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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (14969)	3/13/1998 12:40:00 PM
From: Michael	Read Replies (1) \| Respond to of 94695

When you talk about Soros going long the bond, I assume you are referring to his (and apparently Buffetts) purchase of Yen bonds. When I first heard this I was puzzled. My understanding was that everybody expected coupons to rise, because come April 1, your average Japanese depositor , now able to invest where he likes, would find USD treasuries much more attractive than Yen deposits, thus the BOJ would have to raise rates to stop a kind of capital flight. Marc Mobius was quoted as saying that Yen Bonds were probably the short of the century. However in the same article the writer observed that if they did this they would decimate the asset base of the Financial Instituions holding those bonds. In particular the insurers which are required by law to provide a minimum of 2.5 % per year returns to annuity holders. However thinking that through, it occurs to me that that provides a very good reason to drop rates. Temporarily at least it would give a nice boost to Banks Asset ratios, which might get them over the hump of the March 31 BIS assessment. Cannot see how it would be anything more than temporary as it would give even more impetus to depositors to go elsewhere which in itself would erode Bank assets. But that's the best sense I can make of it.

To: James F. Hopkins who wrote (14969)	3/13/1998 5:54:00 PM
From: Bonnie Bear	Read Replies (1) \| Respond to of 94695

Jim: this market is like driving down the freeway at high speeds..if you look way out in the distance at your eventual destination and be patient, it's an easy drive. If you look at the bugs getting splattered on the windshield you'll wreck the car.