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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (22904)	8/12/1999 7:57:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

Joan, Allow me to point out that foreign money flows into t-bonds have recently turned negative for the first time in over 20 years. Surely that amounts to a slowdown in liquidity. What's more, growth in money supply has become somewhat erratic in recent weeks, with four of the past six weeks actually showing a contraction in money supply. Let us not forget that a shift in international capital flows back into Europe and Asia (mainly Japan) will take away one of the legs this bull market is standing on. Due to the vast trade imbalance it is reasonable to assume that the Dollar will come under more pressure as time goes on, and that may lead to a reversal of the record high inflows into U.S. equities from European investors as well as additional inflationary pressures, all of which will force rates higher. So liquidity is slowly but surely becoming a problem... regards, hb

To: Joan Osland Graffius who wrote (22904)	8/12/1999 10:33:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

Joan, the corporate debt market is soaking up all the liquidity. Mature companies are now issuing public debt in amounts not heard of before. Each week something around $10 billion or more. The new IPO's are peanuts compared with the debt issued. Now think what would you like to own the stock of GE that may return 10% to 15% a year or a hedged pair of treasury and GE debt issued at 100 to 150 bp spread and the pair trade returning 20% a year. Not to mention convertibles It is your choice <G> Haim

To: Joan Osland Graffius who wrote (22904)	8/13/1999 3:58:00 PM
From: bobby beara	Read Replies (2) \| Respond to of 99985

Joan, i believe that we saw a peak (short or long term is a question) in bullishness in $USD and equities as indicated by p/c ratios and sentiment surveys, basically every body was long and thinking the markets were invincible, bears throwing in the towel all over the place, this causes a short term liquidity vacuum, now that everybody became bearish we have funds to drive the market back up. If the market was fully liquid it would sluff off greenspan and would have given the great earnings reports from microsoft and others a nice boost, instead of an almost 20% sell-off in soft. bb