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Why marketeers should have a happy holiday

May 26, 2000
Web posted at: 10:09 PM EDT (0209 GMT)

By Frank Pellegrini

(TIME.com) -- This could be a good weekend for the markets to catch their breath. Skittish after a wild week and tentative heading into a holiday, investors are nonetheless armed with some of the news they've been waiting for: The economy is cooling off and Alan Greenspan might be too. After hearing Thursday that rising mortgage rates were finally cutting into home sales, rate-hike-weary investors got more good news Friday: Orders for durable goods like refrigerators and airplanes, which tend to rise when people are feeling wealthy enough for big-ticket purchases, dropped precipitously in April, with savings on the rise. Investors' message to the Fed: OK, Alan, you can stop now.

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Well, maybe not completely. "These are the kind of signs that the Fed is looking for, that the economy is slowing down and consumers are reining in their spending," says TIME senior economics reporter Bernard Baumohl. "But Greenspan still sees signs of inflation. The most this does is maybe limit how much he'll raise in June -- probably 25 basis points -- and give the markets hope that it's the last one for a while." When the markets become convinced of that, it could be the beginning of a steady climb back toward those long-ago highs. At least it's something to talk about at the barbecue.

Copyright © 2000 Time Inc.