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To: Roads End who wrote (30633)	8/7/1998 4:42:00 PM
From: SecularBull	Respond to of 97611

Steve, trading DELL can be lucrative if you can time it. I prefer to stay long and not worry too much about being right on timing. I enjoyed our exchange of information. Have a nice weekend. Regards, LONGonDELL

To: Roads End who wrote (30633)	8/7/1998 4:43:00 PM
From: Elwood P. Dowd	Respond to of 97611

PCs GOING BACK TO SCHOOL....... El cnnfn.com

To: Roads End who wrote (30633)	8/7/1998 4:47:00 PM
From: ALTERN8	Respond to of 97611

Inflation Is Countercyclical Confirmation of a 4.1% deceleration in economic activity in the second quarter from the robust 5.5% average rise in real GDP over the January-to-March period has caused the financial markets to assume a more favorable view of inflation. This single factor analysis of the determination of inflation is based on the notion that creation of slack in the labor market will immediately dampen the latest price growth pressures in the economy. A more comprehensive analysis of the recent behavior of inflation and the countercyclical relationship between price growth and the real economy, have a less sanguine view of potential developments. Specifically, the typical cycle inflation acceleration is associated with slower real growth not an acceleration in activity; and once commodity deflation is excluded, the deceleration in inflation of the past eighteen months dissipates. Developments in the commodity markets have been critical in determination of the overall inflation rate, especially since the Asian crisis has cut sharply into demand for raw materials. Energy prices, in particular, accounted for a full 50% of the 1.6% slowing in CPI growth between December 1996 and December 1997, while a downward bias in food prices accounted for an additional 0.4% of the consumer price adjustment. Oil and refined products prices provided the entire downswing in price growth during the first six months of 1998. In fact, consumer prices slowed at a compound annual rate of only 0.3% this year, while energy prices have provided a 0.5% downward bias to this series. On the other hand, the latest data show that food prices no longer subtract from inflation. The upturn in the CPI measure for goods prices excluding food and energy is an even more surprising development. For example, the goods portion of core consumer index has shifted from subtracting 0.15% from inflation in 1997 to adding 0.13% annually over the past six months. These observations suggest that the inflation potential in the economy has not been realized because of weak commodity prices, but that the dispersion of price growth pressures is fairly wide. The recent deceleration in economic growth does not ensure a continuation of the recent favorable inflation environment. In the later stages of a business cycle inflation pressures continue to accumulate even as growth slows, in part, because the composition of demand has shifted toward the consumer and the construction industry. This shift is already evident in the current expansion. Moreover, national labor supply limitations tend to lead to slower employment growth. Strong demand for labor in a tight job market drives up wages which, in turn, squeezes corporate profits and eventually produces higher prices. The domestic economy appears poised to take this next step in its development, although global growth conditions suggest that a return to 2.5% inflation environment is the most likely result. The countercyclical nature of inflation depicts the historic relationship between deviations from trend in both real growth and overall price growth. This de-trending of the growth and inflation cycle suggests that the bottom has already been reached in the rate of price growth for the current business cycle.