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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (2800)	6/27/2000 10:43:00 AM
From: Logain Ablar	Respond to of 30051

Well I completed another 3rd in the holy name this am. I did mention I would buy on the break of $19.5. It may be just a quick trade though. I still have my conspiracy theory but a short squeeze on any news could propell it to next resistance around $26-7. Remember buyers have a tendency to negotiate to the end of the quarter to try and squeeze the salesman as much as possible knowing they have quotas to meet. If we were to hear news it should be in the next few days. Tim

To: Zeev Hed who wrote (2800)	6/27/2000 10:43:00 AM
From: Sam	Read Replies (2) \| Respond to of 30051

I don't get Sandisk's move today. Or for the past week or two. I thought that Palm's endorsement of the Secure Digital Card would give Sandisk a boost, but instead they are now down after a 15 minute or so flurry. Palm's endorsement is yet another blow to competing standards (read here, "Sony's memory stick"). I thought Seagate was close to done selling, but perhaps they are trying to get rid of as much stock as possible before the end of quarter/their fiscal year. Guess we'll find out in a couple of weeks (think they report around the 11th or 12th). I would guess that Seagate may well want to just clear the decks for their buyout/giveaway to Veritas, which couldn't care less about Sandisk stock, they just want the cash to pay whatever taxes will be due on their Golden Stockswap of 128 million shares for 109 million + a billion dollars or so in cash and equities. But that is another story. OT (if that is possible on this thread) below Here is a longish piece from James Smith of PEI. Some black humor about Japan. Smith & PEI have had an axe to grind against Japan for quite awhile, so take it with a grain of salt. But he might also be right, you can distort markets for only so long before they clinch and crumble. ---------------------------------------------------- The only thing "divine" about Japan is the "wrath" that is coming down on it. Mori-san may have bungled in calling Japan a Divine Nation, but perhaps there is such a thing as "Divine Wrath"which comes from financial mkts that have lost patience. JGBs & JPY reacted to a narrow win by the LDP in less than charitable manner. The election marks a Major Turn for both JGBs & JPY. The market will no longer tolerate the "fiscal pork" that the LDP has so often resorted to. Worries about a credit downgrade are well- founded. No matter what the LDP does, the JGB ponzi is coming undone. Best course is to allow the Yen to devalue, paying back the humongous JGB debt in funny money. Devaluation will help exporters and perhaps also spark a domestic revival...because consumers who don't spend their savings....lose it to inflation. Many analysts have forecasted an ever-stronger Yen as the BOJ is now threatening to abandon the Zero Rate Policy. We agree that abandoning the Zero Rate Policy should act to strengthen the Yen, but this will not be the only influence on the Yen. Japan is sitting on a ton of debt which they have no chance of ever paying back....unless they devalue and pay back with funny money. . Debt is now 130% of GDP. Note that an opposition Democrat nearly lost his seat in the election because he was a major proponent of "raising taxes" to solve Japan's problems. Rest assured other Japanese politicians saw this and took notes. If "raising taxes" is risky to your political career, perhaps a hidden tax thru massive Japanese yen devaluation would be easier to foist onto a rather unforgiving electorate. But even if they politicians can fool the public, they can't so easily fool the financial markets. Has everyone forgotten how the markets disciplined Sweden for relying too heavily on debt-financing to continue their welfare state utopia? Has everyone forgotten what happened to Canada and their similarly socialist agenda? The markets can be ever so cruel to air-heads. Some may argue that because Japan does not rely on external financing to the same degree as Canada or Sweden, that they can get away with it. And they'd be right...for a while. In fact, it would be very hard indeed for any govt that borrows from abroad to get away with having a debt ratio of 130% of GDP. But even if Japan relies mostly on domestic financing, this is still a bubble. As most sensible people realize, every bubble has to pop. Just as the Nasdaq bubble has popped and may even now be setting up another sharp leg down, the same may be true of Japanese Government Bonds. Certainly a Credit Downgrade from Moody's or the S&P would pack a punch. If the credit rating agencies don't downgrade Japan, they are simply not doing their job. They will lose credibility in the financial markets. How can they allow one country to carry such a huge debt load and yet still give it a AAA rating without any hint of discipline. These agencies' ratings may lose any meaning to the markets is they delay judgment for too much longer. It may very well be that the BOJ will be forced to raise Short Rates just to control the speed of a coming Yen Slide. Of course, it is equally possible that raising short-rates will add to the problem. From an investor's point of view, "Why take a lousy 1.7% on a 10 year bond when you can get an ever rising rate of return, short term with less risk? If the fear of a Credit Downgrade causes JGBs to begin to slide, this will impact the Nikkei negatively. Higher longterm rates will slow the economy and send the Nikkei into a FreeFall. A FreeFall in the Nikkei will force a devaluation of the Yen because the only way Japan can combat declining stock prices is to devalue the Yen so that Japanese exporters can sell more goods overseas. This too may become harder if the US and Europe slow down. Japan will have to devalue the yen all the faster just to maintain current exports. US consumers are spending a greater proportion of their disposable income at the gas pump. This means they have less left over for that Sony Wega TV, that Toyota Camry, or that Toshiba stereo. If the trade deficit between the US and Japan hit a record of over $7 billion for the month of April and yet the Japanese economy is still weak, what