Zeev,
>>but if you indeed believe that we ar in a bear market, than the late October low will be
breached and the break of 7600 would indicate continuation is in the cards.
Speaking of bear markets, Friday night two analysts on Moneyline with Lou Dobbs, presented a pretty gloomy scenario, but then Dobbs was able to squeeze a "No bear market" prediction out of them at the end. Here is what Bruce Steinberg, of Merrill Lynch said in his talk with Dobbs:
LD: Where are we going to see the full brunt of the Asian economic crisis in the US?
BS: I think tht the effect of Asia on our economy is going to begin to show up fairly soon, like in the current quarter. Probably in the next six to nine months the direct impact will be felt because our trade balance is going to deteriorate quite severely. There are some indirect impacts which are beginning to be seen, that is on corporate earnings and worries about earnings, and that can feed back to effect the US economy by reducing US capital spending.
LD: Deflation is the watchword. You were one of the first to start talking about it. How serious a threat is it, how significant?
BS: Well we're in a deflationary world here. Prices are going down. It's very interesting if you look at Alan Greenspan's thought process over the last six months. It's very interesting, six months ago the word deflation never passed his lips. Three months ago inflation was a greater risk than deflation, and now this past week he spends all of his time discussing the risk of deflation. I think the Fed has time to act, but I think the Fed will have to act this year, that is the Fed wil have to ease US monetary policy. I think there's probably multiple easings that the Fed is going to end up doing in 1998. At the end of the day, that will be enough to cushion the impact of Asia on the US economy. Think of it this way: The Asian crisis is the equivalent of two or three Fed tightenings, and I think the Fed is going to have to ease two or three times to relax the negative implulse of that on our economy.
LD: But no bear market?
BS: No bear market.
LD: Thank you gentlemen for offering us hope.
Above FWIW.
Jack |
