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Non-Tech : WELLS FARGO

WFC 86.33

+1.1%

3:59 PM EST

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To: Barron Von Hymen who wrote (1053)	1/8/1998 6:44:00 PM
From: Jaime H. Ayalde	Read Replies (1) of 1281

Sounds like the article says not to worry! Everthing is fine and the Banks will adequately hedge their risk. No Wall of worry to climb. Follow the price and do not listen to the pundits. The PRICE will not lie. Interest Income has grown because the Pie is 10X bigger today than 15years ago. How much debt has been created in the REstate market alone. 1-1.5 BOOK is as much as anyone should pay for these instruments. And that is all they are. In 91 the Federal Reserve orchestrated their financial rescue by exploding their margins. They jumped on the opportunity and leveraged themselves as BIG as possible to take advantage of all the FREE $$$ given to them by the FED RES. It is not the bankers that created the opportunity but the FedReserve. And the Fed Res. has much bigger problems on their hands now. The dissapearance of BILLIONS of credit created over the las 5 years. This is It, the big WAVE is upon us. And the sooner we realize the better of we will be. I mentioned all the present things that would occur well back before Aug of 97. Marking 8.97 as the Crest of the Wave. (10 year anniverssary to the 87 High) I mentioned this compression and defaltionary cylce as being in play but finally we are hearing it echo through the press. If historically long term yields carry a 2 -2.5 premium to inflation and we are entering a negative year to year period. What will yields end up going to? Demand for cash (Dollars) is so great that any excess liquidity created by the Fed is being absorbed by the dissapearing assets in the Far East and Investors looking for a safe haven. It is the Russians, Latins, and Asians not willing to hold onto their own currency since it is backed by the word of their own corrupt (Irresponsible)governments. The only way to easy the pain is to create more $$$. The Fed can do this by lowering the Fed Funds which will in turn allow for Long term yield to fall even lower. This classic defaltionary game got played out in Japan and look were yields are. 0.75% -1.25% and BOJ still is unable to turn the tide. This is going to get Ugly but it will take time. This is the beginning- not the end of this massive wave, and no one is bigger than it, not all the central Bank put together. Get SHORT the financials!!!!!! Go long SMU.

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