In our estimation, both of these events will keep the market very volatile between now and November. Last month many corporate insiders again began purchasing their stocks. This is usually a bullish indicator. The United States Economy remains strong but perhaps not as strong as it was last year. The rest of the world views the U.S. market as a safe haven for their money.
Unemployment remains low and shows no sign increasing.
The recent events in Asia and Russia tilt the trend away from an inflationary environment and more towards the disinflationary environment we discussed in the first paragraph of our 1998 outlook. We think that the possibility of the Federal Reserve raising interest rates this year is slim. If anything, they may be forced into cutting short-term rates to add liquidity to the system. It has to do with the psychology of investing. These shortcuts in thinking cause us to react and cause the market to sell off more than it should.