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WESTFALIA INVESTMENT
TECHNICAL COMMENTS
Seasonal Factors!
Seasonal factors have always been a dilemma for the financial
markets. The hefty rise in the September Producer Price Index
included "one time increases." As we see it, price
increases over the next few months will be less visible. However,
seasonal factors will continue to work their way through inflation
indexes. While we anticipate a bit higher inflation in the short
term, we look for the annual rate of inflation to remain under 3%
well into 1998. We continue to look for a steady monetary policy
for the balance of the year.
EQUITIES: The parade of third quarter earnings results are now
making their way to Wall Street. As we suspected, the results are
strong, but the market seems to be acting indifferent, suggesting
the Greenspan effect is still very much prevalent in the market
place. In our opinion, the market is in short-term holding pattern
and will act defensively as the economic data point to a bit higher
inflation. We continue to look for the market to reach new highs as
the inflation fears are short lived. We reiterate buys in American
Tel (T), Motorola (MOT), Identix (IDX) and Sovereign Bancorp
(SVRN).
GOLD: The December gold contract is nearing the lower end of the
trading range. We recommend short-term traders buying the December
contract at 328 for a short term.
BONDS: No change, long-term yields are nearing the upper end of the
trading range. Buy the December contract at the market 115 1/2.
DOLLAR: The Greenback is on the defensive, we continue to look for
further decline against the Deutschemark.
October 16, 1997Peter Cardillo, Director of Research
Westfalia Investments, Inc.
90 West Street, New York, New York
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