Europeans no longer investing in American Equities. Tokyo Stocks falling sharply.Tomorrow I expect NASDAQ to go below 2,500 and I don't think that the dead DJ stocks can maintain their deemed high valuations either!
Tomorrow? I don't see a rally because everyone's longer range technical charts are showing blips, bangs, pretty red lines, cute designs and all other texbook irrelevancies. The only charts worth a darn are intraday now. We are looking at a market in denial. The DOW is the biggest denial of them all. MWD leading a rally today? What is that? Its denial because the conservative players are still clinging to the almighty Dow and the Financials that are looking like the fissures in the dam are going to burst. FUNDAMENTALS are going to carry this market and the only place the technicals indicators play are in reading the RESULTS of the fundamental realities. CHARTS are not your leaders, they are just the mirror image of what is going on behind the scenes. I might get some action on the long side on some beaten down stocks, but unless every tech stock has a double digit P/E.. rally just means a break of air, a remission from a deadly disease. Looking to short the financials, the DOW, and any other company that trades at valuations not realized in their actual earnings bottom line. It is really tiring of seeing this massive denial that has gone on these past 3 months. If investors think the haven will now be in the dow and NYSE they have some rude awakening.
From this mornings Financial Times:
WEDNESDAY DECEMBER 20 2000
Euro revival fails to live up to its potential
ECONOMIC AGENDA BY LEA PATERSON
IN ITS short life to date, the euro has managed to acquire the tag of a persistent underperformer. It failed to surge in value at launch, a brief period of stabilisation in the summer of 1999 proved to be a false dawn and its performance this year has been nothing short of dismal. Until the last few weeks, that is, when the single currency at last showed some signs of life.
The bounce in the euro since mid-November has taken the currency almost 10 per cent away from its record dollar low. It has led many to conclude that, this time, things really are different. After all, with the US economy starting to look distinctly sickly, the dollar is bound to head lower, isn’t it? And that leaves the way clear for the euro to begin at long last to strengthen.
While there is some evidence the worst may be over for the euro, it is far from clear that the recent mini-rally will take the currency much further. The two key forces which have dragged down the euro since launch — adverse capital flows and a disappointing European growth performance — may have dissipated for the time being. But all the signs are that they will be back, and possibly back with a vengeance, at some point next year.
Take capital flows first. One of the main reasons why the euro has struggled, particularly against the dollar, since launch in 1999 is the vast sums of money that have been flowing from Europe to America. Part of this has been merger and acquisition (M&A) related, with European firms expanding into the US. And part is down to the greater returns that investors believed they could reap from placing their money in US rather than European stocks.
Over recent weeks, both these factors have turned against the dollar, and can explain much of the renaissance in the euro on the foreign exchanges. According to Citibank foreign exchange analysis, plans by the US company Abbot to buy the pharmaceutical division of the German company BASF should mean that December will see more M&A-related cash flow into the euro-area than out of the euro-area. This would only be the second month of euro-supportive deal flow this year, and should help to bolster the single currency’s value.
Investor sentiment has also turned in the US, with mounting fears of a sharp slowdown in growth taking their toll on equity prices. As a result, investors have been less willing to place their money in American stocks. There is as yet little clear evidence that investors are turning to European equities instead, but at least the flood of money flowing from the Continent into US shares has begun to dry up.
Perceptions about relative growth prospects do not only impact upon equity prices. They have fundamental implications for interest rate expectations, which in turn affect the demand for currencies. Since early November, interest rate expectations for the US have been dramatically revised, with markets now expecting the Federal Reserve to move aggressively to cut rates.
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Tokyo Stocks Fall Sharply
The Associated Press, Tue 19 Dec 2000
TOKYO (AP) — Tokyo stocks dropped Wednesday morning amid concerns about a slowing in both the Japanese and U.S. economies. The U.S. dollar was higher against the yen.
The benchmark 225-issue Nikkei Stock Average shed 129.48 points, or 0.92 percent, to 14,002.89 at the end of morning trading. On Tuesday, the average closed down 351.53 points, or 2.43 percent.
The dollar bought 112.67 yen at late morning, up 0.61 yen from late Tuesday in Tokyo and also above its late New York level of 112.40 yen overnight.
On the stock market, the Nikkei's decline followed falls in New York on Tuesday, where the tech-heavy Nasdaq composite index lost 112.81 points to close at 2,511.71, its lowest level in more than a year and the index's sixth straight losing session.
At one point, the Nikkei fell below 14,000 points, but late buying reduced some of its early losses. It last traded below 14,000 points in March of last year.
On Tuesday in New York, the Nasdaq sank after the U.S. Federal Reserve indicated it was worried about a slowing U.S. economy, though it declined to cut interest rates.
Analysts said the slowing economy may negatively affect Japan's exports to the U.S. market. Japan is still struggling to put its economy back on track after its longest slowdown in decades.
Also in New York, the Dow Jones industrial average fell 61.05 points to close at 10,584.37 on Tuesday.
The broader Tokyo Stock Price Index of all issues listed on the first section fell 18.60 points, or 1.41 percent, to 1,296.03 Wednesday morning. The TOPIX closed down 28.48 points, or 2.12 percent |
