Since June, the economy’s ringmaster, Alan Greenspan, has been forced to crack the whip four times, raising short-term interest rates. In his eyes, inflation is still on the prowl. So Greenspan and members of the Federal Reserve are trying to force price pressures back into the cage where they have languished. The Fed’s view of inflation’s dangers will be made clear Wednesday, with the central bank’s region-by-region beige book. Economist Tim O’Neill said analysts will be on watch for any hint the economy is beginning to slow. “The pattern of the report is unlikely to change from one of mentioning very tight labor markets and expressing worries about wage gains,” said O’Neill, of Chicago’s Harris Bank and its parent, Bank of Montreal. Worth tabbing is whether the report mentions soaring fuel costs. The bottom line, according to O’Neill, is that the report won’t deter the Fed from raising short-term interest rates by a quarter-point, to 6 percent, when they meet March 21.
DEBT
BALLOONING CREDIT
The question for Tuesday’s report on January consumer credit is not whether debts will expand once more, but by how much. Depending on which categories are included, Americans either owe $1.4 trillion or a record $6.8 trillion, which translates to more than $20,000 per capita, up from $13,000 in 1992. By the lesser figure, analysts are expecting the January increase to be more subdued than the $11.2 billion a month earlier, a level of growth that far exceeded forecasts.
EARNINGS
SURPRISE PARTY IN STORE?
Financial markets are beginning to wonder about first-quarter corporate profits, as companies gear up to offer advance warnings about potential disappointments. Chicago investment manager William Hummer expects problems to crop up because “unlike recent years, we are encountering a much more mixed picture.” Hummer, of Wayne Hummer & Co., said “there are bound to be some shocks and surprises. Although company sales are booming, margins are being squeezed, hit by much higher fuel costs, rising interest rates and higher costs for employee compensation.” He said the result could be a combustible atmosphere “of negative surprises that will unnerve financial markets.”
WALL STREET
NASDAQ’S ROLL
Gales blowing through the stock market have created billionaires among owners of computer stocks, while those holding traditional blue chips may be underwater. Day-by-day records have become the norm for upstart companies with little history–but prospects that are described as nothing short of fantastic. The market’s winners are concentrated in the Nasdaq composite index, which could cross the 5000 level sometime this month. It closed Friday at 4914.79, a little more than two months after it first closed above 4000.
