taiwanese president apparently shot (details unclear ...)

hey, where's lee?

zeev, do you have any new views on silver? i remember last summer you had an argument against investment in silver ... now, at $7.50, it kinda looks like there really is strong demand out there ....

so apparently the fed is concerned about stock and real estate prices ... or at least some of them.

Fed Sought to Keep Flexibility
With Shift in Rate Statement

By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
March 18, 2004 7:20 p.m.

WASHINGTON -- Critics of the Federal Reserve warn that its low interest rates are boosting prices for stocks, bonds and houses to unsustainable levels. Some Fed officials, it turns out, may share those concerns, minutes of the Fed's January meeting show.

The minutes also show that central-bank officials are divided both on the wisdom of saying they can be "patient" about raising interest rates and on whether inflation is more likely to rise or fall this year.

The disagreement suggests the Fed, while currently unified in its desire to see the economic expansion strengthen before the central bank raises rates, could experience more dissent as the year progresses.

The Fed's "considerable period" commitment held down long-term interest rates last year and early this year while the economic expansion gained traction. But some FOMC members worried that the commitment had "contributed to valuations in financial markets that left little room for downside risks," the minutes say, indicating worries that an eventual rate rise could trigger a violent reaction in the markets. Some private analysts long have argued the Fed's easy monetary policy is encouraging excessive speculation in stocks, corporate bonds and houses.

A minority of the Fed policy makers remained uneasy at the January meeting with even the less-restrictive commitment to patience in raising rates. They worried it could "shape expectations" in ways that "could complicate the conduct of policy," and is no longer needed since the economy is growing strongly, the minutes say.

Officials also were divided on the direction of inflation. Some pointed to low interest rates, tax refunds, strong commodity prices and scattered signs of businesses raising prices as evidence of risks of higher inflation. But others, and the Fed's professional staff, thought rapid growth in output per worker, which holds down production costs, high unemployment and unused business capacity probably would nudge inflation down a bit. The latter view currently prevails. On Tuesday, the Fed said it still saw a slight risk of inflation falling too far.

The divergence of views appears unlikely to tip the Fed toward raising interest rates soon. Despite confidence that a "vigorous expansion was now firmly established," officials preferred to "take risks on the side of assuring rapid elimination of economic slack." With recent disappointing job growth, the Fed is still more likely to err on the side of keeping rates too low for too long.

However, should employment pick up in coming months, Chairman Alan Greenspan may face problems steering a monetary course that satisfies all his colleagues. That was reflected in his testimony to Congress last month, in which he warned both of "risks that could threaten the sustainability of the expansion" and the risks that interest rates could be "improperly calibrated" for a strengthening economy.

At their January meeting, Fed officials also discussed at length their communications strategy, prompted in part by controversy over "considerable period." Officials debated whether to ditch their assessment of the "balance of risks" in the statement that follows each meeting, or to strip the statement down to boilerplate choices, but rejected both options. Instead, they decided to adjust their statement and the balance of risks "gradually over time in keeping with evolving economic conditions."

Officials also considered whether to release minutes just a few weeks after each meeting rather than waiting until after the subsequent meeting. But some feared early release would "feed back adversely" on their deliberations and the quality of the minutes themselves. Early release may be revisited at some point; the Fed's staff is still studying the issue.

bonds plunged?? tnx merely dipped ...

first time i've ever seen such news on cnn before debka.com ...

i picked up just a bit of nem today, since 42ish seemed like something close to recent lows. i'm not sure about trusting this all yet, but ... c'est la vie. will be watching in the a.m. to see if there are legs to it and whether to invest more ...

though i had sort of resigned myself to waiting to buy back in summer ... but who knows if seasonal weakness will ever play into this, when its the dollar that's driving everything.

(oh, i sort of feel cautious here, though, considering that zeev still has new lows for us to visit and i'd expect the dollar rally to continue until the indices bottom ... though i have no reason for that, just observation)

though, speaking of volume: very nice volume on the gold miners. maybe its part of the anticipation of scary ppi numbers ...

am i correctly seeing today's nazdog volume at 1,659,756?

Bad news for MSFT and SNE

hardware doesn't matter for games as much as actual titles. this is likely a big yawn ...

FBI, U Michigan Probes Feb 13 Sentiment Release

[now why doesn't anyone leak the PPI??]

