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To: Steeny who wrote (19421)	6/1/1999 12:47:00 PM
From: Jenne	Respond to of 41369

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To: Steeny who wrote (19421)	6/1/1999 12:48:00 PM
From: Jenne	Read Replies (2) \| Respond to of 41369

Watching the Wallboard By James J. Cramer 6/1/99 12:11 PM ET Forget copper and gold. Who gives a darn about iron or steel? I am watching wallboard, and not just because we are redoing the outside of our house. This Sunday's Chicago Tribune led with a frightening piece about the current wallboard shortage. I have known about this shortage for some time, but I had no idea it had gotten so out of hand. The shortage is so great that, to quote the Trib, "Some homebuilders are sending a bevy of employees to Home Depot (HD:NYSE) so each one can buy the maximum number of sheets the chain has set, which varies from one area to another." The killer quote, however, comes from a builder who says, "We're telling our people to start stacking it early and in stages." Nothing angers the Fed more than people trying to beat price increases by taking down excess inventory. The only way to break that cycle is to raise short-term rates. That makes it too expensive to stockpile, which breaks the cycle. How important is drywall as a measurement of the economy? As much as 10% of the cost of a house can be this type of insulation. It is a huge swing cost. It's a keystone commodity. Stories like this one in the Trib scare me. I am used to hearing about rents in the Hamptons being a reason for the Fed to tighten. But that's been the story for 12 years. I am also used to hearing about Manhattan's rents being a reason for the Fed to tighten. But that's also been the story for 12 years. I am not used to hearing about nationwide shortages of commodities that go into every house. That hits the Fed in the kisser. When I read articles like this, they say to me, Wait until Friday midmorning to buy anything. Which is what I will probably do. --------------------------------------------------------------------------------

To: Steeny who wrote (19421)	6/1/1999 1:20:00 PM
From: D.J.Smyth	Read Replies (2) \| Respond to of 41369

Steeny, your comment <<This morning, NY Fed President Mcdonough(a voter) said that April's CPI was NOT an aberration. He said this at about 9:45am. Don't have a link. It came across Bloomberg.>> From the Dow Jones: <<New York Fed President William McDonough said that policymakers can't allow inflation to "take off." He said the Fed's recent switch to a tightening bias shows a shift in the balance of risks and that he isn't sure the jump in the April consumer price index was an aberration.>> Said "he isn't sure" isn't the same as "was NOT an aberation". The rate of increase of housing starts is as important as the overall number. The population transfer from mid to upper is having a significant effect on the housing starts, but this is leaving a lot of unsold homes/real estate in the mid range. isn't there a population increase per group as well to account for much of the housing data?