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To: Mang Cheng who wrote (16173)	5/26/1998 8:05:00 PM
From: joe	Respond to of 45548

Mang, Good article! Here's some thoughts I have on the analysis: >> The 30-year Treasury bond was up 31/32, pushing the yield down to 5.84 percent.<< The more instability, the lower the yield. It's part of the deflationary trend. This will keep stocks from a severe crash. Now the Fed has a harder time raising the rates, and the economy will probably show some slowdown, and eventually we'll have lower int. rates and lower inflation. All good things. The price we'll pay is a stock correction - hopefully it won't be too bad. Possibly, this is SE Asia round II. >>The dollar surged against the yen as Washington appeared ready to tolerate a weaker Japanese currency while Tokyo breathes new life into its economy.<< In my opinion, if Japan gets a little life in its economy, then it will be able to help SE Asia regain it's footing. That's the other side of the following: >>''The strong dollar is also causing a problem. The fear is that the weakness of the yen could have a snowball effect on other currencies in Southeast Asia and bring about a renewed period of instability,'' Metz added.<< >>Wall Street has bet that U.S. corporate earnings will rebound in the second half of the year, which justified current high stock valuations, analysts have said,<< I don't think this is the whole story about Wall Street's attitude. Since interest rates are so low, investor's are more willing to invest further out into the future - as far as into the 1999 year. And they're more tolerant of lower profit earnings in the 2nd half - which could still do well, considering Europe is picking up lots of momentum. Heck, what is cash going for nowadays? around 4%? Even if company earnings average out to 3-5% year, it's better to stay in the market - as long as there's not a serious chance of recession or inflation. >>Wall Street guru Barton Biggs, Morgan Stanley Dean Witter's global strategist, said Tuesday that the tone of equity markets around the world is deteriorating.<< This guy is Mr. Gloom and Doom. Since, I've started looking at the market seriously over 3 years ago, he's always had the same mantra. Maybe one of these days he'll be right, but compared to all the wrong calls, he's no help. He's a contra-indicator. I just hope HongKong and China keep it together and don't devalue their currency. To me, that's the biggest fear of the SE Asia problem. If it happens, the world will be economically out of control (possibly...). But it's in China's interest to keep SE Asia stable. They will be the new superpower if they succeed - Japan has no leadership abilities, and China sees that as an advantage. joe