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To: SE who wrote (39071)	4/11/1998 1:10:00 PM
From: donald sew	Read Replies (1) \| Respond to of 58727

Scott, Concerning Japan, that is the same read that I have. Just to make it clear to myself: 1) With Yen appreciating, the Japanese investments in the US will lose value. 2) Therefore, investments in the U.S. BONDS and STOCKS will not be as attractive. 3) With the tax cut and the YEN appreciating, that should reduce some of the worries of investing in JAPAN. Its not the total solution but at least a beginning, so the flight-to-safety environment should be decreasing over there and confidence in the Japanese market should start increasing. 3) Since the US MARKET is at high levels, such should intensify withdrawal of JAPANESE moneys, since the risk of a pullback here is increasing, at least in the stock market - not sure about the bond market. Now Patrick had indicated that also, but he first stated that there would be an inflow first into our market, then the selloff. What is not clear to me is why would there be a rush into our STOCK and BOND markets first before the exodus. I just took a look at 2 JAPAN indexes, the JPN and EWJ and both indicate that it is in the overbought region per my short-term technicals and it should top out within days or start to pullback. This is based on data prior to Japan's confirmation of the tax cut. If it can extend this current rally and at least match the previous peak then it would be the first technical sign that it is breaking out of its current downward trend, which has been setting lower lows and lower highs since early FEB. Now that I think Iam getting a better understanding, soneone is going to throw something else into this hodge-podge, and I will get confused all over again. Seeya

To: SE who wrote (39071)	4/11/1998 8:22:00 PM
From: Patrick Slevin	Respond to of 58727

I glanced at Don's reply after reading your post. So let me try to address both of them. The concept was that a dropoff in the Nikkei, particularly below 14,000, would send monies here and be short-term bullish. However, the U.S is buying Yen and the Japan Banks are selling the Greenback so your first misinterpretation is that the Yen is falling against the Dollar. It's the other way around, I think Thursday the Yen was 131 and now is 128. So fewer Yen can buy a dollar, the Yen appreciates. The rationale for this is obviously to avert a trade war. If the Greenback were to appreciate instead then Japanese goods would become more desirable vis-a-vie U.S. goods. Now, this takes the Asian Investor out of the picture to some degree. If the Dollar is dropping the Asian Investor is more reluctant to convert to U.S. Markets. However. Potentially there may be a further shortfall in the Nikkei and as a result Japan Banks may have to shore up liquidity by selling U.S. Treasuries, which in turn will have a short-term bearish effect on U.S. Markets. To sum up......equilibrium is a bullish environ for the U.S. markets and International Markets in general. This shaky kinda environ in Japan allows for doubt which our market will not enjoy. A weak Dollar would be a step in the direction of a market whose equilibrium is out of sync.