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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (18316)	5/8/1998 4:00:00 AM
From: IQBAL LATIF	Respond to of 50167

stocksmart.com The levels at which HSI and Korea Indonesia are sitting at give me an indication of a impending bounce off these supports. Jakarta Thai Korea and some HongKong funds trading on NYSE need to be looked at, Jakarta trading somewhere near its lows-- it would be nice to position in these what I think are very attractive funds. The ideal time is when it looks horrible the trade is not a ticker trade and has a horizon of 12 months.

To: IQBAL LATIF who wrote (18316)	5/8/1998 5:46:00 AM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

BCA charts-- DOW within 10-15% of Nikkei's overvaluation. bcapub.com bcapub.com And my answers to BCA- The last two week chart from BCA clearly shows that whenever we had CPI inflation 'goods inflation' in mid eighties played an important role- higher CPI was pushed up by 'goods inflation' very much between 86 to 90-once goods inflation headed down we saw CPI heading lower. The second charts deal with long term valuation bench mark-- according to BCA DOW is within 10-15% of historic over valuation of what we had in Nikkei. I have tried to highlight various anamolies in these charts. I do understand anyone looking at the charts would like to short DOW since its relative valuation benchmark mimic Nikkei's. Underlying facts are so different, sad to see that how chart based deductions kill comon sense. Chart 1-We have 'goods inflation' heading lower may I ask the BCA guys to explain why a little blip up in service inflation should be a problem?-- We need a little inflation in the system anyway.Lower goods prices can be deflationary if not accompanied by increasing purchase power of public- -service inflation may be just doing that like a invisible hand it is keeping the enough demand not to make this imported price stability 'deflationary'. Even if you look at relative inflation rate in that chart we had convergence in 86 to 90 between goods and services --- as goods headed higher services came lower this 'convergence' was in no way a virtue it stifled demand. We also see a divergence in services and goods, the goods inflation is heading lower and services ticking up but overall impact on CPI is downward. BCA in my opinion way off the mark by suggesting that 'goods lower prices' would have a similar impact on economy like that of mid eighties, they forget that IT and associated globalization has changed the markets structure for ever. MSFT INTC DELL CSCO the leaders in software, CPU's, boxes and networking are not manufacturers in traditional old sense of word they are hiring workers at steep cost but with much higher productivity and very steep value addition. Chart 2- If economist keep worrying about old lathe machine productions techniques and impact of 10$ an hour worker on economy, they would never be able to appreciate that why US markets are here at the first place. In the last few years US is home of very specialized products efficient, highly competitive and very productive like Boeing 777 or Window 95. May be market valuations are showing a deviation from GDP growth but how about an efficient GDP and inefficient GDP. Why should Japanese or European GDP's beset with structural problems of draconian protectionism and tariffs be comparable to US economy. Citicorp makes 4.2% return on assets the best Japanese bank makes -2% return on asset. A US company which ignores shareholders interest is history, Japanese thrive on ignoring shareholders interest and they do it best. Forget about the profit margins for a second, which any way for US corporations is no mean achievement, look at the revenue of these new global corporation-- this is all being sucked up in US, this huge revenue cash flow has translated into affluent living which has led to increased consumer demand. May be for markets and shareholders it is the profit margins, but one cannot overlook the importance of revenues of major corporation in nation's economic strength. It is revenues which are the sources of income for employees( cost comes out of revs also surplus in US is a result of increased contribution of taxes on earnings and capital). New efficient productive rising WAGES are at the heart of prosperity of a nation, a nation with multifaceted expertise does not retire into economic oblivion like Japan post ASEAN crisis. I was surprise to see that US has in last five years seen a massive revenue shift from old traditional manufacturing to new efficient intellectual production like software. What a nice thing to see that a nation concentrating on its comparative advantage is importing goods from all over by being advocate of free trade. It is lack of this ' imports' that besets Japan , by sharing 'proprietary wealth' US is exporting global prosperity. Japanese by prudence have put themselves in mix and need a dose of stimulus every other day in contrast US by concentrating on productivity and share holders value have change the entire corporate landscape. It is ironic to see that BCA unfortunately applies similar set of rules to determine valuations what were being applied when rail road companies ruled the markets or Ford assembly line revolution made the news. In a world of data networking they hinge on to economic principles which are timed out and need major retooling. Boeings Cisco's, MSFT's and Pfizer's of today are at cutting edge of technology, may be it would not be a bad idea to have a new set of definitions. Imagine if US becomes infatuated with this concept of 'surpluses' and 'huge savings' like Japan we would usher into global ice age of deflation.