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Politics : Dutch Central Bank Sale Announcement Imminent?
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To: Bill Murphy who wrote (554)8/9/1998 9:06:00 AM
From: Crimson Ghost  Read Replies (2) of 81083
 
Bill: Looks like we may soon witness a sea change in US asian policy in favor of reflation. Let me quote from an editorial in the latest Business Week magazine -- a mouthpiece of Fortune 500.

"Austerity Isn't Working in Asia"

... A major effort to refinance and reflate the Pacific Rim is needed now.... The solution to this economic crisis is liquidity... The IMF and the US Treasury must shift course and work to lower interest rates and pump more money into economic growth."

Those betting on a continuing deflationary spiral in Asia will have their heads handed to them if they do not reverse positions soon.

My take on the situation is that the US financial markets will remain under pressure until we have washout in the big cap stocks. Quite soon methinks. Gold, oil, cyclicals, and Asian stocks are already washed out and probably will not go down much further if the Dow drops to 7500 or so as I expect.

Once the Dow has corrected 20-25%, expect the Fed to lower short-rates significantly. The dollar will weaken and all the stock market groups that have suffered from Asian deflationary pressures -- gold, oil, small caps, cyclicals, the Nikkei, etc. -- will come roaring back while the big cap darlings bounce just modestly. A huge buying opportunity in all these groups is very close.
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