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

To: epicure who wrote (17967)	5/6/1998 11:40:00 AM
From: Tommaso	Read Replies (1) \| Respond to of 94695

Here's what I mean about how a few of the Marketgauge indicators are not very meaningful: marketgauge.com Witht the long bond at around 6%, yields on stock would have to be negative to push the indicator into bearish levels as defined on the chart. Or conversely, the long bond would have to go up to cloase to eight percent--which is not unthinkable but which would send the stock market down so far that bond-minus-stock yield would still not reach the supposed "bearish" levels. So I think we can ignore that as an indicator. At this point the short terms are starting to go heavily bearish, making the bear/bull indicator ratio about 13/6. I am (as a bear) still hopeful that foreign inflows to U.S. mutual funds will now ease, and that redemptions will start to pull cash out of the U. S. market. U. S. banks have set themselves up for another major fiasco caused by overlending to consumers. First it was overlending to countries like Brazil, Poland, Mexico, Czechslovakia, etc, in the 1970s. Then came the oil-patch lending crises that sank Continental Illinois Bank. Then there was the savings and loan overlending. Now it's credit cards and renewed second and first mortgage lending. I heard about the Continental Illinois situation at first hand because I have a brother-in-law who was made V-P for Public Relations of that bank just as it collapsed--the largest failure in banking history. He said, "It would have been so simple to avoid." After helping straighten things out, he went to Northern Trust. My impression is that most bankers go unpunished or even retire on golden parachutes when they make major mistakes in this country. In Switzerland they put them in jail and take away their assets, as happened to Paul Erdman. I think that at some point the losses to personal bankruptcies will outrun the returns on credit card loans and will cause a major credit contraction. Something like this seems to happen about every eight or ten years. At least we acknowledge it in this country; in Japan they are still trying to keep it a family secret.