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Strategies & Market Trends : Sonki's Links List

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To: ANANT who wrote (244)	9/5/1998 9:18:00 AM
From: ANANT	Read Replies (1) of 395

Articles for review: Barrons: September 7, 1998 Boxing a Bear All-out collapse looks unlikely, but so does a rousing rally By Jacqueline Doherty interactive.wsj.com Excerpts: Yet the domestic economy does have some sweet spots. Consumers remain confident and keep shopping till they drop. Inflation is under control, and the yields on long-term Treasury bonds have fallen to the lowest levels in a generation. Such cross-currents have analysts split: Bulls believe lower interest rates will save the day. Bears predict that creeping global deflation will overwhelm any benefits of those lower rates. "If the meltdown occurs it's going to be because of deflation," opines Greg Jensen, a research associate at Bridgewater Associates. "The power of the deflationary force in the world right now is stronger than anything we've seen since the Great Depression." The excess industrial capacity around the world and the plunge in commodity prices have surprised most market watchers. Right now, in the U.S. there is a delicate balance between the negative impact of deflation and the positive impact of low interest rates on corporate profits. But if deflationary pressures eventually overpower the influence of lower interest rates, the market could face more trouble, explains Jensen. One key indication that deflation may be winning the day is the breakdown in the correlation between stock prices and bond yields. Normally, when bond yields fall, stock prices rise. It's easy to -------------------------------- ÿ Cracks in The Nifties Two long-time tech bears size up the flight to "quality" By Kathryn M. Welling interactive.wsj.com IMHO: This article is bearish. represents another point of view.

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