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Strategies & Market Trends : Strictly: Drilling II

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To: Frank Pembleton who wrote (13800)	6/4/2002 11:02:06 AM
From: isopatch	Read Replies (3) of 36161

Excellent post on denial in US Financial press & media <Tero Kuittinen Darkness on the edge of town 6/04/02 09:43 AM ET Singapore was interesting in the way it resembled Sydney and London -- raw fear over U.S. assets is just about boiling over. There is a profound dislocation between the U.S. and overseas viewpoints. The U.S. business magazines and newspapers seem to be engaged in a shrill "Buy U.S. Assets Right Now" campaign -- focusing on productivity growth and trying to dismiss the corruption, trade and current account balance fears out of hand. The flurry of unequivocal "Buy Now" cover articles has been not only disquieting, but downright scary to many foreigners used to regarding U.S. business journalism as the best in the world. It creates the impression of an attempt to sweep the foreign concerns under the rug -- dismissing and belittling the doubts. But the unease of foreign investors keeps deepening as the news flow on corporate scandals, criminal charges, SEC investigations, suicides and doubts on cash flow manipulation continues unabated. The issue is whether the macroeconomic news really is more important than the fears over structural imbalances. It's eye-popping how strenuously most American business publications have opted for cheerleading over the last month -- across the range of weekly magazines and newspapers. There is some world-class rationalization going on here. Round-trip trades are not actually illegal; personal tax evasion does not imply corporate wrongdoing; Spitzer is trying to pull a Giuliani for political reasons, etc. Maybe this sophistry really does calm down American investors -- but it is not working overseas. It looks a lot like denial. Just like insistent comments about "range-bound" market as many key companies keep breaching September lows. A typical U.S. mainstream business column includes sneering, contemptuous comments about "what are the foreign investors going to buy -- France and Japan?" Well, duh. That particular question was supposed to be a joke two weeks ago. It's not looking very funny right now. The U.S. assets still are priced at a hefty premium. There is no room here for doubts. Most currency experts seem incapable of even trying to visualize a dollar crash. The commentary on the currency issue inevitably follows the "slow, beneficial dollar depreciation" line. This ignores the fact that most foreign investors are petrified over the prospect of even a slow decline in dollar -- it would magnify any impact of equity price falls over the next two years. The complacency of most U.S. commentary about the markets is increasingly jarring. As the Dow and Nasdaq tumble, the media focus is kept obsessively focused on the macroeconomic numbers -- even though the real problem here is perception of corruption. That's something no amount of productivity growth is going to fix. The whole argument about "range-bound currency fluctuation" is looking hollow as the yen and euro bust out of their supposed ranges. The Japanese interventions have been notably ineffective. These interventions work against speculative moves -- but of course they can't neutralize the impact of genuine asset reallocation.>

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