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To: Mohan Marette who wrote (73726)	10/22/1998 1:58:00 PM
From: Lee	Respond to of 176387

Hi Mohan,..Re:Is Greenspan & Co playing catch up? What happened to pre-emptive strikes. Mo, I've been sidetracked and apologize for the delay in answering your funny post. I thought we got a pre-emptive easing last week. <VBG> Thanks for the article. Although I generally like Bert Ely's comments regarding the banking industry, he might be a little off in his Fed opinions. (Fed is always behind)! Re: . Longer-term interest rates have been declining over the last 18 months to reflect both lower inflation and, more recently, fears of an economic slowdown. Well, let's check the chart, looks like they've been declining since March '97. But the comment about the recent decline being due to fears of an economic slowdown show that he completely missed the hedge fund action and flight of Asian/other funds to treasuries from Russia, SE Asia and S. America. Doesn't have anything to do with economic slowdown as you know so well. bigcharts.com I was going to post the dates of the rate moves but didn't have time to go back and look them all up but did find two dates, April 18, '94 and March 28, '97. If you check the chart, you will notice that rates had already preceded the Fed. The Fed does wait to see if the market will balance risks naturally but if it gets too far ahead, they move to catch up. <ggg> I think it's a smart move on AG's part and in fact this methodology allows for more conservative regulation. (IMHO) As far as the economy slowing, if we remember that the consumer accounts for approximately 68% of GDP, then the following new as reported by James Padhina of thestreet.com shows that we're still very healthy. Granted, the trade deficit will subtract some from this quarter's GDP but that negative may be offset by the strong consumer and inventory build-up. ____________________________________________________________________ thestreet.com The Invisible Mouth: On the Home Front, the Numbers Look Good By James Padinha Economics Correspondent 10/21/98 2:05 PM ET (1) Housing starts fell 2.5% in September. Yet single-unit starts, which account for 79.1% of total starts, fell only 0.6%. Meanwhile, starts fell 3.6% in the Northeast and plunged 8.6% in the South but rose 3.2% in the Midwest and surged 5.6% in the West. This doesn't spell d-e-a-t-h. It spells w-e-a-t-h-e-r. Starts rose 4.1% during the third quarter against a 0.9% decrease during the second. And building permits -- the best gauge of starts in future -- soared 15.4% during the quarter just ended. (2) The National Association of Home Builders' Housing Market Index hit an all-time high in October. The percentage of builders labeling new-home sales conditions as "good" jumped to 68 from 57 while the percentage labeling them "poor" remained at six. The gap between "good" and "poor" -- a decent indication of near-term sales -- now stands at its highest level of the cycle. (3) The Mortgage Bankers Association reported this morning that loan applications are rising at a 121.4% (!) year-on-year rate and that applications for refinancings are rising at a 256.6% (!) rate. And for spending in general. The huge volume of mortgage refinancings that has persisted throughout the year -- and especially over the last eight weeks -- spells s-t-i-m-u-l-u-s. _____________________________________________________________________ So while everybody is buying the MOs and Utilities and defensive stocks because of the 'economic slowdown', we should be taking advantage of stocks which will do fine because of continued growth. I can think of one stock in particular, can't you? Regards, Lee