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To: Ahda who wrote (16750)	8/27/1998 8:32:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116764

I do not think that USA stocks would be able now to compete for money even at 7000 with say Nikkei..sentiment of safe haven changed...footnote JapanNikkei 225^N 2258:26PM 13878.97 -534 82-3.71% Also at 15% ECU reserve would now take a lot of Gold to reach that magic 15% ....not even sure if they got that much... Dollar looks like in far bigger trouble than commodities....Oil becomes not so cheap...

To: Ahda who wrote (16750)	8/28/1998 9:29:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116764

FOCUS-Weak commodities may point to deflation 02:39 p.m Aug 28, 1998 Eastern By Clive McKeef NEW YORK (Reuters) - Commodity prices continued to sink Friday under the weight of the Russian crisis and weak economic growth in once-booming Asia, with economists saying the threat of deflation may spur the Fed to ease interest rates. ''If commodity prices continue to plunge, as I expect they will, the Fed will ease,'' said Edward Yardeni, chief economist of Deutsche Bank in New York. But currently the U.S. Federal Reserve ''is focusing mostly on the booming U.S. economy and putting very little weight on the spreading global recession,'' he said. ''They should be (focusing on the global recession) because it will hit our economy by depressing earnings, stock prices and consumer spending - say hello to deflation and goodbye to earnings growth,'' Yardeni said. Commodity price indicators such as the Commodity Research Bureau index of 17 futures continued lower Friday despite a steadiness in some markets like oil and coffee. Grains, metals, cotton, pork, lumber and many others continued to fall. The CRB index edged down to a new 21-year low of 195.20 points Friday morning but was at 195.56, down 0.68 point, in the afternoon. In the last year, the CRB index has fallen about 20 percent as rising commodity stockpiles worldwide pressured prices since, with Asia's financial troubles, consumption has dropped. Until the crisis started, the tiger economies of Asia were some of the biggest importers of crude oil and base metals such as copper, as well as perennial importers of foodstuffs, such as wheat, corn, soybeans, and sugar. Gold prices fell to 19-year lows of $273.40 an ounce Friday. Crude oil prices at around $13.20 a barrel were not from 11-year lows seen earlier this year, and corn prices at around $1.91 a bushel were at 10-year lows. Wheat prices at $2.42 a bushel were at 7-year lows, and soybean meal prices at $134 a tonne were at 13 year lows Friday. ''In the old days, miners often took canaries in bird cages down with them,'' Yardeni said. ''If canaries died, it was an early warning of poisonous gases. Similarly, plunging commodity prices are a very good leading indicator of an economic downturn. ''Odds are that global real GDP (Gross Domestic Product) has stopped growing,'' he said. ''I believe that the bust in Asia is offsetting the boom in the United States and Europe.'' The crisis in Russia's currency, debt and stock markets this week worried commodity traders because of the possibility of heavy sales of Russian oil and metals on world markets to raise hard currency earnings and stabilize the battered rouble. Analysts said such sales could only increase the the threat of deflation and push governments around the world to relax both fiscal and monetary policy quickly to spur economic growth. ''In the next couple of months, you may see a revision toward more aggressive and accommodative fiscal and monetary policies in major economies,'' said Steve Strongin, director of commodities research for investment bank Goldman Sachs in New York. ''But if a recession doesn't occur, the easing in policy may spur economic growth and be bullish for commodity prices on a 12 month view,'' Strongin said. ''There is some evidence that Asian demand is bottoming out now that credit lines have been straightened out and Russian exports of crude oil are already probably at maximum capacity, so the threat of extra supply may be minimal,'' he said. ''What we are seeing this week may be just a reflection of the bearish sentiment in world stock markets and not independent information, so there may be a modest buying opportunity in commodities relative to expectations, but it's hard to be aggressive about that,'' Strongin said. (New York Commodities Desk, 212-859-1640)) Copyright 1998 Reuters Limited.