exactly do you suppose will happen once the US slows down? "Divine Wrath" is what I'd call it. You have the makings of a vicious cycle. In a previous article I mentioned that by holding short term rates at Zero, Japan has chosen to bankrupt the Life Insurance companies in order to save the banks. It now appears that the Life Insurance companies are on course to be devastated. In a recent FT article ("Japanese Life Groups Suffer Falls in Income", June 5th), we see that indeed the plain facts are that these institutions have managed to lose money on nearly everything they invest in. They are suffering the effects of what the FT calls a "negative spread"--the gap between the return on investment assets and the pay-outs guaranteed to policyholders. I've talked about this problem before, but it is important to realize that the problem is only getting worse. These same Life companies that have lost money on their domestic investments due to the "negative spread" have also lost money on foreign investments due to a stronger yen. They now believe the correct course of action is to refrain from investing overseas. Most of them are increasing their investments in JGBs and other domestic bonds. Why? This is what we call the "deer in the headlights" phenomenon. They have lost money so often due to exchange rate changes, that they now have no appetite for risk. But by piling into JGBs at the top of the market as the Moody's and S&P get ready to downgrade Japanese debt, are they not adding to their problems? Have the Life Companies in Japan become a contrarian indicator? Now let's see how this all adds up on a more personal level. You are a "Japanese SalaryMan" making a lousy wage but at least you have a guaranteed position at the company for life. Your wife is nervous that you are going to get fired because she rightly figures that if you are as useless at the company as you are around the house, you'll be the first to get the axe. So what does she do? She puts even more of your savings into the Post Office even though the current return is less than 1%. In fact, by socking away so much money, your wife as well as every other housewife in Japan, is causing the Japanese economy to contract. So when the Nikkei tanks and the economy spins downward because the idiots at the BOJ decide "now" is the time to raise rates (slowing the economy), you do in fact lose your job. The BOJ quickly realize that it was about as wise to raise rates at this juncture as it was for the JPN govt to raise the consumption tax in 1997, but the damage is already done. The Nikkei has gone into a Mexican Swan Dive. The BOJ quickly announce that no more rate hikes are planned, but the market doesn't trust them, and continues to punish the Nikkei. The BOJ then begin to add monetary stimulus to the system...quite aggressively to make up for the stupidity of their recent rate hike.....and this only causes the Yen to slide. Your wife goes to the Post Office to get her savings, but she can't because about 100 million other Japanese had the same idea at the same time. No one wants to keep their money in Yen because everyone knows it will become monopoly money. Your wife rants at you non-stop and you are tired of dressing in your suit and leaving for the office job that no longer exists to sit on a park bench. You think about killing yourself, but you don't have a gun and you don't like pain. On the way home you have a heart attack. Your wife is sorry that you are dead, but immediately calls the Life Insurance company to collect on the insurance plan you had taken out. The insurance company folded right before your wife called. Once again your wife is pissed off at you. If you had only died a few days earlier she'd have gotten the life insurance money. But it turns out that plenty of other wives' husbands died before you did, which caused the Life Company to fold. Call it "negative payout" if it makes you feels better. She cannot collect on the insurance until the govt sorts outs the mess. The govt's brilliant idea is to saddle any good Life Insurance companies with the obligations of the bankrupt ones.... kinda like what they did with the banking crisis. Mega-mergers to create a bigger mess. Because of a near total loss of confidence in the government, new elections are called for. But before the election takes place an earthquake hits Tokyo. With the chaos comes opportunity.... for some. Ishihara-san (current Mayor of Tokyo) manages to seize control of the govt in what effectively becomes Marshall Law. China and the rest of Asia are none too pleased to see a rabid nationalist like Ishihara-san in charge of Japan. Menacing words are exchanged and a new round military defense spending in Asia turns into a global arms race. Your wife feels bad about you dying, but she truly feels you're the lucky one to have died before things got really nasty. And if you are not a Japanese Salaryman, do you honestly believe you will go unaffected by these events??? Have a nice day.

To: Zeev Hed who wrote (2800)	6/27/2000 12:06:00 PM
From: Mark Johnson	Read Replies (2) \| Respond to of 30051

Thanks Zakrosian for posting my quote to Zeev.... Zeev said in reply: <<<If management cannot convey its strategic plan to investors without investors badgering them constantly, that management is in trouble.>>> Bull....., a monthly phone call to the company checking up on progress from statements of the previous conference call is prudent due diligence....not badgering......responding to you...pointing out the flaws in your turnips..you may consider badgering... Zeev.....if you develop a rapport with someone you can get a feel whether someone is hedging on the real progress of a company....if people are more talkative and jovial usually things are going well.....if people are more guarded and quiet maybe things aren't going so well..... I detect a lot of nervousness and anxiety on this thread...it's probably not a bad idea to interject a little humanity into your turnip philosophy... Regards, MJ

To: Zeev Hed who wrote (2800)	6/27/2000 12:23:00 PM
From: Pink Minion	Read Replies (2) \| Respond to of 30051

Please tell us when V#@C will be a great short. I am dying to short this thing. Any stock that attracts idiots like M Johnson have always been a great short.