03/16/2004
Dow Jones News Services
(Copyright © 2004 Dow Jones & Company, Inc.)



(Updates with comments from survey director Richard Curtin on focus of investigation; adds further details).


By Grainne McCarthy and Michael S. Derby
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The University of Michigan and the Federal Bureau of Investigation are looking into the release last month of a consumer sentiment report produced by the university's Survey Research Center, according to officials at the school.

"I would like to inform you of the unauthorized access and public release of data from the University of Michigan's Surveys of Consumers prior to the official announcement on Friday, Feb. 13," Richard Curtin, the director of the survey, wrote Tuesday in an email to subscribers, a copy of which was obtained by Dow Jones Newswires. "This incident is being investigated by the Federal Bureau of Investigation," he added.

Diane Swanbrow, communications director for the University of Michigan's Institute for Social Research, confirmed the contents of the email and the FBI's involvement. She also said the university's Department of Public Safety is conducting an investigation.

In a telephone interview later, Curtin said the investigation centers around how a news organization came to release the data before it was given to subscribers. "I know a news organization released it much earlier than we released the report," Curtin said.

The university said it has bolstered "security measures," and "the last two (consumer sentiment) releases have remained secure. Pending the completion of the review, additional measures may be instituted if necessary."

A spokesperson with the Detroit division of the Federal Bureau of Investigation, citing department policy, declined to confirm or deny that an investigation into the data's release was ongoing.


Controversial Release

The University of Michigan consumer sentiment survey is among the market's more controversial economic indicators. While closely watched across Wall Street, the report is released to subscribers only, on a twice monthly basis, through a conference call and the website of the organization.

Despite the Survey Research Center's best efforts, the consumer sentiment data are generally available to news service subscribers, via people who get the report, mere seconds after its most important measures are made known to subscribers. The final monthly reading of the report is released publicly on a delayed basis, but the mid-month release, the focus of this investigation, is not.

There is no clear evidence from analyzing the Treasurys market activity that morning of a leak in information. Indeed, some expressed surprise at the investigation, saying there was no sign on Feb. 13 that any of the normally market-moving numbers had been released before subscribers had access to them.

Still, rumors often circulate in advance of closely-watched data and other traders remember speculation on that day of some sort of leak that pointed to a sentiment reading that was well below consensus.

The Feb. 13 report heralded an unexpected plunge in consumer sentiment, with the index falling to 93.1 from 103.8 in January, much weaker than the consensus estimate at the time for a reading of 104.0.

Ranvir Singh, a London-based bond market analyst at MacFutures Ltd., a proprietary trading unit of Refco Group Ltd., said he had seen the Treasurys market rally "six to 12 seconds" before the data were released by the University of Michigan. MacFutures subscribes to the data, which is released by conference call.

"I think traders around here will agree that that day, the market moved before the data was released," he said.

This isn't Michigan's first brush with problems relating to the survey. For years, the organization has attempted to crack down on the indirect release of its numbers to the press, with only minimal success.

The Michigan data, largely because of the manner of their release, have assumed a sense of mystery that doesn't hold for other types of economic statistics. For some, the data's uneven way of making it into the public provides a golden trading opportunity, which in turn has heightened the focus placed on the number.

"For whatever reasons, the (Michigan) confidence data have captured the imagination of the market," particularly for equities traders and investors, said Stephen Stanley, chief economist at RBS Greenwich.

This is somewhat ironic, in that most economists say consumer confidence reports are generally not a particularly strong indicator of more important factors like consumer spending. Michigan's, like the Conference Board's report, "are all indicators that correlate with the consumer" although that relationship is not all that strong on a month-to-month basis, said Jim O'Sullivan, economist at UBS in Stamford, Conn.

The University of Michigan has had troubles with its surveys before. Last February, the Wall Street Journal reported that a researcher who directed the quarterly American Customer Satisfaction Index had been buying and selling short the stock of companies in the survey, sometimes ahead of the survey's release.


