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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (6302)	2/13/1999 6:08:00 AM
From: Cymeed	Read Replies (2) \| Respond to of 99985

Here is a good article re the bond market, interest rate, and inflation threat. In my opinion, the overall stock price direction will be determined by the performance of bond market. If the bond market can stabilize here, stock price looks good. If the bond price get trashed again next week, the stock market will be tough and I will be in trouble since i have bet long here :o) I also researched a little re early 1996. The 30-yr bond went from 6% to 7% in yield, Stock price blipped in January 1996 for a few days then, but then went up strong after that, even during the time when bond yield was still climbing. Then later 1996 when bond yield started dropping from 7% again, the stock market just took off. I think we may see a repeat of early 1996 here again. But the key question is, can the yield hold around 6% and not going to say 7 or 8% ????? If there is no inflation threat, the answer seem to be yes and the stock market will be fine. But if there is any sign of inflation, oh...my God...I don't want to think of it now LOL. So the government figures next week may be able to tell us something. cbs.marketwatch.com Inflation is back on the front burner Three reports on prices due in coming week WASHINGTON (CBS.MW) -- They can blame it on Rio or Tokyo, but everyone knows only one thing makes the bond market nervous: Inflation. Bond traders will have plenty of opportunities to fret and bite their nails in the coming week because the Labor Department will release not just one report on inflation, but three. The week's data Tuesday 1 pm: Housing affordability index 2:45 pm: Redbook retail sales Wednesday 8:30 am: Housing starts 9 am: BTM retail survey 9:15 pm: Industrial production 10 am: Import/export prices Thursday 8:30 am: PPI 8:30 am: Jobless claims 10 am: Philly Fed 4:30 pm: Money supply Friday 8:30 am: CPI 8:30 am: Trade 10 am: Real earnings And those three reports on inflation will be followed the next week by Federal Reserve Chairman Alan Greenspan's Humphrey-Hawkins testimony. No wonder traders have the jitters. "The bond market has been a bit edgy," said Joel Naroff, chief bank economist at First Union. "Any whiff of inflation is going to make it jumpy." Despite the dangers, Naroff thinks both the Producer Price Index and the Consumer Price Index will be relatively benign. "It'll calm some nerves," he said. Naroff thinks the core rate (which excludes food and energy prices) of the PPI will fall 0.2 percent for January while the core CPI will rise 0.1 percent. Other economists agree the PPI and the CPI will remain under control for January. The consensus estimate of economists surveyed by CBS.MarketWatch.com is for the PPI core to be unchanged and the CPI core to rise 0.2 percent. Import prices The danger could come from the little-watched import and export prices report on Wednesday, said Richard Berner, chief economist at Mellon Bank. Falling import prices have helped keep domestic inflation under control, but that beneficial influence is beginning to wane as the dollar weakens, he said. Naroff agrees that the import price index could be a surprise, but one the markets will largely ignore at their peril. He's fought and lost a battle to get the markets to pay more attention to the data. "A major factor keeping prices under control has been import competition," he said. Naroff thinks import prices will continue to fall, but at a slower rate. "It won't show enough of a deceleration to cause problems," he said. But "the closer it gets to zero, the more people will worry." Trade gap The weaker dollar won't show up in December's trade data, which will be released Friday. The MarketWatch consensus is calling for the deficit to widen to $15.6 billion from $15.5 billion in November. The attention will be on exports, Naroff said. Investors want to see if U.S. sales are picking up as Asia stabilizes. "Orders are coming back," Naroff said, but "we haven't seen a cutback coming out of Latin America." Naroff said the Latin American slowdown isn't nearly the disaster Asia was. "It isn't going to cost us a point off growth," he said, but he does see the trade gap at a temporary plateau before another downward movement in exports. The manufacturing sector has reflected the resumption of export growth. The sector is still contracting, but is showing signs of bottoming out, Naroff said. It'll take months before a full-fledged recovery in the factories, he said. "Maybe in June we'll be looking at it really carefully." Production As it stands, the MarketWatch consensus calls for industrial production to be unchanged in January. Don't be surprised if it falls a tenth or two. Hours worked were down in January and the leading surveys from the National Association of Purchasing Management and the Federal Reserve banks are showing continued weakness. Trade and manufacturing are side issues, however. "What's important here is inflation," Berner said. "The Fed is now biased toward restraint and Greenspan will make that clear." "The Fed won't make a move until they see overt signs that inflation has changed direction," Berner said. Naroff agrees. "The Fed is going to hold out as long as they absolutely, positively can," he said. "Unless they're seeing it in the inflation numbers, they aren't going to do anything." The Fed is almost back where it was before Asia threw a scare into policymakers. With growth running ahead of expectations, but inflation remaining under control, the Fed will hint at higher rates and let the bond market do the rest of the work. So far, the market has done everything that's expected of it: The yield ($TYX) on the 30-year Treasury bond has risen from 5.07 percent on Jan. 14 to 5.42 percent on Feb. 12.

To: Lee Lichterman III who wrote (6302)	2/16/1999 12:55:00 AM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 99985

OT Off topic but important for us tree huggers <g> Found this on the Gold thread... HOLLYWOOD DESTROYING NATIONAL PARK IN THAILAND: Boycott 20th Century Fox movie "THE BEACH" Dear Friends, On a recent trip to Thailand I discovered that 20th Century Fox is making a movie called "The Beach" on Phi Phi Leh Island, a treasured National Park in Thailand. Portions of the film, which stars Leonardo Di Caprio (Titanic- fame), will be shot on Maya Beach on the island of Phi Phi Leh. This is one of the most beautiful, unspoiled islands in the Pacific and it is being destroyed to meet Hollywood's perception of paradise. The film company has already bulldozed large portions of the beach and removed much of the natural vegetation (Giant Milkweed, Sea Pandanus, Spider Lily and other beach grass) in order to widen the beach to accommodate a football scene. Fox plans to replace the native vegetation with 100 non-native coconut palms to create their "paradise." Local Thai activists feared that removing the natural vegetation would create serious erosion, and they were right. The beach has already been eroded and now locals are very worried about how much of the beach and bay will remain after the monsoons. Phi Phi Leh Island is supposedly protected as a National Park and is key to the local tourist economy. Thai activists report that Thailand's Royal Forestry Department violated their own regulations and were bought off by 20th Century Fox, who paid the government Bhat 4 million. Local activists are enraged that the government would cave in to Fox's demands and that their concerns were ignored. Activists are not opposed to filming on Maya Bay, but want the island to be filmed as-is. A lawsuit has been filed, but an injunction to stop further destruction of the island was denied. The local Thai people have tried everything, from the courts to blockading the beach, to protect their island. They need our help. They ask the American public to take action and boycott the film. The Thai people point out that Americans would never allow Thai film makers to bulldoze Yellowstone or other US National Parks. Hollywood must get the message that exploiting the environment and powerless people is unethical for mere entertainment. Please help the people of Thailand by: 1) Passing this message on to everyone you know. 2) Write a letter to producer Andrew McDonald. Tell him you will boycott the film unless 20th Century Fox stops destroying Maya Bay. The address is: Andrew MacDonald, Producer c/o Carol Sewell 10201 W. Pico Blvd. Building 89, Room 224 Los Angeles, CA 90035 Check out web site of Maya Bay at: http:www.wildrockies.org/wve/