SOME OPINIONS OF SOME MARKET WATCHERS:-
(culled from various internet newsletters, e.g., WSJ, Barrons etc)
Why did investors sell? Why did the DOW drop 247 points on Friday?
Because Clinton reduced the capital gains tax, and investors opted to sell off NOW in
a hurry to crystallize their gains BEFORE a market collapse which many believe is
likely to happen anytime sooner rather than later! Also by selling now, they may be
able to pick up more stocks on the cheap later on.
Furthermore, on Friday, we had the expiry of options and futures as well as a frenzied
programmed trading during the last half hour before the market closed. Yes, we had a
double witching hour which generally drives the market down.
Is a market collapse imminent next week?
A good number of expert market watchers don't think so. They reiterate that
fundamentals are sound, inflation is low, unemploynment is down, and corporate profits
are good etc., and venture the opinion that the interest rate might go even lower! later
in the year, that Greenspan is probably thinking that his hiking the interest by 25 basis
points in March was a mistake, and that holding the interest rate unchanged for now is
really tantamount to raising the interest rate to curb inflation.
Will the sell off continue on Monday?
Most likely, they say. But a rebound is not unlikely later in the day, or in the afternoon
on Tuesday.
Is the market likely to go higher?
Yes, because the current 'correction' was not broadbased. Also, it was programmed
trading involving just two trades during the last half hour that drove the market down
by another 125 points. Because the sell off was not broadbased and the trading
volume was relatively low, CNBC believe that a crash is not immediately imminent and
the market is likely to go even higher after the current correction.
Is it possible to have low (or ~0) inflation when markets are booming and productivity
is increasing?
Yes, it appears that we are in a unique period of the economic cycle where inflation
remains low or dormant despite other contradictory indicators. Even Greenspan
conceded in his Humphrey Hawkins speech that the present phase of the economical
cycle is "exceptional".
WHAT IS ALL THIS GOING TO DO TO THE PRICE OF GOLD? IS IT STILL POSSIBLE FOR GOLD TO RISE DESPITE CONTINUING LOW INFLATION AND THE SPECTRE OF FURTHER EUROPEAN CENTRAL BANKS SELLING OF GOLD?
Your comments, please. |