-Grainne McCarthy; Dow Jones Newswires; 201 938 2381; grainne.mccarthy@dowjones.com

-Michael S. Derby, Dow Jones Newswires; 201-938-4192; michael.derby@dowjones.com

NASD Investor Alert

http://www.nasd.com/investor/alerts/alert_betting_ranch.htm

Betting the Ranch: Risking Your Home To Buy Securities
March 15, 2004

With a rising stock market, record low interest rates, and large gains in home value, some investors have taken out new mortgages, refinanced, or obtained line-of-credits secured by their homes for the specific purpose of investing in securities. The hope is that the investment will not only pay the mortgage, but also generate additional income. Unfortunately, it doesn't always work out that way.

NASD is issuing this alert because we are concerned that investors who must rely on investment returns to make their mortgage payments could end up defaulting on their home loans if their investments decline and they are unable to meet their monthly mortgage payments. In short, investors who bet the ranch could lose it.

This alert outlines the risks involved in playing the market with the equity in your home and offers advice to consider before making such an investment decision.

Your Risk is Compounded

There is risk to principal when you invest in virtually any security. Taking money out of your house to buy securities compounds your risk for the following reasons:

* When you buy securities with mortgage money, you are investing with borrowed funds. While this increases your buying power, it also increases your exposure to market risk, similar to buying securities on margin. The difference is your mortgage loan is likely to be greater than any amount a securities firm would loan you on margin. Investing borrowed mortgage money amounts to a huge bet that the investment will increase.


* Unlike investing with savings, when you invest with mortgage money, you stand to lose more than your principal if the investment goes sour. You can lose the collateral supporting the loan—namely your house. Even if you don't lose your house, you could lose the equity in your home that may have built up over a considerable period of time.


* You may put your money in higher risk investments than you might normally select, in an effort not only to match the rate of your home loan but in the hopes of surpassing this rate. Furthermore, with so much at stake, if a given investment does poorly, you may feel compelled to move your investment into even more risky investments to make up the difference, further jeopardizing your home, credit standing, and overall financial health.


Worst Case Scenarios Can Happen

NASD is aware of instances in which investors have had difficulties paying their mortgages as a result of declines in their mortgage-financed investments. Here's how this can happen:

A retired couple's house is paid off, but they have very little extra money to meet their everyday living expenses. They decide to take out a new mortgage of $250,000 at 6%, seeking to invest this mortgage money in the hope of making more than 6%. They lock into a mortgage requiring monthly payments of $1,663.00. On the advice of their broker, they invest their mortgage money in a mutual fund that has earned an average of 12% over the past five years. But instead of gaining value, the couple's investment loses money from the start and continues to decline. After one year, their investment is worth $200,000. Since they were depending on this investment to generate $1,663 per month to pay the loan and have no other assets to liquidate to make up the difference, they are faced with a tough choice: sell off part of their now depleted original investment to pay the mortgage payments and hope that the investment turns around, or sell their house and hope that the selling price is enough to pay off the loan and pay for real estate commissions. Either way, they run the risk of losing money—and their home.

How To Avoid Losing Your Home

If your broker recommends this strategy, it comes down to one very simple question. Before taking out a mortgage or refinancing to invest in securities, ask yourself: How will I pay for my mortgage or loan if my investments decline? Do you have a secure salary or reserve funds to make mortgage payments if your investments lose value?

If the answer is no—just say no to betting the ranch to invest in securities.

Where to Turn for Help

If you already have a problem with a mortgage-financed investment recommendation that your firm did not resolve to your satisfaction, you can file a complaint online at NASD's Investor Complaint Center.

Resources

To learn more about the risks of investing with borrowed funds, read Investing with Borrowed Funds: No "Margin" for Error.

http://www.nasd.com/investor/alerts/alert_betting_ranch.htm

okie dokie. well i've mostly been watching the techs, and among the stuff i've been watching, the big caps have been the good shorts; the smaller ones seem to have made their big moves already and are hanging around convenient strike prices; perhaps too low for shorts to short, and too high for longs to invest in; so its just traders ... pmcs, kopn and swks in particular are ones i'm watching closely ...

anyway, i've been watching the dollar primarily as confirmation of which way we might move. the move up in the dollar fit well with the decline after the fed, but then it just continued to hang around there during the final rally, which means - to me - my shorts are staying open.

INTC bounced off that former low support @ $27s.70's we saw
before one more time ..bounced pretty good too!

eh? intel bounced off 26.7, which is a new low for this move, and not a support of any kind as far as i can see. (price action there comes from the summer, week of 8/22, and it only spent a week in that range before barrelling up to 27's ...

oops, correction - 28's. there was good support there.

