VOLTAIRE'S PORCH-MODERATED Message Board

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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: Jim Willie CB who wrote (50964)	5/4/2002 3:21:47 PM
From: t2	Read Replies (1) of 65232

Dow internationals will get hurt first by down dollar foreign hot money is more important than the prospect of improved exports and currency translations of overseas operations I expect a false rally in the internationals hotmoney will use it as an open door to exit Jim, It may eventually turn out to be a false rally but I still expect it to happen if the dollar plunges..should continue with huge gains until the Dollar reaches bottom..and then the Dow starts dropping. (Note that if the world economic situation gets worse, the dollar will start reversing higher--then possibly hitting the markets). The very simple reason that treasuries will be hit the hardest is that these would just be paper assets taking a beating. Where will the huge amounts in bond funds go? We know there is a lot of asset allocation...so will they bail out of the dollar and head into the Euro/Yen? My answer would be NO. The only real alternative (apart from Gold) is to buy up real businesses instead of holding US government paper assets.....a flight to quality in to the Dow stocks. We have not seen this but it could happen, imho. Enough of these multinationals have a low Price to Sales ratio (consumer stocks especially)that they will imediately make big gains in earnings....remember most of these companies already have stock buyback plans unlike most Nasdaq stocks. The foreign hot money is basically in bonds right now anyways; may be Asian central banks that loaded up with dollar reserves---something they had to do because of the currency crisis of a few years ago. Now, it should go full circle. Here is an article that concludes a run up in the Dow and Gold. I basically agree with writer. I don't know if I had post it earlier but it is a very interesting read. This is what I had thought prior to seeing it in print. kitco.com btw--dollar index broke through 114; next stop 113 and then 112.

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