John W. Re your note including <<The global equity crisis was certainly the catalyst, and nothing will get better until this
anxiety is over (when will we decouple from ASIA?). The bigger picture is, if someone
can make money anticipating further decline into the low 30s because the mkt is
dragging it down, then where would the Dow's bottom be. Nasdaq? Scrip data
although is very positive is pissing on an global inferno. A discussion of the near term
price movements will be decided by this Asian FLU crisis (I wish they had a PI for
this). Right now, no one can see the bottom of the Hang Seng. If this retest of the lows
breaks through 6900 on the Dow, where is the bottom. Will this all spiral out of control
(with help of another war in the gulf) until we have a global recession, even possibility
of a second Great Depression. If the whole world goes to hell in this dark moment,
people will make money shorting AGPH, but we all will have much bigger problems
than AGPH's short term move.>>
I find it amusing (though expensive) that economist observing the world scene now have two devastating scenarios for the U. S. stock market:
Scenario 1: A very strong U. S. economy causes wage inflation which causes general price inflation which causes higher interest rates, which drives down the stock market.
Scenario 2: Competitive devaluations by developing countries cause DEflation in Asia and Latin America, which is exported to the U. S. (through lower prices on goods imported into the U. S.). Wages tumble, demand dries up, which drives down the stock market.
I haven't seen any economist who says that the forces driving Scenario 1 are offsetting the forces driving Scenario 2, but that is obviously what is happening. Moderating growth in Asia will cool off the slightly overheating U. S. economy.
However, international monetary problems are not subject to overnight fixes. They will still be hanging around at the end of the year. While I am not a stock market forecaster, i do like to make foolish predictions, so here you are:
Dow today 7401
Dow 12/31/97: 7800
Dow 11/12/98: 8200 |
