Idea Of The Day Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Idea Of The Day

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Getcher who wrote (7924)	8/25/1997 4:18:00 AM
From: IQBAL LATIF	of 50167

Comparing 10- year government bond there is a need that global reduction of interest ratesshould be in offing - tall statement to make especially when every one is looking at a new round of interest rate hikes originating from Germany- but the kind of real interest earned from these bonds will 'if economic environment continues its present mix' come down- this reduction in real rates will be only possible if yields head lower- mind you that lower inflation will lead to a geometrical progression in markets valuations but markets are not deep enought to watch for the overall trend- S&P provides the instrument thru which every dip is played by Money Managers some do it out of genuine fear others out of speculation, I anticipate this month Cost of employment index and NAPM number to be a key determinant of market direction- I doubt any new hi above 969.3 on SPU could be made before we get a green signal from NAPM Journal of Inflation Cost- you may get few surprises because we caanot get higher corporate profits on back of weak numbers so strong numbers will wrongly be defined as inflatinary leading to 'sell offs' and retracements, so volatilty is and will be an integral part- however it will and I doubt will ever be a fall like 1929 or 87- only nimble and total detachment from market direction will help you trade this market- Let market show us the dirction we will work with the trend be late but ride the trend- I am a great supporter of riding a trend- it will take a lot to change to bearish configuration i.e after a break of 7400 is achieved- I have been banging my head on individual sectors and at that level things start loking a super steal- as a firm beleiver of 'no free lunches' I think if we see those levels we would need some external imbalances to hit the market and for that we will closely need to watch political calender worsening situation in ME or Russian coup -with present dynamics and mix of forces I would be exaggerating below 7400- therefore my emphasis has always been a forecast of correction. Visiblity is very clear to me the heights and lows are properly defined and I am going to work within those paramenters. Aus Sweden Italy Spain Austria France Canada US Belgium Britain Denmark Germany NL Swiss Japan are listed in order of highest to lowest real rates- note the inherent problem in Japan despite being 10 year rates lower than US their real rates are only 0.25%- it is this obvious reason that Japan is and will be the biggest provider of cheap capital to the world markets- this will certainly lead to world rates' with all this disinflationary components of global economy' to tread lower- but how many understand this- in the mean time- the play is Fear Play- if you don't know your fundamentals well you will be a loser. The moment rates in Japan start rising we will have a problem in the global equity markets but at the moment until Japan stirs up its domestic economy out of self imposed slumber we may see the party running late. You know what is the problem-we need to urgently redefine and throw all these bench marks based on which the present figures for inflation are decided, undoubtedly we overstate inflation and therfore a possiblity of rates dropping to 3% by 2000 is not a dream but for me an event delayed due to political machinations and considerations of liberals in Washigton- lower inflation would turn cuts in ' entitlements ' but who has the balls to slaughter this holycow. Weaning people away from entitlements is solving half of US problems of zero deficits, moreover lower long term rates will bring in higher tax receipte and another genuine round of tax cuts will be on board- a goal of low tax society with low inflation and low unemployment is the US answer to economic problems of the industrialised world. Is Newt Gingrich listening in Washington- no he is making compromises!

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next