WESTFALIA INVESTMENTS TECHNICAL COMMENTS (November 22, 2000) Inflation increased at half the pace in October, reversing the strong gains of the previous month. The consumer price index rose 0.2% last month. The core rate of inflation also rose 0.2%, after a 0.3% increase in September. Demand for American consumer and business products pushed the nation's trade deficit to a record $34.3 billion in September. As we see it, it appears that higher energy prices have not yet infiltrated to other retail prices. Indeed, inflation seems to remain under control.
EQUITIES: The stock market is trapped between a cooling economy and a bizarre election that still cannot produce a new president. Last week we questioned whether or not there was still time for a strong year-end rally; we said, that a rally was possible, but, due to the gridlock over the presidential election, we are scaling back our previous call for NASDAQ 4000-4200 by year end. We believe at best, NASDAQ may rally back towards the 3500 level from a very oversold condition. We continue, to look for the Dow to end the year around the 10,800-11,000 level.
GOLD: No change. The December gold contract continues to trade near the lower end of the trading range with little hope of a major reversal anytime soon.
CURRENCIES: The dollar gained ground against the Euro as weaker than expected German economic data points to weaker economic activity. We look for a narrow trading range to prevail near the lower end of the trading range.
BONDS: No change. Weaker stock prices continue to attract Treasury buyers. We continue to look for a stable Treasury market to continue.
November 22, 2000 Peter Cardillo, Director of Research Westfalia Investments, Inc. 546 5th Avenue, New York, New York 212-391-9260
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