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

To: Cynic 2005 who wrote (14008)	2/11/1998 3:51:00 PM
From: Cynic 2005	Read Replies (2) \| Respond to of 18056

More thoughts on the market direction - I am looking at liquidity and only liquidity in determining the near-term direction: 1. fund flows (per a report out today) for Feb at monthly rate of $14 bil. 2. per a report that was out yesterday, money market funds were up significantly in January and strategists are panting for those $$$. 3. April 15 is around the corner and new IRA money will be coming. If last years Late April rally is any indication, smart money is positioning itself for this $$$. 4. Yesterday there was a quarterly refunding for 10 year (?) treasuries to the tune of about $16 bil. Again, stock market strategists are panting for these $$$$. What are the odds of an institutional bond investor jumping in to equities at these prices? 5. Mohan has still some buying power left and so he is not totally assimilated to the Borg continuum. Hence the future direction is with an upward bias. -vbg- All told, how much liquidity we are talking about? I have no clue. But, based on my dentist's comments, I have a feeling that this market has a lot of money to be sucked in. BTW, he would buy a good company stock at any price because he is in it for the "looooooooong term" in which there is no risk in equities. But how much is enough to support these valuations, again, I have no clue. -Mohan

To: Cynic 2005 who wrote (14008)	2/11/1998 3:57:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

Mohan, could we be having another episode of "disconnection" between treasuries and the market? Stealth flight to "quality"? The long bond is up a full point but the market is just so-so. As for the raging argument on MC/GDP, we must be careful not to be side blinded. The percentage of GDP represend in the public market has changed drastically in the last 20 years, and is very different here than in Japan or Europe. In Japan, for instance, a huge chunk of the retailing market is still in private hands, not in public companies, this applies as well to farming, medical services and transportation (which is mostly in Government's hand and not in their MC) we have undergone massive centralization with fewer MOM and POP outfits, . I have no idea by how much this may skew the data, but I am sure that the 129 MC/GDP ratio of Japan at their top would be , I would guess closer to 160 in term of our market. Now, they really did a bubble at their top, and about ten years later, they are still much closer to their bottom (G). Zeev. Zeev

To: Cynic 2005 who wrote (14008)	2/11/1998 4:39:00 PM
From: Mike M2	Read Replies (2) \| Respond to of 18056

Mohan, with respect to the liquidity issue a significant factor creating the illusion of liquidity is the reduced preference for liquidity in the aggregate created by a record bull run. Yes as individuals we feel liquid in the stock market but any attempt to take a substantial sum of dollars out of the market and convert it to real liquid assets-cash or t-bills will hammer valuations like Oct 97 or Oct 87. As E.H.H. Simmons,president of NYSE in Jan 1930 with respect to the crash" For various reasons...we have had in the stk mkt an extraordinary willingness to buy and an equally extraordinary unwillingness to sell. It was the lack of equilibrium which really made the trouble." Mike