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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who wrote (108)	5/14/1998 9:29:00 AM
From: Chip McVickar	Read Replies (3) of 3536

Hello Henry There is an interesting article in the WSJ by Alan Reynolds "Let's Burst The Bubble Theory" In it he takes account of the recent news articles and attention placed on describing "America's Bubble Economy" from The Economist-Financial Times-Daily Yomiuri and others. He takes a look at three areas of concern: 1] rising prices of financial assets 2] too much money chasing too few assets 3] historical comparisons too Japan in 1987-89 and in the U.S. in 1928-29 These arguments at defining an "American asset bubble" seems at the heart of understanding the strentgh of todays stock markets and understanding the forces that will continue to support these prices and growth. Reynolds counters the notion that we are experiencing a 'bubble' and would expect the prosperity to continue unless the Fed takes this "bubble bunk" too seriously and actually acts. It is a very clear from this article that many different economic conditions (including world wide conditions) have come together to create our 12 year expansion. These conditions and forces are not weakening...that in deed this economic expansion remains stronge. I cannot find any abatises that might stop these market conditions. Only slow them down modestly.... - Japan and SE Asia....might be one factor..? - The euro would not reduce growth....only effect the dollar and perhaps the bond markets as reserve positions of euro's are adjusted. But I cannot imagine the Central Banks have not figured this out and will do the adjusting cautiously. Unless something 'very unexpected' comes along....I think todays market conditions will continue for a number of years....maybe another decade. What are your thoughts..? Do any of those 3 areas appear as potential abatises.... Anything being missed..? Chip

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