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

To: John Hunt who wrote (15389)	4/10/1998 10:02:00 AM
From: yard_man	Read Replies (1) \| Respond to of 18056

I appreciate you posting these -- I've been too lazy to link to the page, but I really do like reading his "stuff."

To: John Hunt who wrote (15389)	4/10/1998 10:43:00 AM
From: Zeev Hed	Read Replies (4) \| Respond to of 18056

John: First, the URL (contrarian report) you posted causes strange things to my computer. I tried it trice and everytime it simply kicks Window out and goes to DOS leaving the system hanging. A Jynx? As for the barbarian. Yes I think they are at the gates. The turnips were of the opinion that within two weeks of the end of Japan Fiscal Year, the SEA malaise will start and reestablish itself. Well, the turnip might be a little premature (they assumed that two weeks will take care of the April 1st influx of new money into the market, maybe it is taking a little longer, and the new merger media in the financials on top of the "fantastic" earning of Yahoo(?????) could carry us a little further. Yet, the SOX stinks to high heavens, and the reality that "earning warnings" are going to be translated into "earning shortfalls" may establish itself after all. Having said that, I can start and see a new source of new liquidity coming into the market later this year to make todays overpriced securities cheap. Thus, right now, the turnip see not much more than a retrenchment to about the 8250 area. Two additional issues, the Japanese repatriation of their US bonds hoards. It has started already last June and I think is being engineered to have minimal impact on the US bond market. I have presented this calculation before. If indeed we have a "balanced budget" a good chunk of the interest earned on US treasuries (some $300 Billions annually) can be repatriated over the year without a negative impact on our interest rates. If we are actually going to run a surplus of $20 to $50 Billions, that much more can be repatriated without impact on the US market and actually could allow for rates to go down and challenge 5.5% (thus my bullish stand medium term). The second issue is a "new source of liquidity" I mentioned above. As part of the impending deregulation of the Japanese financial market, "Japanese Savers" will be given a "once in a life time" opportunity to invest abroad (of course at the peak of those foreign markets, including the US). We have sustained a powerful bull market with about 200 billions (give or take) injection of new funds (and I estimate at least another $100 Billion in corporate stock buy back programs) per year. Guess what will happen if let say just 2% of the 10 trillion dollars in "postal savings" earning less than 1% find their way into our markets, or even into the international arena in general. The fuel for a real bubble another $200 billions annually could make todays S&P's PE of about 28 pale and since those people remember PE's of 80 in the Nikkei, they might be led to believe that a PE of 40 on the S&P is a bargain. They might even buy a bridge in Brooklyn from me. Zeev