My opinions are based on market action in many small stocks I follow and the bids are moving up and the selling is near dead on many.

small stocks aren't behaving anything like the large caps i'm watching, though ... all of the ramps in intc seem to get sold into, e.g., pmcs, on the other hand, they just move around at will within a $1 range.

fed reserves, you might like this:

What the TRIN is telling us
By Mark Hulbert, CBS.MarketWatch.com
Last Update: 12:02 AM ET March 16, 2004


ANNANDALE, Va. (CBS.MW) -- Something happened last week in the stock market that hasn't been seen since Dwight Eisenhower was president.

The Trading Index -- or TRIN, for short -- was above 2.0 for three consecutive days.

This normally would be a very bullish development. But at least one newsletter editor I monitor thinks we are not living in normal times.

But I'm getting ahead of myself.

Let me first review what the TRIN is: It is technical indicator that was developed by Richard Arms in the late 1960s, and is sometimes also referred to as the Arms Index. It is calculated by taking the ratio of two numbers, each of which in turn is also a ratio:

The numerator is the ratio of advancing issues to declining issues.
The denominator is the ratio of the volume of advancing issues to the volume of declining issues.
For example, on Monday, there were 675 advancing issues on the NYSE and 2,160 decliners. So the numerator of this ratio would be 0.31 (675 divided by 2,160).

Furthermore, because advancing issues' volume on Monday was 190 million and declining issues' volume was 1.7 billion, the denominator of this ratio would be 0.11 (190 million divided by 1.7 billion).

Monday's TRIN reading for the NYSE therefore was 2.80, which is the ratio of 0.31 to 0.11.

As was the case on Monday, a TRIN reading above 1 means that there proportionately is more volume in declining issues than in the advancers. A reading below 1 would mean that volume is disproportionately concentrated among advancing issues.

High TRIN readings, even for just one day, are often considered evidence of panic selling on the part of investors. Since market bottoms often occur when investors throw in the towel, many interpret high TRIN readings as a bullish sign.

High TRIN readings for two consecutive days are even rarer and considered even more bullish.

And when such readings occur three days in a row? Well, that's capitulation.

In part of because of these high TRIN readings, James Stack of the InvesTech Market Analyst writes that we shouldn't "be alarmed by" the market's recent correction. Stack therefore has decided to keep his model portfolios nearly fully invested.

Peter Eliades, editor of Stockmarket Cycles, agrees with Stack that high TRIN readings normally would be a bullish indicator. But he has several problems with a bullish interpretation of the current situation.

First of all, Eliades stresses that there have been several major exceptions to the general rule that two consecutive high TRIN readings are bullish.

For example, he points out, after two consecutive TRIN readings above 2.50 in January 1941, "the Dow moved 5 percent lower over the next three weeks." Two such high back-to-back readings also occurred in August 1946, "and the Dow was 16 percent lower over the next nine weeks."

In other words, a bullish outcome in the current situation is by no means a certainty.

In addition, Eliades thinks it is ominous that the stock market has been unable to rally from last week's high TRIN readings. He interprets that to mean that there is "great instability in the market."

Conceding that he may come across as "overly dramatic," Eliades believes that, because of that instability, the odds of a market crash are now much higher than average.

"Readings such as we currently see on the Trading Index moving averages are usually signaling us that some kind of market bottom is imminent time wise. By that we mean we should see some type of bottom within the next two-three weeks, if not sooner. The tricky part of that equation is that it tells us nothing about the price vulnerability between now and that bottom. It could turn out to be very significant."

cymi was flopping around in the 40-43 range when i saw him mention it with the 36 target.

bearmove, any significance in cymi reaching your target @ 36, or was that intended as an "at least 36"?

finally! i remember how we were discussing here how irresponsible this was ... almost a year ago ...

