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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1346)	2/25/1999 2:00:00 AM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Greenspan Declines World Firefighter Role Wednesday February 24 5:36 PM ET By Caren Bohan WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan said Wednesday the U.S. central bank was limited in its ability to rescue crisis-ridden emerging countries, whose fates depended mostly on their own policies. As global financial leaders consider ways to prevent economic contagion from flaring up again, Greenspan rejected out of hand solutions that would assign the U.S. central bank the role of global firefighter. ''Our central focus on policy is the United States. Whether we lower or raise interest rates, the central focus is our long-term goal, which is maximum, sustainable economic growth,'' he told the House Banking Committee in day two of his semiannual report to Congress on the economy. Tuesday, Greenspan said that with the U.S. economy growing robustly, the Fed may consider taking back part of last year's rate cuts. But he also said it was possible the global crisis could reignite, which could send the Fed back into a rate-cutting mode. Answering lawmakers' questions Wednesday, Greenspan focused heavily on international issues. The U.S. Treasury market was disappointed he did nothing to dispel the negative psychology spurred by his mention the day before of possibly taking back the rate cuts. The benchmark 30-year U.S. Treasury bond finished down 1-4/32 point, sending the yield to a six-month high of 5.51 percent. Stocks followed bonds lower. The Dow Jones industrial average ended down 144.75 points at 9,399.67. While emphasizing the global crisis was far from over, Greenspan said the financial system probably was no longer the powder keg it was six months ago. That was in part because the hot money that flowed freely into emerging economies throughout the 1990s was no longer there. ''The crisis has created a great deal of caution and that has meant that a lot of the leverage has worked its way down again and we don't have the extreme, unstable system,'' he said. The Fed's three 1998 rate cuts were aimed at greasing the wheels of a world financial system on the verge of freezing up after Russia's economy collapsed last August. Greenspan was queried about a proposal floated by Argentina to replace its own currency with the dollar as a means of preventing the capital flight plaguing its neighbors. ''We have no interest in -- nor does Treasury have interest in -- this issue of being a lender of last resort outside the United States,'' he said, adding the Fed would oppose any proposal to have its discount window serve banks of foreign countries that might choose to use the dollar as their currency. Still, Greenspan had no problem with a country wanting to base its economy on the dollar on a unilateral basis. He was noncommittal about what types of currency systems made the most sense for emerging countries, calling floating regimes the ''least worst'' of the many available choices. Greenspan gave a half-hearted endorsement to currency boards, rigid systems that peg a local currency to the dollar and require an arsenal of reserves to support them. A crawling peg, which allows for gradual currency depreciation, was used by Brazil but ultimately contributed to the country's economic unraveling as it was unable to support its real currency. Greenspan said such systems were ''not useful.'' In the end, though, he said sound policies were far more important than a particular choice of exchange system. ''The best way to maintain, in general, stable exchange rates, is to maintain a stable international economy and very basically a low-inflation economy,'' Greenspan said. The message was in sync with one conveyed by U.S. Treasury Secretary Robert Rubin at last weekend's gathering of officials from the Group of Seven rich nations. ''Currency stability is a very useful objective and the way to achieve it is through sound policy and strong domestic demand-led growth,'' said Rubin who over the weekend told European officials to forget fancy ideas for controlling global financial markets.

To: porcupine --''''> who wrote (1346)	2/25/1999 2:03:00 AM
From: porcupine --''''>	Respond to of 1722

FWIW: RESEARCH ALERT-Goldman Sachs restarts GM DETROIT, Feb 22 (Reuters) - Goldman, Sachs & Co. said on Monday that it restarted coverage on General Motors Corp. with a market outperformer rating. --Goldman Sachs analyst James Irwin in a report forecast earnings for the world's largest automaker to rise to $9.00 per share in 1999 and $9.25 per share in 2000 from $5.32 in 1998. --Analysts surveyed by First Call expect GM earnings of $8.79 per share in 1999 and $9.20 per share in 2000. --Irwin said GM will benefit from cost reduction efforts, the launch of the new Chevrolet Silverado and GMC Sierra pickups, and rising profits in Europe from the new Astra small car and Zafira small van. --Although GM should have an outstanding first half to 1999, auto sales across the industry will weaken in the second half of the year, he said. --In addition, Toyota Motor Corp <7203.T> and Honda Motor Co Ltd <7267.T> will put more pressure on U.S. automakers with new capacity and GM's marketing incentives are likely to rise as the automaker attempts to boost its market share, he said. --"In the near term, we believe that GM will deliver strong results...In the second half, however, we believe that GM's performance will flatten out," Irwin wrote. --GM shares were up 2-4/16 at 87-11/16 on the New York Stock Exchange in mid-afternoon trading. ((Detroit newsroom, 313-870-0200))

To: porcupine --''''> who wrote (1346)	2/25/1999 2:16:00 AM
From: porcupine --''''>	Respond to of 1722

GM, steelmakers reach four-year purchasing deal DETROIT, Feb 22 (Reuters) - General Motors Corp. , the single largest customer of the U.S. steel industry, said on Tuesday it has agreed to buy 18 million metric tons of steel worth $11.7 billion over four years from 40 global steelmakers. The world's largest automaker, which began negotiations with steelmakers on the pact last March, said the long-term agreement will cut costs, add more predictability to pricing and guarantee better quality. GM currently buys steel on a regional basis under one- or two-year contracts. "The length of the contracts and volume of steel they include account for more than 90 percent of our steel needs through the year 2002," said John Stiles, executive director, GM Worldwide Purchasing-Metallic. GM declined to identify the steelmakers in the agreement, but said nearly three-quarters of the steel will be purchased from U.S.-based producers. Major U.S. steelmakers that currently supply GM, including LTV Corp. , Bethlehem Steel Corp. and USX-US Steel Group , all had no comment when contacted by Reuters. GM buys about 6 million metric tons of steel annually, most of it flat-rolled steel that is used in vehicle bodies. Stiles said GM is continuing discussions with a number of steel suppliers for contracts of up to 10 years, which would further stabilize pricing, quality and availability. GM has made similar deals with other metal manufacturers. In November, the Detroit automaker reached a 10-year, multibillion-dollar deal with Alcan Aluminum Ltd. to supply aluminum and co-develop new products using the lightweight metal. Despite the increasing use of aluminum, steel's lower price and higher strength make it the dominant material in vehicles. GM planned to hold a conference call at 1100 EST (1600 GMT) on Tuesday to release further details on the steel agreement. ((Detroit newsroom, 313-870-0200))