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To: Sam who wrote (1672)	5/25/1999 9:38:00 AM
From: Paul Berliner	Respond to of 3536

That means bad news for the mortgage REITS again if prepayments hover at record levels.... though this time the underlying market for CMBS should be bid fairly - no nightmare like last fall. Prepayments kill investments such as IO strips, which all the top mortgage REITS swore off last fall, but someone is still holding them! Here we go again. I was wondering why the mortgage REITS had not rallied strongly amid a sharp tightening in CMBS spreads over the last 3 months - I guess it must be because the rate of prepayments has not decellerated.

To: Sam who wrote (1672)	5/25/1999 9:48:00 AM
From: Sam	Read Replies (2) \| Respond to of 3536

While consumers pay down debt, Greenspan worries that the savings rate is [allegedly] negative, as we depend on Mr. Market's generosity; see notes on his latest speech: biz.yahoo.com Does anyone think that these savings rate stats are bogus? Didn't Gene Epstein do an article on that a couple of months ago in Barrons? FOCUS-Greenspan says wealth gains driving spending (adds details in paras 8-9, 11-13) WASHINGTON, May 24 (Reuters) - Federal Reserve Chairman Alan Greenspan said on Monday that U.S. consumers were using capital gains from both the stock market and equity built up in their homes to fuel strong spending. He noted that incomes were rising ''fairly solidly,'' but the increases in purchasing were far outpacing those gains. ''As a consequence, the amount of saving has not only gone down, but now has turned negative,'' Greenspan told the National Retail Federation. He was referring to statistics from the U.S. Commerce Department showing that in the first quarter, the personal saving rate fell to negative 0.5 percent, the lowest since record-keeping began in 1946. That suggested consumers were drawing down their savings to finance spending. ''Certainly, the very sharp rise in stock prices has been a major force there,'' Greenspan added. But he said, ''The wealth effect is not wholly a consequence of the stock market.'' He noted that consumers also had access to wealth through equity built up in their homes, which they could tap either through mortgage refinancings or by selling their houses at a profit. Greenspan appeared at the Retail Federation to receive an award for leadership in public service. Discussing the retail picture, he described it as ''one of the most impressive parts of the American economy's performance.'' He said he had not seen retail markets like those today in all of his 50 years watching the economy. He said that the wealth effect was a significant factor in spending by those in upper- and middle-income groups. Greenspan said those consumers did not perceive themselves to be spending in deficit. ''They are looking at their 401Ks,'' he said, remarking on employees' retirement savings accounts, many of which have reaped huge gains from the stock market. Asked about the Year 2000 computer bug and how financial institutions were grappling with it, Greenspan replied that banks were ''ahead of the curve'' in preparing their systems for the century data change. Greenspan did not offer any predictions about the economy or the stock market in his fairly brief remarks. Last week, Federal Reserve policy makers decided to keep interest rates steady for now, but warned they were leaning toward possibly raising rates in the future. The Dow Jones Industrial Average fell 174.61 points, to 10,654.67, led by a sell-off in technology and financial stocks. An influential Wall Street analyst had issued a rare ''sell'' recommendation on multinational bank stocks Monday, citing concerns over the Year 2000 computer bug.