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To: long-gone who wrote (36194)	6/30/1999 2:27:00 PM
From: Ron Everest	Read Replies (1) \| Respond to of 116753

Wall Street shares are in dangerous territory at any yield above 5.75 percent, he said. The yield on the 30-year Treasury is currently 6.10 percent. ''At 5.75 percent I believe the equity market goes from green to amber. We are not yet in crash territory but if the bond yield goes through 6.25 get your crash helmets on.'' Wednesday June 30, 2:00 pm Eastern Time Wall St seen headed for correction within 3months By James Saft JUAN-LES-PINS, France, July 30 (Reuters) - U.S. shares are headed for a correction within three months that will eventually take the Dow Jones industrial average down more than 40 percent to 6,500 points, fund manager Regent Pacific said on Wednesday . A U.S. Federal Reserve hike in short term interest rates, widely expected later on Wednesday, will set the stage for a decrease in liquidity that could end the long-running bull market in U.S. shares, Peter Everington, chief investment strategist a t $1 billion fund manager Regent Pacific told Reuters at a conference. ''Equilibrium for the Dow is about 6,500 and I expect the market to go back to that level in the not-too-distant future,'' he said. The Dow Jones industrial average currently stands just below 10,800 points. ''I think the correction will happen within the next three months,'' he said. The key indicator of stock market danger is the yield on U.S. long-term bonds, according to Everington. Wall Street shares are in dangerous territory at any yield above 5.75 percent, he said. The yield on the 30-year Treasury is currently 6.10 percent. ''At 5.75 percent I believe the equity market goes from green to amber. We are not yet in crash territory but if the bond yield goes through 6.25 get your crash helmets on.'' Rising interest rates impair the profits of some businesses and make all company earnings less attractive to investors in comparison to bonds. Everington said the Dow's trip back to 6,500 will not happen all at once. ''I think the probability is a first cut of the knife of about a 3,000 point fall followed by a period of recovery and then a much longer drawn out fall of perhaps two years.'' Everington traces the inflation in U.S. shares to the decision by the Japanese in 1995 to begin printing money as a means of bailing out their ailing banking system. "This money found its way into the U.S. dollar system via the purchase of $400 billion of Treasury bonds by Japanese institutions. ''This created a bubble in the entire U.S. dollar system, including emerging markets.'' Because of this a rising yen is a direct threat to U.S. shares, as it may wipe out the profits of Japanese holders of Treasuries, causing them to sell. ''Watch the yen but more importantly watch the bond market.'' ''The U.S. is currently in severe crisis, that crisis is a bubble and the coming crash will be nothing more than an elimination of that excess.'' biz.yahoo.com