-->Subject: Seligman - Chuck Kadlec Commentary - 9/28/03 - Next Test


> The rise in the price of gold to nearly $390 an ounce, and the
> apparent shift by the US to a weak dollar policy, signal a sudden
> increase in the risk of both domestic and international monetary
> instability. The Fed's commitment to maintain an accommodative stance
> based on weak labor markets and backward looking measures of inflation
> suggest that monetary policy within the US will remain too easy for
> too long. At the same time, the Treasury's success in getting the
> Group of 7 Finance Ministers to call for"more flexibility in
> (currency) exchange rates" is likely to decrease the global demand for dollars, as investors seek to avoid the capital losses
> associated with owning or investing in a falling currency. This
> combination of too much supply in the face of falling demand for
> dollars
> risks:
>
> * An acceleration in inflation to above 3%
> * An increase in 10-year government bond yields to above 5%
> * An increase in volatility in foreign exchange markets
> * An increase in equity risk premiums
> * A possible correction in US, European, and Asian equity markets
>
> Economic indicators continue to point to an acceleration in US
> economic growth to a 5% annual rate for the remainder of the year.
> And, rising corporate revenues and profits have been consistent with
> our Decidedly Bullish outlook (see 7/2/03 Seligman Commentary titled
>"Decidely Bullish"). However, unexpected inflation at home, and
> increased monetary instability abroad, could short-circuit the recovery.
>
von meinem deutschen Freund heute aus N.Y. übermittelt erhalten.

Emerald.