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

To: studdog who wrote (8018)	11/15/1997 4:19:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 18056

Karl What makes you think there will be such a drop in earnings? Decrease in demand, decrease in prices, or both?, Remember, If this does come to pass then bond rates will really tank. Well profits will erode for the following reasons (with each reson shaving several percentage points): 1. Overcapacity of almost every product from chemicals to autos to chips - no pricing power until standart of living in developed countries will increase. 2. SE Asia economies will need to work themself out of the present recesion/depression and "push sell" to the healtier markets "on the cheap" - e.g US, W.Europe. 3. US is in a cyclical top in employment and it will take a while until wages will rise below inflation 4. Most productivity improvements are in place, and cost of labor will increase 5. Exports markets will shrink some, mostly as a result of SE Asia and Brasil/Argentina etc. 6. Europe is not solving it's social/economic problems and will be in borderline recession and drag teh US with it. Nothing major but each instance will shave several percentage points, as global growth will suffer. Happy Trading Haim