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To: Ahda who wrote (38028)	7/29/1999 9:48:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116756

The jobless rate jumped to a larger-than-expected 4.9 percent in June from 4.6 percent in May. That's seen darkening the prospects for Japan's economic recovery. A recovery would lead to higher stock and asset prices, luring investors to buy Japanese currency with which to buy those assets. ''The yen was sold as Japanese stocks fell and bonds rose,'' said Tetsuhisa Hayashi, a foreign exchange manager at Bank of Tokyo-Mitsubishi Ltd. ''The unemployment rate will worsen. The dollar could rebound to 117 yen today.'' quote.bloomberg.com 117? How about down to 115.50 at this time, now that is really not good for the dollar...should make Market really nervous

To: Ahda who wrote (38028)	7/29/1999 10:03:00 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 116756

Darleen, I'm interested in Hutch's answer as well, but here are a few thoughts from my corner. The perception is that Japan is recovering. I think it is a false perception given the continued problems they face with NPLs (non-performing loans) in their banking sector. There are two ways for Japan to recover economically that I can think of. Export there way back to a semblance of health or increase domestic spending by their deposit holders. To export their way to health STRONGLY depends on maintain a favorable exchange rate. If the yen gains strength against the dollar then their exports will fall off as they become more expensive in the US markets. Furthermore, if the yen strengthens, then Chinese goods become even more competitive with Japanese exports to the US increasing the pressures on their exporting profits since the yuan is not being floated in the currency markets. Now we know that there are rumours of a Chinese devaluation and that will put that much more pressure on the BOJ to keep the yen weak. But the more pressing issue is for Japan to monetize its HUGE national and domestic debt. They can't use interest rate decreases to stimulate their economy, so they have little choice except to print yen and make those NPLs become devalued through deliberate inflation/devaluation of the yen. Japan will become the world's largest debtor nation, and it will be done at the expense of their retirees who have their money sitting in postal savings banks drawing anywhere up to 7% while the current borrowing rates are .25 to .50 percent. This is the political problem they face. Devaluing the yen effectively will devalue the savings of their retirees. However, they just don't have any other choice, just like the US didn't have a choice in 1933. When that occurs, the dollar will strengthen against the yen very strongly, hopefully permitting increased economic growth in the US as prices for imported goods decline even more. But the down side with be the serious balance of trade issues and likely calls for protectionism. It will be interesting to see how gold fairs when Japan finally bites the bullet and does what they have to do. Since "inflation" in the US will almost non-existent because of this Japanese monetization, the Fed will have to increase liquidity to prevent a collapse of prices. Thus, I think gold will continue to decline because the Fed is voluntarily striving to maintain the parity with the Yen and will seek to keep the dollar from growing too strong. Substantial japanese savings will likely come flooding to the US seeking a safe haven from a yen devaluation, unless such a devaluation is done quickly before the public catches wind of it. Hutch, would you like to step in here and tell me where my logic is screwed up (anyone else si welcome also)?? Regards, Ron

To: Ahda who wrote (38028)	8/1/1999 9:02:00 PM
From: Zardoz	Read Replies (2) \| Respond to of 116756

Darleen: What you and I assume to be important, in the eyes of the FED may seem trivial. I stated a long time ago {circa Aug 98) that Greenspan and friends had appear to have mitigated the boom bust cycles of economics. Then in Aug 98 they took the reverse stance, and decided to lower rates against a growing economy. Much to my posted disagreement. To further add fuel to the fire they pumped M2 at a very high rate. Both events will aid in the creation of inflation. But it appears that growth was also created. In my opinion: The easiest way to find a bear, you should first look in the caves. If you can catch one asleep, then you can easily take aim. Within the economy, caves abound. But caves must be dug into something, whether it is debt, monetary policy, and political policy. In Sept 86 the M2 MACD hit a relative high. That makes for many caves for bears to hide in, but doesn't make them come out. What wakes a bear up is when the FED comes by and startles them; by whacking them with a rate hike stick. But only bears that have been dozing are startled. Some have been wide-awake and will rear their heads and stand up. But won't move their positions outside the cave. So what is the difference? Bears are hungry, always. You feed a bear with lower yields, the more you feed him the more he eats, the stronger he gets, but won't come out of the cave to forage. As rates come down, the DOW bull climbs. But when times get lean, and you feed the bear less, he'll attempt to eat the DOW bull. {Short the markets} So how do you awake a bear? You raise rates while the bull is climbing, and the yields are falling. This shows that the market was missing something. Then the bull becomes the meal. But as of now, we have the yields rising in advance of the FED hitting with the stick. So the bears are all awake, and clambering around in the caves. But none have stuck its head out. Many hunters are outside, pointing there guns, and ready to fire. {Sell on mass} But the FED isn't sure yet. The FED gives the appearance of running around chasing statistics. Yet many of the spastics are the direct result of previous Fed actions. So to call the kettle black in advance of the Fed painting it is wrong. Many here suggest CPI is a measure of inflation when it ISN'T. But yes inflation may very well be on the up tick, but a deep look into the M2 suggested that the Fed has illuminated M2 exuberances. I've been of the opinion that inflation was always here, and that M2 hides inflation back in the caves. Lower the M2 rate, and the inflation becomes visible again. The bear is being weened {not weaned} slowly of the Bull. members.home.net This means that the Dow should trade within ranges between the Fed meetings until a substantial inflationary trend is created. If the fed continues to whack the bear in the cave, they'll come out to munch. Hutch