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To: j g cordes who wrote (42390)	5/6/1998 5:22:00 PM
From: Jerry Olson	Read Replies (1) \| Respond to of 58727

Hi Jimmy Did you listen to Alice R's interview??? and was it on CNBC, by CNBC reporters??? Was she jawboning??? EDIT----jIMMY HER'S THE TEXT!!!!!! Not bad....... US stock prices not necessarily "bubble" --Rivlin NEW YORK, May 6 (Reuters) - Federal Reserve Board Vice Chairwoman Alice Rivlin said on Wednesday it was unclear whether the U.S. economy had felt the full impact of the Asian crisis or whether current U.S. stock prices represented a financial ''bubble.'' Rivlin, in an interview with the financial cable television network CNBC, said it was ''not clear whether the biggest impact... (of the Asian crisis) has hit us.'' Asked if lofty U.S. stock prices were a concern for the Fed, Rivlin said it was ''hard to define a bubble until after it bursts.'' She acknowledged the high stock price valuation was ''certainly cause for concern... not necessarily a bubble.'' Rivlin said the notion that rising U.S. stock prices may be more concerning to the Federal Reserve than inflation in goods and services was ''reasonable.'' ''These (stock) values are hard to justify unless you're very optimistic about future earnings. The stock market is outdoing itself,'' said Rivlin, who added, ''But that doesn't mean there's anything the Federal Reserve necessarily needs to do about it.'' Rivlin agreed with New York Fed President William McDonough that the U.S. has achieved price stability, but also that the Fed must be vigilant against inflation. ''I'm extremely pleased with the inflation...that doesn't mean that inflation couldn't heat up in the future. We have tight labor markets and an economy that is growing strongly.'' The Fed vice-chair said she knew of no talk at the Federal Reserve about using tools other than interest rates -- such as higher investor margin requirements -- to cool the economy. ''(Higher margin requirements) would only make sense if one thought that A: the stock market was in some sense was out of control and B: that was because of borrowed money and the latter is certainly not clear,'' Rivlin said. She said Japan's economy remained a near-term concern but its outlook was improved in the longer run. Japan is moving to stimulate its ''economy which is in recession and they need to face up to structural problems with financial system,'' Rivlin said. Back to the U.S. economy, Rivlin noted that there were some indications that second-quarter growth may be slower than the first due to an extended impact from Asia's crisis. ''The thing to watch are the trade numbers because we've already seen signs of the impact of Asia in the trade numbers but they could easily get worse ... that slows the economy.'' Rivlin described the current U.S. economic stance as a ''balancing situation'' with the Fed looking at ''what the latest statistics are'' and getting additional input from the regional bank presidents. She would not elaborate on her position on U.S. monetary policy. Related News Categories: US Market News, currency, international, options Help Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon See our Important Disclaimers and Legal Information.