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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (3754)	2/27/1998 10:15:00 PM
From: Bald Man from Mars	Respond to of 18691

Guys, I think it is time to buy Gold... The last 2 days, the XAU is up a lot, I think it is going higher ...

To: Bill Wexler who wrote (3754)	2/27/1998 10:55:00 PM
From: S Shaw	Read Replies (1) \| Respond to of 18691

Bill: Are the Japanese unloading more U.S.Gov't. securities? I don't claim to be a genius but the Japanese gov't needs money to bail out there economy and are they going to raise some of it by selling our paper? Which leads to the question is now a time to consider shorting some funds that hold US govt securities? Scott

To: Bill Wexler who wrote (3754)	2/27/1998 11:04:00 PM
From: Pancho Villa	Read Replies (3) \| Respond to of 18691

On the 30 year bond yield, inflation, deflation, recession etc., etc., etc. My comments are from the perspective of a person with a net short exposure and, must add, who usually does not believe in market timing [you may find the statement a bit contradictory]. I must also add that my knowledge of economics is limited to macro and micro economics MBA level introductory courses. I do hold a PhD in Operations Research. The mathematical tools I use are not too far from those used in econometrics. On the most recent GreenSpan testimony to congress, I guess not too many people noticed that the delicate balance GreenSpan is hoping for has a very low likelihood of materializing. What we [he] are [is] hoping for is the Asian crisis takes on GreenSpan's [his] role by: 1) Having cheap Asian imports control upward price pressures when in fact we all know the largest sector in the US economy is the service sector, a sector not very sensitive to the cost of asian imports. 2) the crisis inducing a slowdown in US exports - not only to Asia but to other regions of the world in which Asian imports are now more attractive [people seem to forget this last point when concluding that the net effect will be less than 1% in GDP] - that is just enough to slowdown economic activity without throwing the ecomomy into recession. Of course given all the uncertainty and little evidence of [past] inflation - let's remember that government statistics reflect the past not the future - look around and tell me where you see prices going - the best course of action for Greenspan is to do nothing. The impression is that I got he feels powerless plus he is also scared s...less. He wishes he could raise rates - among other things to stop the "rational exuberance" and inflation pressures - but this would probably worsen the Asian crisis [equity markets] and strengthen the dollar in a way that would cause a recession. My conclusion from all this: There is a good chance we may have some pretty bad news for the market within the next four to six months. In the best of cases an earnings slowdown, in the worst of cases an economic slowdown coupled with substantial price increases in the service sector (e.g., induced by the outrageous rates Cobol programmers working in the y2k problem will charge:)), some version of the stagflation of the 80's; and finally a scenario in which Asia does not cool off the US economy and Greenspan raises rates. With a market priced to over 25 times earnings, IMO any of these scenarios spells trouble for the market. Trivia question: Why is PG thinking about raising the price of tide? Pancho

To: Bill Wexler who wrote (3754)	2/28/1998 9:38:00 AM
From: Pancho Villa	Read Replies (2) \| Respond to of 18691

Bill RE: 30 year bond yield going up. This piece in Barron's reminded me of your post and my reply to you. interactive.wsj.com Monday, March 2, 1998 An Economy Too "Finely Balanced" Produces a Foul Mood Among Bond Investors By William Pesek Jr. O Brave New World! William Shakespeare didn't have economics in mind when he put these words in Miranda's mouth. But recent trends in the U.S. economy are stirring up a dramatic and fascinating Tempest of their own. Alan Greenspan, perhaps no Prospero but a magician in his own right, drew renewed attention last week to the brave new dynamics mysteriously restraining inflation. In fact, the Federal Reserve chairman made clear that the economy is so "finely balanced" that there's no way to tell which way rates are headed next -- if indeed they're headed anywhere. A foul mood overtook bond investors as the translation sank in: There will be no cut in short-term rates, at least for now. "The Fed may not be certain where rates are headed, but, as Greenspan suggested, it certainly isn't down," says Mary Dennis, senior economist at Merrill Lynch. ..... It's hard not to conclude that the risks in the economy are still to the upside," notes former Fed governor Lyle Gramley, now an economist with the Mortgage Bankers Association. ... Greenspan, too, is a bit unnerved by the sheer underlying brawn of the economy and cautions against placing big bets on a continuation of sunny economic times. To continually expect extraordinary economic improvement of the sort seen in recent years, he says, "is, I think, to press the edge of Murphy's Law." The key question going forward, as Greenspan puts it, is whether the restraint building from the turmoil in Asia will be sufficient to offset inflationary strains that might otherwise result from the strength of domestic spending and tightening labor markets. .... What He Didn't Say That message may not be out of character for the world's most powerful economist. But for Fed watchers, it wasn't so much what Greenspan said, but what he didn't say. There was less talk about potential economic drag from Asia and more focus on the worrisome domestic forces like employment growth. And the D-word -- deflation -- was noticeably absent from his discussion of the outlook. It also didn't help that Greenspan's speech ended with a warning about taking the risks of inflation lightly. .... The biggest unknown going forward is whether the low inflation trend will continue. A new survey by the National Association for Business Economists finds that fully 86% of its members think inflation is only temporarily subdued. And even with a slowdown in growth this year, a majority of analysts still expect the Fed to raise short-term rates in 1998. .... But as Cramer says those Bears at Barron's they are always WRONG! Pancho

To: Bill Wexler who wrote (3754)	2/28/1998 9:51:00 AM
From: Oeconomicus	Read Replies (1) \| Respond to of 18691

hasn't anyone commented on the fact that the 30yr yield has been ticking upwards Bill, there's a dip I'd buy. Your observations about the signs of excess are similar to mine, especially "Bearon's" ironic cover story last week. I think that's a keeper; frame it with the coming crash headline. BTW, speaking of Cramer, did you hear him on Good Morning America about a week ago advising investors to "buy any stock that announces a split" (or something to that effect; it's not like I recorded it<g>). Now how exactly does that bit of advice fit within the prudent man rule? Then you have AMZN turning over its entire float and short interest in two days, up 12 or so, and YHOO doing pretty much the same thing (and both with a flood of insider registrations lately, the squeezes coincidentaly coming right at the end of their selling windows) and the bulls on those threads take it as a sign they are headed much higher. Back to Cramer, I wouldn't be surprised to hear him say that he unloaded all his YHOO yesterday. Bonds are a buy here though IMO. BWDIK? "Folly is wont to have more followers and comrades than discretion." - Cervantes Or are we just tilting at windmills? Bob