NASD Charges Three Brokers with Suitability Violations for Recommending Investment Purchases Using Mortgage Proceeds
PR Newswire - March 15, 2004 12:33

WASHINGTON, Mar 15, 2004 /PRNewswire via COMTEX/ -- NASD announced today that it has taken separate enforcement actions against three brokers for making unsuitable recommendations to customers, urging them to purchase investments using proceeds obtained from cash-out home mortgage refinancing. NASD also issued today an Investor Alert to help highlight the dangers associated with mortgaging a home to fund investments. NASD is concerned that investors who purchase investments with mortgage proceeds and use their investment returns to make the mortgage payments could default on their home loans if their investments decline and they are unable to meet their monthly mortgage payments. Investors can learn more about the risk of the use of mortgage proceeds for investing by reading, Betting the Ranch: Risking Your Home to Buy Securities (http://www.nasd.com/investor/alerts/alert_betting_ranch.htm).

Today's enforcement actions include two settlements and the filing of a complaint:

* James A. Kenas, of Coeur d'Alene, ID, and formerly a registered
representative with WMA Securities, Inc., was suspended for 6-months for
violating NASD's suitability rule by recommending that his customers
purchase mutual fund shares, when the only funds available to those
customers for the purchases were from mortgaging their home.

* Steve C. Morgan, of Loveland, CO, and a registered representative
associated with Washington Square Securities at the time of conduct,
suspended for 6-months and ordered to pay restitution to customers of
more than $15,000, which must be paid to the customers before he re-
enters the securities business. NASD found that Morgan recommended that
a retired couple purchase a variable annuity even though they were
financially unable to make the purchase except by mortgaging their home.

* Jamie A. Engelking, of Denver, CO, and a registered representative
formerly associated with First Union Securities, was charged in a
complaint with recommending the purchase of a variable annuity using
mortgage proceeds which were the only funds available for the
investment.

"A recommendation by a securities firm or a broker that an investor mortgage his home to buy securities raises all kinds of regulatory red flags," said Mary L. Schapiro, NASD's Vice Chairman. "NASD will always ask whether it is appropriate to recommend that you risk your home to seek investment returns."

Under NASD rules, an individual named in a complaint can file a response and request a hearing before an NASD disciplinary panel. Possible sanctions include a fine, order to pay restitution, censure, suspension or bar from the securities industry.

In settling these charges, Kenas and Morgan neither admitted nor denied the allegations.

well i'm still watching swks and qcom for signs of breaking down. swks should have a long way to go, since it still near its 52-week high and is pretty frothy.

no, not a subscriber. i've read some good things from it though, but don't know whether its worth the subscription price.

he's already the mascot on http://capitalstool.com

oops duplicate

"I guess the guys that made the decision to shut down Hubble feel they have more pressing needs for our money."

yeah! we're going to mars! yay! :-P

well, i could believe A, but that has nothing to do with the terrorist incident, which was your claim.

B. If these guys were clumsy enough to leave a trail that got them caught within a couple of days, than what makes you think their infrastructure can just get up and running again...

C. It proves "we can get them" even if they get the chance to do their destruction...

hehe. i think "A" would probably be the better reason to buy microsoft and oracle on monday.

re long time gaps, "1993 1st Trade center... 2001 2nd Trade center... 8 yrs apart...": i think what he's probably thinking about is riyadh followed by casablanca, and the 2-day istanbul attacks.

from wikipedia:

Several attacks and attempted attacks since September 11, 2001 have been attributed to al-Qaida. The first of which was the Paris embassy terrorist attack plot, which was foiled. The second of which involved the attempted shoe bomber Richard Reid (who proclaimed himself a follower of Osama bin Laden - he got close to destroying American Airlines Flight 63)

More subsequent plots included the synagogue bombing in Djerba, Tunisia and attempted attacks in Jordan, Indonesia, Morocco, and Singapore. See: Singapore embassies terrorist attack plot. The network has also been implicated in the Limburg tanker bombing, of complicity in the kidnapping and murder of Wall Street Journal reporter Daniel Pearl and suspected of complicity in the October 2002 Bali car bombing of a nightclub in Bali, Indonesia. Al-Qaida was also involved in the assassination of US diplomat Laurence Foley in Jordan, a terrorist car bombing in Kenya in November 2002, the Riyadh Compound Bombings, and the Istanbul Bombings in Istanbul, Turkey, in 2003.

wow.

