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To: Investor2 who wrote (12496)	12/7/1998 10:13:00 AM
From: Defrocked	Read Replies (1) \| Respond to of 86076

Regarding the well-written link you posted, I'll discuss the last paragraph which pertains to potential Fed activity. "I think the Fed will ease again this month if we continue to see the spread between corporate issues and bonds widen. (This may also have something to do with the decreased capital investment as new loans for big projects are still restrictive). Also, the recent manufacturing data may trump the strong jobs report since manufacturing is more long term and the jobs report comes at a seasonal high anyway." The first two sentences assume the Fed is following an interest rate targeting strategy which also considers credit spreads. This may be true and many have inferred this action from the last Fed rate cut. IMHO the Fed has often erred in too loose/too tight policies when employing interest rate targets and may be doing so now with US money growth in the double digits. Furthermore, I hope banks/capital markets do become more restrictive in the extension of credit, especially on big, capital intensive projects in a deflationary environment. The last sentence implies that the quality of the latest jobs report should be questioned. I've seen the same data used to support opposite arguments. In this sentence, somehow manufacturing jobs are supposed to be considered superior to service jobs by the Fed, although the US is inexorably moving toward a service economy. The fact that the jobs report comes at a "seasonal high anyway" is supposed to explain away above-expectation real growth even though the underlying data has already been smoothed out by the seasonal adjustment factors. Hence the statement may be viewed as an implicit attack on the method of the statistical generation of the data-of-best-fit because it doesn't confirm the original premise of potential Fed ease. I respect the author's view and understand his rationale and associated "trading ax". My view is that the Fed will pause and reflect on additional data before acting again on interest rates. So I'll look at the same data and interpret it differently.<g> And the market will determine winners and losers.<ng> It just goes to show you what they say the similarities are between economists and prostitutes: Economists use statistics, like prostitutes use lampposts...they are employed far more often for support rather than illumination.<g>