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Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Graeme Smith who wrote (1259)	6/9/1999 3:42:00 PM
From: Bill Wexler	Respond to of 10293

You should read this article by James Bianco in the latest barron's: interactive.wsj.com excerpt: <<<But the wealth effect indeed does make it different this time. Even without a significant jump in inflation, expanding nominal GDP will push interest rates above the rate of GDP growth. And, thanks to the wealth effect, nominal gross domestic product doesn't look poised to slow any time soon. For interest rates to fall, nominal GDP expansion must decelerate. For this to happen, real growth has to slow. For real growth to slow, the stock market must decline. What will cause stocks to go down? Higher interest rates -- real interest rates, that is. The levels we are watching are 5.78% on the five-year note and 6.10% on the 30-year benchmark bond -- only a stone's throw away from current quotes. These would be the highest yields since 1997, which given record stock-market valuations should be a cause for concern. >>>

To: Graeme Smith who wrote (1259)	6/11/1999 11:40:00 AM
From: Marconi	Read Replies (1) \| Respond to of 10293

Hello Mr. Smith: I think the market it a little too bullish on balance with the 30 year bonds at 6%. The dollar has weakened substantially. A rate hike would strengthen it. I doubt if Greenspan wants to see the double whammy of a weakening dollar causing foreign money to flow out of our stock stock market and increasing the cost of our net imports. I think the carry on the rate hike is the market has achieved part of it and the Fed will be cautious not to let the dollar slide too far from where it is at. The yen is the nearest touchpoint IMO. AMG Data showed a low flow the last week of 300-400M into equity funds and a little more than that into bond funds. From their trends it looks like money market funds are where the most money went recently, with an uptrend. AMG does not break out domestic versus foreign money flows--at least not in the freebie section. The AMG link is: amgdata.com I am not sure if I have the big picture in grasp, but a falling dollar seems the most lose-lose scenario, and the Fed has some say on the dollar with interest rate tweaks. Where is Joey-Two-Cents? He had the 6% rate pegged nicely last year as occurring sometime this year. I would add that if the dollar is supported by rates, I think the Euro is going to trade close to parity with the dollar yet this year. Best regards, m