| BUSINESSWEEK ONLINE : OCTOBER 18, 1999 ISSUE | ||||||||
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| FINANCE
How the Whisper Number Could Affect the Markets 1. Suppose the consensus estimate of economists for the consumer price index indicates that it will increase by 0.2%, meaning there is relatively low inflation. The stock and bond markets stay strong. 2. Subsequently, the whisper forecast of 0.4% is posted on the Internet, indicating higher inflation than the consensus estimate. 3. Reacting to the whisper, interest rates rise, bond prices weaken, and stocks falter. 4. Actual CPI number comes in at 0.3%. 5. Because the actual number indicates lower inflation than the whisper, bonds rally, the stock market goes higher--even though inflation is greater than what the economists were projecting. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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