New York's labor participation rate -- the percentage of employed adults relative to population -- fell from 65.6 percent in July 2002 to 57 percent now. The city comptroller's office recently framed that drop this way: "If the labor force participation rate had remained at the level of July 2002, the NYC unemployment rate [now] would . . . rise to 19.9 percent."

from
In New York City, Fewer Find They Can Make It
http://www.washingtonpost.com/wp-dyn/articles/A56562-2004Mar13.html

The market will scream on Monday as Spain is about to announce the arrest of 4 Muslim tied to the Madrid bombings...

?? well the guy from intel institute (some terror info organization), who was providing commentary on cnn just now, mentioned that the concern arising from an al qaeda link is that they've had a tendancy to do these things more than once. meaning that a similar attack could be seen again in a very short time ...

so i'm not sure why you see this as a rallying point. perhaps just the opposite.

"Yet there are things we do know. The real culprit in this jobless recovery is productivity, not offshoring."

bah, this is all just doublespeak ....

offshoring is a productivity enhancement, and is enabled through technological enhancements in the same way as everything else they're discussing.

We know something about the kinds of jobs that could migrate to Asia and those that will stay home. [...] But specialized jobs that require close contact with clients, plus an understanding of U.S. culture, will likely remain.

ha. this sort of sounds like an 'imperial' view of business, where the u.s. is the hub of business activity, and all of the actual work is farmed out to the rest of the world. but we're fooling ourselves if we believe that to be true: we already know, for example, that if your clients are in china, then it already pays to have a significant presence in china, and the chinese often insist on that. but i'm not 'picking on' china here.

take the open source software movement as a paradigm of future development, or what a company could do internally on a smaller scale. linux is built by an army of folks that are dispersed across the globe, and the project is run by a handful of people who never sit down face to face. and pretty much the only reason it hasn't displaced microsoft is msft's prior lock-in. (sort of ...) but looking at the stock's underperformance this year, it sure seems like nobody believes this is sustainable ...

pat buchanan has been saying this for a long time, and just again recently: its not entirely a free trade issue, in the classical sense. i suppose this fact won't be recognized until we start shipping patients en masse to thailand for expensive medical procedures.

i'm still bug-eyed that the protection of the pricing of prescription drugs (either via limits on negotiations by medicare, or permitting reimportation from canada, or whatever) isn't decryed as 'protectionism' by the WSJ. no, in that case, its good for the economy. (yeah, yeah, i know: cheaper prices on drugs aren't going to make them more widely used; there's already a captive market, so you milk 'em. although i still don't exactly see why this would be different from, say, a tarrif on motherboards, which we no longer produce but need here in the u.s.)

re don sew: but not in his old group on market swing: in open market discussion,

http://www.marketswing.com/forum/forumdisplay.php?f=4

fed won't raise rates ... ever ... well, almost ...

=DJ FED WATCH: Goldman Goes Long - Really Long - On
Fed Call

(This article was originally published Thursday)

By Michael S. Derby
A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)--Long in the vanguard of banks that see the Federal Reserve keeping interest rates low for a long time, Goldman Sachs just edged a bit further out onto the bleeding edge.

The bank suggested in a research note that the Fed may never again hike interest rates while Fed Chairman Alan Greenspan is holding the reigns at the central bank. For those keeping score, that means a steady Fed until sometime in 2006.

For quite some time, Goldman Sachs analysts have argued that the Fed, faced with an economy defined by a large divide between actual and potential growth levels, will be keeping what's currently a 1% federal funds rate in place for a long time.

And it's this so-called output gap that's looked to by many forecasters, along with Federal Reserve officials, as the main determinant of inflationary pressures. The farther the economy is under potential, and the longer it stays there, the lower the inflation pressure it's likely to face.

And it's inflation that remains at the forefront of the Fed's focus. Indeed, Fed officials from Chairman Alan Greenspan on down have all said that even with growth heating up, the dearth of meaningful price pressures is what takes pressure off the central bank to raise rates.

Goldman, along with banks such as Citigroup, Credit Suisse First Boston, HSBC Securities, Lehman Brothers and Merrill Lynch, all agree the Fed won't be doing anything this year with interest rates, even though a modest majority of banks that deal directly with the Fed - called primary dealers - still favor some sort of rate hike action much later this year.

The latter camp grew smaller last Friday, after the government released dismal February jobs data. Financial markets also priced securities and futures contracts for a much-reduced chance of central bank interest rate action this year.

