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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: MythMan who wrote (403)12/15/1997 4:46:00 PM
From: Cynic 2005  Read Replies (3) of 86076
 
Pete,
<<what makes you think things will get ugly?>>

No more e-mail exclusives. -g- I am speculating that the market is on the verge of a major liquidity crisis. Hard to see any positives for this market, except for that in itself is the only positive. The churn since August must have taken a lot of unseasoned short-term traders out. Not many leveraged bets. Not much speculative money chasing already bloated stocks. 98 S&P PE is still above 22. Some of the estimates have come down but not the stocks.

After selling naz stocks and parking money in MM funds and some blue-chips, they will get back to bluechips for selling. That's when it gets interesting.

On top of that, now we have a full-blown international financial crisis. If Japan's new package calls for tax-cuts, they will have to repartiate some of the T. bond money - devastating for US stocks. Anything short of tax cuts doesn't seem to impress Japanese markets. If Japanese markets are not impressed by the Govt package, it begets selling in Japan and here.

For tomorrow - Big Al has a dilemma - can't rise rates but he may have to - for two reasons: 1) they have been monitizing debt (returning from overseas?) 2) jobs report; both of which are inflationar. I am not sure if they are concerned about deflationary cycle.

At the same time, even if the Feds see economy slowing drastically, they can't lower the rates - Dollar gets weak. Stocks continue to soar creating a major headache for the Feds. So, the best alternative is to sit tight.

The world scenario is too much complicated. Thanks to Greeny's efforts to flood the world with $. -g-

-Mohan
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