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To: fut_trade who wrote (5625)	1/5/1998 1:27:00 AM
From: Mama Bear	Respond to of 27307

Fed lowering interst rates supports the deflationary scenario. I think we'll see a 4% handle on the long bond before the end of the year. That's why I have been a net purchaser of bonds in my 401k since the yield was ~6.5%. Barb

To: fut_trade who wrote (5625)	1/5/1998 1:44:00 AM
From: Bill Harmond	Respond to of 27307

Peter, I think the die has been cast. So much liquidity and wealth has evaporated into thin air, Asian labor has become incredibly cheap again, and their only way out is to run their factories full tilt to earn their way out...by exporting to US!! That puts American companies in a real box that lower interest rates here can't magically cure...namely much weaker exports overseas, and incredibly cheap competing imports here. All this talk of the service sector (70% of the US economy now) being a stabilizing factor only goes so far. If US manufacturers and farmers get hit, we're not going weather the storm by giving each other more haircuts, fast food and legal advice. Already there are clear signs of nationalism emerging, and globalization is becoming a dirty word in some of these hard-hit countries. If Koreans believe it's unpatriotic to eat Oreos (which has been reported), and they're being asked to surrender jewelry to raise dollars for the country, what do you think that does for American forest products, paper, produce, technology and a host of other products there even if they can afford them? Many Korean distributors of American companies are going under to boot. It was one thing after WWII when the rest of the world was in ruin for the US to prosper by capitalizing on cheap commodities and the need to rebuild our previous enemies. This time some of our fiercest competitors are in economic ruin but their means of production still stands, and in most cases it's modern, state-of-the art capacity. That's not good for anyone here, no matter how you slice it. Just one example. Can you imagine how cheaply Koreans can manufacture a PC now that their currency is worth half it was last spring and they're hungry for export growth? Do you think the Chinese have to buy Compaqs? A PC's a commodity item, and Intel sells chips to anybody. Samsung is a quality brand name. I have some Compaq employees' families as tenants in Houston, and I'm a bit worried about it.