I think that Asia matters a lot. Once it starts and make front page news (and it will as new lows are hit and when H-K and Nikkei breach critical number respectively of 10,000 and 15,000), people are going to revisit the consequences, low inflation but a ballooning trade imbalance, which will eventually have to get the dollar down. One of the reason for our low inflation was the strength of the dollar. The decline of the rim economies will prevent Japan from getting their house in order in a timely fashion, and when you take these all together it takes out a good percent or two from world wide economical growth. That is not good for anyone nor our multinationals, and the deflationary pressures will eventually hit our high techs where it hurts, the bottom line. So, yes, I think that SEA could act as a trigger for a sharp reaction. Not enough to have a real bear market but enough for about 900 Dow points from the highs. We may start a bear market after a summer rally, more in the traditional August-October period. We rarely get two two years in a row with Octobers massacres , but this time could be different.
Zeev |
