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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (19129)	8/1/1998 5:04:00 PM
From: Lee	Respond to of 50167

Ike,..Re: although services is spiking up but goods are pulling the total lower, I agree that we are on a path on non-inflationary growth; however, the goods sector is lagging because of SE Asian demand. I will try to find the reference to commodity prices vs. Asian demand from Morgan Stanley and post the link. This is also not something that will turn around immediately although, from what I've read, the South Koreans have done a masterful job at stopping the currency trauma and instituting some sound fiscal policy which will eventually benefit their economy. Like you say, it will probably be a soft slowdown if it occurs because the turn-around will be gradual. Once demand for basic commodities turns from SE Asian healing, i.e. crude, sugar, grains, cu, then we will be able to gauge our path. The Uk might be making the same mistakes that the US Fed made in '94 which was to over-react to accelerating CPI pressures. If that's true, then the swings from positive to negative growth will be much more pronounced. It is also worthwhile to keep an eye on the value of the dollar as this value remains a key component in our inflation puzzle. Not only because many of the basic commodities are priced in dollars, like crude, cu, etc. but also because dollar strength attracts foreign investment in the treasury market. Regards, Lee