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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Bonnie Bear who wrote (8009)	11/15/1997 12:02:00 PM
From: Zeev Hed	Respond to of 18056

Bonnie, one of the reasons that my longer term scenario calls for a lousy (I meant excellent for the bear) February is that I expect an artificial bump in interest rates. I expect this bump to occur as the Nikkei plunges through 14,000 early next year (next week ?). This will put pressures on the banks to further liquidate stock and to counter act the plunjing Nikkei the BOJ is going to flood the system with yens by selling treasuries. The deflationary impact in Asia (which currently tends to lower our inflation and our rates) will be temporarily displaced by a dearth of demand for the treasuries and as a result we will have a blimp up in interest artes. Now imagine the combination of excess fear of defaltion in conjunction with a temporary tise in interest artes. This cocktail will sink the market IMHO so badly that AG on a white horse will come to the rescue, and by the time late spring or so arrives, we will have low interest rates again (maybe as low as 5.75%), a Dow defalted to about 6200 and a Feready or already lowering the discount. This new cocktail will be fodder for a powerful summer rally and possibly the resumption of the bull market. Until then, stay on the hills and above flood water markrs, since I think we have a little deluge in our future (but no armagedon). Zeev