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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Hippieslayer who wrote (22053)	6/10/1998 1:26:00 PM
From: tonyt	Read Replies (1) \| Respond to of 32384

Greenspan Warns of High Stock Prices, But Signals Rate Hike Isn't Likely Soon An INTERACTIVE JOURNAL News Roundup Federal Reserve Chairman Alan Greenspan declared to Congress that current high stock prices may be difficult to sustain unless the U.S. economy stays unusually strong. But in testimony to the Joint Economic Committee Mr. Greenspan said that a lack of strong inflationary pressures means the Fed so far sees no need to tighten monetary policy. His comments on equities values prompted a short-lived, minimal downturn in the Dow Jones Industrial Average, while his signal that an interest-rate isn't in the cards for the near future boosted bond prices somewhat. "The current economic performance, with its combination of strong growth and low inflation, is as impressive as any I have witnessed in my near half-century of daily observation of the American economy," Mr. Greenspan said. Investor expectations of low inflation and strong economic growth have driven stock prices higher, "perhaps to levels that will be difficult to sustain unless economic conditions remain exceptionally favorable -- more so than might be anticipated from historical relationships," Mr. Greenspan said. But he also said that the Fed doesn't yet see sufficient reason to tighten policy even though there are concerns about potential labor constraints in the economy and the evaporation of potentially transitory price-damping factors. "The effects of the crisis in Asia will almost certainly damp net exports further, potentially moderating the growth of domestic production and hence employment," Mr. Greenspan told Congress. If labor demand is not brought into line, the Fed might see fit to raise interest rates. But so far, policy makers "have not perceived to date the need to tighten policy in response to strong demand, beyond what has occurred through falling inflation's upward pressure on the real federal funds rate." Fed officials have said before that with inflation as low as it is, steady interest rates essentially have a moderate tightening effect. It has been more than a year since the Fed changed interest rates. With economic growth at 4.8% in the first quarter and the unemployment steady at 4.3% the last two months, some investors have worried that the Fed would raise interest rates to slow growth and forestall inflation. But the U.S. has been able to sustain strong growth without seeing inflation for a while now, in part because declining oil prices and currency devaluations in Asia are keeping down supply costs at the producer level. And while Asia's woes have not yet had a marked braking effect on the U.S. economy, many analysts believe some slowing is just around the corner. Add to that fears that an interest-rate increase in the U.S. would further roil already-fragile Asian economies and many economists believe that the Fed policy makers are still likely to sit tight on rates when next they meet on June 30 and July 1. Fed Gov. Laurence Meyer last week painted a hazy picture of the U.S. economy. "Policy is now being made in an environment characterized by even greater uncertainty about key parameters than is normally the case," Mr. Meyer said in a speech to the Downtown Economics Club in New York. "And such uncertainty often justifies more caution about policy changes."