We think the Fed is not likely to raise the Funds Rate at their next meeting of October 3, 2000. Although the economy is still strong and inflation dangers persist, the Fed will probably abstain from any action that could have an impact on the presidential elections.

Signs of strength in the economy: a) Personal consumption expenditures went up 0.6 percent in July from 0.4 in June and 0.3 in May. b) Retail sales increased to 0.8 percent in July from 0.6 percent in June. c) Car sales remained strong in August.

Signs of easing: a) Housing has started to weaken, starts slipped 3.3 percent in July.

b) Non-farm payroll employment was down in August by 105,000, after a decline of 51,000 in July. c) Index of manufacturing activity fell to 49.5 in August from 51.8 in July and June.

Argentina will probably seek a renegotiation of IMF fiscal targets for this year. Finance Minister Jose L. Machinea announced that Argentina will not meet third quarter targets. The government is trying to put together an $11.0 billlion contingency fund in support of the peso.

Brazilian economy continues to grow at a dynamic pace. The expansion is broad based.

Economic expansion led by exports, especially copper and fish. Moderate peso volatility due to political factors.

Ecuador recently adopted the US$ as the nation’s official currency.

GDP growth of about 7.7 percent in the first half. Peso volatility heightening as government transition approaches.