Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Frederick Smart who wrote (28144)	9/15/1999 11:35:00 PM
From: Paul Fiondella	Read Replies (1) of 42771

(Off Topic) Japan and the return of the Asian Crisis I've been think about the price of NOVL and the market's continuing worries about Greenspan and interest rates. As some of you know I have followed Japan and Asian economic developments for some time. First Greenspan and interest rates. If you go back to 1987 there was a similar weakening of the dollar based around trade imbalances followed by tightening in late Summer by the Fed. That brought about the October crash. This is why the market is bearish and worried. This time the Fed began tightening much earlier, the dollar has not weakened as much because it had an enormous cushion of over-value, and the real economy, as typified by semi-conducters is ramping up. We will begin to export more and cut our trade deficits in the last quarters of this year. Watch any revenue numbers for tech companies for European and Asian sales clues. And then there is Japan. Japan is in a very deep recession. The government has undertaken a massive fiscal stimulus and has spent hundreds of billions of dollar equivalent yen to get some meager economic growth(1.1% year over year in the 2nd quarter). But at the same time it loosened fiscal policy, it tightened monetary policy. A strong dollar has also helped Japanese exports. A strong yen will not. Therefore it is important that Japan and not Greenspan make the necessary next move and adjustments in currency values to stop the unnecessary destabilizing run on the dollar that we are seeing reflected in capital outflows from the US stock and treasury markets. To get to the point, the Bank of Japan needs to decisively intervene to buy dollars and weaken the Japanese currency. They cannot cut interest rates to achieve the same result. By doing so they will continue the recovery that the US, as the buyer of last resort and world's biggest debtor, has been able to mount with consumer demand here. If they do not then the Fed cannot tighten too much more without bringing about 1987 and then it will have to loosen too much again to compensate and possibly never get a grip on things again. The world remains in a deflationary pattern with only the US with its finger in the dike. So our market pundits are wrong. Instead of calling for the Fed to tighten to reign in "incipient inflation", they should be demanding that Japan expand their economy further by weakening the yen to create "incipient demand".. Japan has vast excess capacity and weak demand. Why can't it try a little bit of our monetary based expansion and increase its domestic money supply? Krugman is finally right! IT can and should. There is hope in the fact that the Japanese cabinet is pressuring the Bank of Japan. If you watch these worries and policies play out and keep your eyes on Larry Summers you will get a real clue as to when to buy and when to sell in this market. A year ago Novell gave those of us who watched Greenspan an October buying opportunity of very profitable proportions. It just might be doing it again right now.

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