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

To: Bonnie Bear who wrote (11452)	12/14/1997 4:03:00 PM
From: Zeev Hed	Respond to of 18056

Bonnie, when the long bond just break through the 6% barrier, it is difficult for me to visualize 7.5% where your doom scenario will start and take holds and certainly not interest rates above 8% when more pronounced bad debt will be present. The poor suckers that are paying 18% plus on installment debet will keep paying the same rate even if the treasuries get to 8%. US corporations are quite liquid and apart of few pockets of overleveraged companies (the subprime lenders that Sankar used to love), the general balance sheets looks pretty good. Unless inflation is unleached in an unpredicted way, or deflation becomes sever (more than 3%) it is a glodilock economy and that has not changed. Yes there is overcapacity of production means, but it is concentrated in the rim (remember, we gave up on "brawn" industries for "brain" industries), and this will act to give us a benin inflationary environment and thus the danger of an explosion in interest rates is, at least right now, a dream for the bears. Sorry, Bonnie, I see no armagedon, just a nice and furrious retracement to about 6200. Zeev