy is moving rather rapidly." The former Fed officials said the Asia-induced slowdown in the second quarter would probably prevent the Fed from raising rates at a May 19 policy-making meeting. But they added that they expected higher rates at the next meeting in late June. Robert Murphy, an economics professor at Boston College and a former senior economist with the Clinton administration, said he also expected the Fed to raise short-term rates later this year. "The Fed would have acted already if it weren't for the Asian crisis ... The standard economic framework still holds, and the factors keeping inflation down are mostly temporary," he said. The Fed raised short-term rates in March 1997, the first increase in more than two years, but has held rates steady since. Despite the strong economy, inflation has been all but invisible, with the Consumer Price Index up a mere 1.4 percent over the last year. Byram