A- If I may add a couple random thoughts to my previous post..
You saw in today's market action that the big U.S. multinationals (Dow) did take a hit today...as you know, these companies have more to lose (earnings) by slower Latin economies in '99 (ie. Gillette getting 12% of sales and 13% of profits from Brazil)...
The Naz's companies are, for the most part, immune from slower Latin demand affecting their quarterlies....I think that the market reflected that (too) today..
So maybe the markets are fairly efficient afterall...
If you are worried about contagion, I think the economies of HKong, Mexico, South Korea, etc...are in a stronger position to cope with pressure on their currencies then in Oct. '97 or July '98...
I also agree with Larry Wachtel humorous assessment of current market psychology.."We saw this movie in August, and no one got killed"..Therefore, the buying...
Now, we also know, that the IMF and Rubin will do everything in their power to support Brazil...ie, they will get SOMETHING together (renegotiate the package, etc.)...This provides comfortable to the market....a safety net, if you will....Back in October, it wasnt clear that anyone could agree on anything...
And if this thing drags out slowly (as I anticipate)..with no more bombshells....I think it will get minimized on the U.S. markets... |
