posted 05-16-2000 11:08 AM         

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I don't pretend to understand it, but here's something from MarketWatch:

"Goldman Sachs' chief investment strategist Abby Joseph Cohen said Tuesday that a more aggressive stance by the Federal Reserve on interest rates is already reflected in fixed income and equity markets. She told clients that such policy action will successfully prolong, not end, the economic expansion. Her S&P 500 price targets remain unchanged at 1,575 for year-end 2000 and at 1,625 for the spring of 2001. The stock market, Cohen continued, appears to have stabilized following recent price declines and volatility. This renewed stability is, she continued, directly related to the sustainability of the U.S. economic expansion and favorable valuation in many sectors of potential investment activity. Profit surprises may be less frequent in the rest of 2000 as a consequence of already-lifted earnings estimates as well as more difficult comparisons as the year progresses, Cohen conceded. Still, Goldman is not changing estimates for S&P 500 operating earnings per share of $56 and $60 in 2000 and 2001, respectively."

posted 05-15-2000 06:17 PM         

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The Federal Reserve meets tomorrow to decide whether or not to administer another dose of anti-inflation medicine to the U.S. economy. Will the Fed opt for a quarter-point increase or a half-point hike? CNNfn's special report on tomorrow's meeting. (source: CNNfn) http://cnnfn.com/news/specials/eyes_on_fed/

In brief:

- Industrial production soared 0.9% in April while capacity utilization rose to a two-year high of 82.1%, the Federal Reserve said. The jump in output was the largest in 20 months.

posted 05-15-2000 04:59 PM         

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Quite an interesting day. Volume was light, but the buyers were more active than the sellers prior to the meeting. People are suggesting that this might be the last rate hike for a while. hmmm. My prediction: CPI numbers come in fairly strong, Fed boosts rates 50 basis points, and takes a moderately aggressive bias in Greenie's announcement. Greenaspan is all about avoiding optimism. I expect he will warn about being vigilent against inflation and hint that the work may not be through. I think this will deflate the surge people are expecting after the announcement, but not lead to a major sell-off. This buys the Fed time until June when it will have a better picture of whether the economy is actually slowing.

KG

posted 05-12-2000 04:08 PM         

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Well, I think cooler heads prevailed by the end of the day, and I bet some wise profit takers took advantage of irrational exuberance. I am sorry, these numbers are not going to change what happens on Tuesday. The Fed is moving 50, and then they will go from there. People buying in hopes the Fed will stay with 25 are being foolish. Now, if people want to believe "This is the slowdown" they can do that, but I would want some bigger, more definitive numbers than these.

Also of interest to econ-watchers. I read some articles today that said the only thing going on in this market is the economy. There is a big tech-conference going on and all that is moving the markets is speculation about the Fed and economic data.

posted 05-12-2000 11:56 AM         

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Saw a good amount of analysis on CNBC this morning about the economic numbers. Some folks felt that tuesday was going to be a buy-buy situation--if they raise 25 or 50 basis points, people will buy into the market. I guess the idea is--if they boost 50, that might be the last raise we see for a while, signs do seem to be slowing down a little bit. If they raise 25, then it will be lower than expected and people will jump in head first. I agreed with one of the talking heads that there is little chance of a 25 point hike now because the Fed doesn't want people rushing into the market after expecting 50 points. Of course, the Fed claimed not to care about the stock market...personally, I think that's a bunch of hooey.

Still the CPI numbers are still upcoming, and, as one of the people said, the Fed is on a meeting-to-meeting schedule. It is hard to predict down the line.

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