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To: SOROS who wrote (8091)	10/13/2002 5:12:07 PM
From: pbull	Respond to of 89467

CNBS just typically runs about 6 months behind the market. And you're right, their bubble-headed mentality has not been fully broken. Still, when the bond market starts to unwind (and I think that's the basis of my outlook), people will begin to realize that bond prices can go down, too. They still believe Treasuries are "safe," but they'll discover otherwise shortly. Of that, I am confident. PB

To: SOROS who wrote (8091)	10/13/2002 5:39:23 PM
From: stockman_scott	Respond to of 89467

More Clouds May Beset Resilient U.S. Economy The Wall Street Journal ________________________________________________________ It is hard to be optimistic about the prospects for the economy. The list of things that could go wrong grows daily. Unwelcome developments once deemed "impossible" are now seen as merely "unlikely." Right now, the U.S. economy is doing surprisingly well when you consider what has been happening: President Bush seems determined to go to war with Iraq, and oil prices are rising in anticipation. The stock market is valued at half of what it was in March 2000, and our 401(k)s are now 201(k)s, as one joke making the rounds puts it. Fear of another terrorist attack persists, and the devastating accuracy of the gunman stalking Washington, D.C., suburbs intensifies our sense of vulnerability. Optimists note correctly that the economy is still expanding, albeit slowly. Americans are still shopping. Unemployment is still falling. Productivity, the amount we produce for each hour of work, is still growing impressively. But the number of big clouds on the economic horizon is unnerving. Besides the threat of war or a continuing slide in stock prices, here are three others to watch: Deflation. In the 1990s, deflation was Japan's problem. The rest of the world enjoyed an easing of inflation produced by savvy central bankers and an information-technology revolution that made a lot of things cheaper. Falling prices at a time of persistently strong economic growth is great. But falling prices at a time of weakening growth can be bad. The risk is a self-reinforcing cycle: When revenues fall, producers cut costs, delay investments and squeeze wages to try to preserve profits. That causes suppliers and workers to do the same. And that leads producers to make further cuts. The result is depressed demand and overcapacity. CAPITAL EXCHANGE Reader comments1 -- and David Wessel's answers -- about the Capital column. Published Sunday mornings. Submit comments to Mr. Wessel at capital@wsj.com2 This bad deflation is particularly bad for borrowers. Think of the homeowner who sees his house fall in value but still has to pay off a mortgage based on what it used to be worth. And U.S. consumers are pretty deeply in hock. "Never before have debt burdens been as high in quite as unfriendly a world for debt management," UBS Warburg economists caution. A big default. The markets are treating Ford Motor Co., whose $61 billion in bonds outstanding make it the largest corporate issuer, like a junk-bond credit. Fannie Mae, the mortgage giant, is squeezed by a refinancing tsunami. J.P. Morgan Chase & Co., the nation's biggest corporate lender, took a $1.4 billion hit, largely because of bad loans to telecommunications and cable-television companies. Brazil, with $259 billion in short-term debt that needs to be rolled over constantly, is about to elect a leftist who frightens global lenders. Each of these borrowers is making reassuring comments. Each is getting scrutiny that makes a huge surprise unlikely. That's good. The Asian financial crisis of 1998 turned global only after Russia's default stunned those who figured its nuclear arsenal gave it unlimited borrowing rights at the International Monetary Fund. Maybe Ford, Fannie and Brazil will get by. But what else is lurking out there? Is there a big borrower who will surprise us? Have we heard all the bad news from insurance companies, coping with the triple whammy of downturns in their core businesses, stock portfolios and the credit-derivative deals that shifted corporate-default risks from banks to insurers? Is there a big player in financial markets, another Long-Term Capital Management, that isn't quite as well hedged as it thinks it is? More corporate scandals. Even a cynical newspaper reporter is surprised by the magnitude of the corporate thievery now being exposed. We knew that chief executives, even failures, got exorbitant salaries. The "infectious greed," as Alan Greenspan calls it, at Enron Corp. and Tyco International Ltd. is still stunning. We knew, from reporting in this newspaper in 1997, that Wall Street routinely rewarded executives of favored corporate clients with shares in hot initial public offerings that could be sold for quick profit. We didn't know how many executives and how much money. Even if no laws were violated, it is hard to distinguish this from Wall Street bribing executives to win their companies' business. Maybe all the dirt in corporate boardrooms has been exposed now. If not, we run two big risks. One is that business simply seizes up, as executives and directors are distracted and deposed, shareholders are disgusted and flee the stock market, and business-investment decisions are put off. The other is that disgust and distrust of business interferes with what may be needed to resuscitate the economy. If a tax break for business or a dose of deregulation made economic sense, are politicians bold enough to act? Economists at Goldman Sachs Group made a bold prediction the other day that nicely captures the current anxiety: Either the U.S. is going to have "a sluggish recovery" but one "sufficient to keep the unemployment rate from rising sharply" or it's going to have "a renewed recession with risks of outright deflation." Either it's going to be partly cloudy or we're going to have a monsoon. Keep your boots handy. Write to David Wessel at capital@wsj.com3

To: SOROS who wrote (8091)	10/13/2002 10:10:39 PM
From: pbull	Read Replies (1) \| Respond to of 89467

I think _ and this is just an opinion, so feel free to blast away if you disagree _ that biotech offers maybe the best opportunity in this market to make a significant amount of money over the next 10 years. I've stayed away, owing to valuation, but I think we've reached the point where it's time to hone the research skills. I have a few favorites, but I'll leave it at that for now. I just feel as though there are some lottery tickets there waiting to happen for patient investors. PB

To: SOROS who wrote (8091)	10/14/2002 11:28:25 AM
From: SGJ	Read Replies (1) \| Respond to of 89467

<<<There were buyers in 1990 for the first time and buyers in April, 2000 for the first time. It's basic, human nature. That's what got us to Nasdaq 5000+, and that's what will get us to levels which many previously thought of as "the end of the world>>> Out of fear some on SI have accused yours and similar outlooks with an end of the world scenario. I agree with you that its not. Life will go on. There will be more unemployment, bankruptcy, bank failures, etc., but the world will not end. I lived through a regional example of this in South Texas in the mid 80's. It brings with it a continual frustration that gnaws at your fabric. I had to leave, not because I had lost my job, but because the ubiquitous frustration and gloom in the community was not in tune with my youthful, optimistic nature at that time. Its the doubt in the "world will end" attitude that keeps LTBH's in the market. The thinking is the markets will never get "that low" because that will be the end of the world. Well the 30's saw a great depression, but the world did not end then, and neither will it over the next 2 years. Like you said, only for those with everything vested long in stocks and mortgaged to the hilt in RE.