Mike: here is your comment coupled with my response:
<<you should have every reason to be concerned. gold and silver is up. the asian markets
are down with devaluation they will be exporting to us big time, large caps are dead
money due to the strong dollar and small caps will suffer due to cheaper inports. japan
is in deflation. the u.s. market has the highest valuation ever. hk market is down when it
used to follow our market. if hk devalues all markets go because everyone will be
selling t-bills to keep their markets solvent while our interest rates increase. you might
want to follow the enclosed site for future events. stay close to the exit door.
home.sprynet.com
>>
<<Mike, nearly 40% of U.S. product is manufactured overseas <<exporting to us big
time>> yes, but its US companies who, with devalued foreign currencies are exporting
back to the US, thus increasing the earnings of US companies. There are some
companies which will be affected, but not all companies as your note certainly implies.
<<Gold and Silver are up>> They're up from historic lows over the past ten years. The
stock market was booming with Gold above $400 an ounce. It is nowhere near
reaching that yet. But, rabble rouse, it's okay.>>
i did not discount your conclusions in your post. my comment dealt with two specifics, i.e., not all companies are affected by any potential currency devaluation, in fact many companies earnings will increase as a result and (b) the price of gold rising.
you were absolutely correct in your analysis regarding the markets in general having a relative concern over hong kong. more important to hong kong than currency is that their markets have dropped in response to rising interest rates. our interest rates are falling. Hong Kong bank to bank loan rates is 9.5% ours is 5.5% where is the comparison here? Hong Kong market is falling because of rising interest rates, not Thai or Malaysian currency devaluations (although this plays a secondary role as certainly witnessed today)
the price of gold is falling, not rising and i thought you were concerned about the rising price of gold.
this is an over correction in our market. who knows how long it will take to recover, but generally each action has an equal and opposite reaction. Singapore continues to bustle with great promise. The Shanghai market didn't close down today.
So, Mike what is your take now?
So far Mike deflation is nothing more than theory. The markets fell in anticipation of potential deflation. Personally I think if the finanical press bangs on a subject long enough it becomes true in the minds of traders whether this is actually occuring or now. The complexities occurring in Malaysia, Thailand and Japan are more than what can be accounted for by deflation.
Many US businesses have had their best quarters in history with many businesses reporting strong quarters to come, no slowing in the pipeline to their knowledge. If deflation were to become a factor, it wouldn't affect the US marketplace substantially for another eight to twelve months if then. We have the products, the technology and the rising productive rates.
I hope the market will wake up. If not, we misjudged. |