Goldman Sachs says the Fed wants inflation higher and trends are still not moving in the direction, and may not for some time. Which leads to their argument and forecasts for the all important output gap.

Ugly Roadmap

"Based on conservative assumptions, it is unlikely that the (gross domestic product) gap will close before mid-2005 and, therefore, that the (Federal Open Market Committee) will tighten before then," Goldman Sachs economist Ed McKelvey argued in a research note from Wednesday.

"To close the gap in a year, the economy needs to grow by the sum of the GDP gap and the potential growth rate. If the gap is 2% and the potential growth rate is 3%, then 5% growth would be required to close the gap by the spring of 2005," he said.

McKelvey flags the fact that the needed level of growth is well above what economists in the latest monthly Blue Chip economic indicator poll are predicting. And if the Blue Chip forecasters - the poll is the definitive forecaster survey - are right about 4% growth, the output gap won't close until early 2006.

And that's right around the time when Greenspan, at the top of the Fed since 1987, will be leaving the job. His term ends on Jan. 31, 2006.

"This raises a tantalizing question - have we seen the last tightening from Mr. Greenspan?," the Goldman economist asked.

Perhaps in a recognition of the dangers of all long term forecasts, McKelvey admits he's not yet willing to follow where the forecast may be pointing. "We won't push the point other than to note that there is some risk that our expectation of tightening in mid-2005 could be premature," he wrote.

(Michael S. Derby writes about markets, the economy and
the Federal Reserve for Dow Jones Newswires.)

-Michael S. Derby, Dow Jones Newswires; 201-938-4192;
michael.derby@dowjones.com

dan, i love you for reposting these ... feels like old times ... with that, don sew back in the air, and LG getting ready to take on the market ...

I see many bearish charts especially in wireless and networking there is a lot more downside risk.

wireless? qcom and swks still look bullish to me.

After the horrible results of the SoCal grocery clerk strike not only will subsequent negotiations go easier for managment in this sector but I would wager that the vast majority of marginally skilled blue collar workers are trembling in their boots.

is that the whole story, though? e.g. ralph's in beverly hills (no picketers!) had very few customers - at least from the look of the parking lot which, previously, used to fill up (tiny lot), but then was maybe 1/4 full with say 25 cars. stores relatively empty and poorly stocked. ... and now, after the strike has ended, nothing has changed. customers have apparently found new loyalty to whole foods, trader joe's etc. (well, at least my mom is now a trader joe convert ...)

looks like sort of a lose-lose situation all around ... at least to my untrained eye.

How 'bout a man and three women? Or three women
a weeping willow and a Bowe's soud system?

that's a non-argument. families with 2 moms exist. what's the reason for disadvantaging their kids, e.g.?

i like the idea of an amendment that says "marriage is defined as the indissoluable union of one man and one woman". never gonna happen. there goes the "defense of marriage ..." posturing ...

Da Boys showed up late and sold right into the ramp...man they're too damn smart for me...

am i dreaming or do i remember being told that regular late-day selling like this smells of mutual fund redemptions?

its been so long since we had any bearishness, its hard to remember those things ...

me, nothing. just speculating. nq's are down as lee is trading 'em, europe is down big, and there was just a terrorist attack in a madrid subway ...

hey dan, re what i'd asked/observed about dollar/stocks/gold/miners tracking one another ... here's an observation from lee in chart form

http://www.marketswing.com/forum/showpost.php?p=6719&postcount=413

sigh. if we gap down big tomorrow, i'm gonna be grumpy, cuz i covered some of my qqq's at the close

ouch.

Whoa!

Washington - Today, President Bush announced the appointment of Dr. Roger Fei Tu Chen as "Manufacturing Czar", a position he proposed in his annual economic report in January and announced with great fanfare at a rally in Ohio last month.

Mr. Chen, CEO of the Fu Shing Corporation -- a manufacturer of brassiers for western women -- was reached for comment at his home in Beijing. "This is wonderful news and I look forward to working with Mr. Bush on creating more job by free trade."

-----------------------------------------

just kidding. i'm sleepy. hope i didn't cover too much today ...

hey dan,

someone on lee's board was noting a symmetric triangle on the HUI that should resolve soon (daily chart since jan) ... if its a valid pattern, of course. have you seen anyone discussing this?