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Money Supply Rises Sharply As Fed Eases Strategists divided over effects on economy and stock market.(B)

Investor's Business Daily

| April 03, 2001 | COPYRIGHT 2001 Investor's Business Daily, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

By Ken Hoover

Investor's Business Daily

Money supply growth is surging, and some economists think that's exciting news for the economy.

And if it's good for the economy, maybe the stock market won't do so badly, either.

"Money (supply measuring) is not perfect. But it does have a 40-year track record that will beat just about anything else," said Paul Kasriel, head of economic research for Northern Trust. Kasriel admits his view is in a minority among economists. Many don't rely as heavily on money supply statistics as theyonce did.

But an investor might take note of the last three times money supply surged:late 1993, late 1998 and now. The first two increases signaled powerful bull markets. No one yet knows what it means this time.

The annualized 13-week rate of change rose from 3.62% on July 16, 2000, to 11.31% on March 19.

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