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To: Investor-ex! who wrote (457)	11/30/1997 4:39:00 PM
From: Sid Turtlman	Read Replies (1) \| Respond to of 686

Investor-ex: The whole Asia thing creates some interesting cross-currents. They are undergoing an old fashioned bank panic credit crunch. Marginal projects and marginal companies that six months ago could have been financed without any problem will now be stopped dead. Usually one sees a big runup in interest rates before an economy gets to that phase, and that didn't happen this time, but the effect of the credit crunch is the same regardless. It severely weakens or eliminates economic growth in the countries in question. This is very deflationary for the world, and implies lower interest rates ahead, which is normally very bullish for equities. The problem is that this is coming at what I believe is a cyclical peak in earnings. Earnings as a percent of sales can't get much higher, and multiples of those earnings are huge. There is a potential double whammy of earnings of US companies being disappointing because of a loss of demand and perhaps new lower cost competition from Asia, followed by lower multiples of those earnings, because the companies in question aren't "growth" any more, or are less predictable. There is a real risk that a lower market would feed on itself, cut off the flow of IPO money and reduce consumer spending, creating a recession here later next year, which would further damage earnings expectations and multiples. Long term government bonds still look great, though. As to the technical analysis part, up until this year every stock market around the globe was hitting new highs together. Now most are getting killed except for the US and a few others. Typically, bull markets end with strength in the blue chips accompanied by weakness in the advance/decline figures, as there is no longer enough money around to move more than a few stocks up. In a global sense, this is what is happening now; there is no longer enough equity money around to move up all the world's markets, just barely enough to keep the US market holding its own at best. The DJIA might even run up to marginal new highs, but if it did it by itself will little participation from other markets, that would probably be the last gasp of the bull.

To: Investor-ex! who wrote (457)	12/1/1997 6:14:00 AM
From: GROUND ZERO™	Respond to of 686

Hi Investor-ex!, You're right about global markets. This is the basis for my original question e.g., how come the DOW has't yet collapsed? Clearly the technicals for many of the globals appear suspicious, although I did buy the Nikkei and Hang Seng a few weeks ago as posted here on another thread the day I did. You may be very right, that I will find my indicators eventually pointing lower as the U.S. markets fall into line with the rest of the world. I guess we'll wait and see. This should be an interesting week. Thanks for your response. Have a great week. GZ