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To: Fun-da-Mental#1 who wrote (58817)	1/20/2000 5:09:00 PM
From: ItsAllCyclical	Read Replies (2) \| Respond to of 95453

Fun-da-mental, Re: Financial Sector, I pretty much agree with your take, but I don't like to short anything anymore. If I'm going to bet against something I prefer puts. Earnings estimates (as we've seen from oils) are often revised on a lagging basis. As such I would trust any estimates in the financial services area. There will be more downward revisions. And downward revisions no matter how small often cause "value" stocks to fall still further. I have the stocks on my watch list though. What stocks are considered the sector leaders in the financials? Watching SLB would have made you quite a bit of money for predicting the OSX turnaround. What's the equivalent in financials?

To: Fun-da-Mental#1 who wrote (58817)	1/21/2000 1:49:00 AM
From: SliderOnTheBlack	Respond to of 95453

o/t rising rate environment & financials... A rising rate environment is not nearly as detremental to the profitability of the S&L sector - the subsector niche, within "Financials" that WM falls within. Here is an interesting article today; alluding to some of the misconceptions that abound concerning interest rate fluctuations and their impact on the financial sector. fnews.yahoo.com I mentioned earlier; the subprime niche is very dangerous here; as is the credit card market, but the traditional S&L/Banking sector is very stable and healthy. For the mortgage & traditional banking entities; what is totally misunderstood; is that the rapid declining rate environment leading up to the 1998 market crash was much, much more negative than this raising rate environment will be. These S&L's with their heavy mortgage portfolio's suffered by rapid refinancing during the declining rate enviornment leading up to the 1998 crash. This early prepayment wreaked havoc on ASB's & the Mortgage Backed Securities market. Spreads went crazy and this was a very unique environment. The environment of 8 - 8 1/2% mortgage rates is very normal on a traditional basis and will still allow for robust growth in the banking and housing markets. There is a blessing in disguise to a moderate rate hike environment slowing the very hot housing & mortgage sectors - it makes the growth much more manageable and actually helps sustain it & eliminates the "boom to bust" type of cycles. The multiple area's of income & fee generation within the very broad "financial" sector is "not your fathers oldsmobile" any longer. The income drivers in the financial sector have changed dramatically over the recent years. Banks and S&L's have been among the greatest beneficiaries of the technology boom and the efficiencies realized. Look at a 10-20 year chart of Citicorp, or Exxon - these two sectors have something in common. Over the long haul banking & oil are the pillars to any growing economies and the leaders within these niche's have made lots of money for lots of people over the last 20 years and will continue to do so over the next 20... What is most exciting about the S&L sector - just "one" niche/subsector within the very broad "Financial" sector; is the very strong earnings and underlying fundamentals. That these stocks are priced lower today than what they were in the Global Financial Markets "COLLAPSE" of 1998 is a clear and undisputable valuation "anomaly" - period. In these "anomaly" situations; if one waits untill the technicals clearly indicate - "all is well", or if one waits for the Fed Rate Hikes to fully play out; one will miss the boat as these stocks moved 30%+ in mere days this past October for example.There is an absolute "coiled spring" price environment here and one must be willing to catch a falling knife; as the bottom here is very, very likely going to be a "V" bottom when it does occur imho. Also,the Bond Market here clearly reflects and has priced in - approx .50 basis points of Fed Rate Hikes. One should also not ignore the tremendous political pressure upon Greenspan & no one should ignore his "early" re-appointment which was not a "given" by any stretch. Greenspan has his finger on the "button" and he knows it. He has telegraphed what he is "probably" going to do - that being 1,2 hikes for .50 basis points. The market has accepted this and has fully priced it "in" and adjusted for it. While sustained Crude prices over $30 would surely upset the Global Markets and would trigger my probable exit from the S&L plays; given that the Fed may have to hike rates further; I really do not see a 9% Mortgage Rate & 7 1/2% Bond Environment being something Greenspan desires. He must delicately balance pulling the brake handle - slowing inflationary "pressures" - and triggering either a rate hike induced recession in housing, mortages and potentially triggering a market collapse. The more I look at Greenspan and all the issue's - the more I feel comfortable that he virtually is caught between a rock & a hard place and he has to go lightly on the rate hikes in this environment - he has no choice. Alcoa just announced increased production intentions - triggering a selloff on worries of signals that aluminum production is ramping up - which will negatively impact & weaken prices. OPEC is not stupid; I think we get our spike over $30 - and this must happen; as it will be the ONLY environment wherby OPEC can increase production and it will be on a "negotiated" basis whereby they appease the Global outcry of "uncle." Anything other than the Global Economies begging OPEC to increase production to ease prices; would be met with a violent "whipsaw" - over correction to crude prices. I think that perhaps we see Crude solid spike through $30 off of strong seasonal drawdowns during the peak USA driving season between Memorial & Labor Day. We will have $26 + crude sustained thru that time and hopefully OPEC's acquiessence to the spike through $30 will allow them to institute their "price band" philosphy and allow crude to gently come down to a pre-determined "buffer zone" acceptable to OPEC, Big Oil, The Future's Traders & Global Economies. We should see crude ease to a sustained $22ish all through 2001 - which should still allow solid global growth and may actually become the real "Goldilocks Economic" environment at last. What excites me, is that there is a highly manageable scenario that can result in a "win-win" result for both OPEC, the Oilpatch & Global Economies and thus, the Financial stocks. 2H 2000 into 2001 may become the hottest 18 mos. of global economic growth in history. $22 crude - very profitable and very manageable, 8 % ish Mortgage Rate Environment, 6 1/2 % Bonds,and the DOW can run thru 14,000. I allmost think the "fearlessness" of the NASDQ reflects the sentiment of the "manageability" of the events unfolding... We may just be entering the greatest 18 month run in Global Economic History... Oil wins, Banks win, Greenspan wins, the Dow wins, NASDQ wins - Emerging Markets,Europe ,Asia and the USA all win... the ultimate "win-win" environment is very possible here. We shall see... in the meantime, I have some "knives" to catch.