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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (4427)	6/12/1998 1:09:00 AM
From: Stitch	Respond to of 9980

Mike, As an antidote to reading your recent earnings warnings posts here is a synopsis of one article in this morning's New Straits Times as well as a second one I typed out entirely. This is your small dose of "good news", (or at least, not so gloomy news) so you won't drown over the week end. See me in my office on Monday if the symptoms return. <G> Study sees sustained American growth <<New York - The U.S., Canada, and Mexico will grow 3.5% this year and 2.7% next year, according to a three nation study released today by a consortium of research groups. "While this is slower than the almost 4% growth recorded in 1997, North America's growth rate will still be among the highest in the industrialized world" says Gail Foster, chief economist of the Conference Board and co-author of the report. "Only Europe, which is still recovering from the 1993- 1994 recession, is expected to grow faster this year ten last. The report was compiled by the Conference Board, the Conference Board of Canada, and Centro de Estudios Economicos del Sector Privado of Mexico. Asia's financial crisis will have little direct impact on the U.S., Canada, or Mexico, the report said. But the indirect effects of the crisis on commodity prices, interest rates, and currencies will slow growth and change the dynamics of North America's economy this year. Trade between North America and the five Asian countries most affected by the crisis (Indonesia,Malaysia, the Philippines, Thailand, and Korea) amounts to just six per cent of exports or less then one per cent of GDP. The United States posted a 3.7 per cent advance in first quarter GDP and a 4.9 per cent gain in domestic demand. Since Canada and Mexico send more then 80% of their exports to the U.S., market strength there is reflected in advancing exports for both countries.>> By the way, if you begin to feel tremors on Sunday do not call me...just reread the following: <<Differing views on Asia's Woes Hitting the U.S., Europe>> <<London: Central bankers and many economist are confident that strong fundamentals in the U.S. and Europe will shield them from any worsening of Asia's economic problems. But markets and investors are having a tough time buying into this sanguine outlook given the persistent weakness in the Yen and the growing threat of more devaluations throughout the region. "If we get big corporations citing Asia as a reason for poor earnings there is only one way the market can go" said one London dealer. What might explain these sharply differing views is an assessment of how Asia's troubles could be transmitted quickly to economies that are otherwise healthy. For the optimistic, the economies in the U.S. and Europe appear well insulated given their long standing accomodative monetary policies that have facilitated growth. "U.S. consumers still have quite a bit more spending power ahead" said Kim Schoenholtz, chief economist for Salomon Smith Barney in London. "The cost of capital is remarkably low and is providing the incentive for firms to maintain investment levels even in the midst of a profit squeeze." This view appears to be shared by many of the world's central bankers. In its annual report released this week, The Bank for International Settlement (BIS) was more concerned about the threat of inflation than any chance that Asia's downturn in the world's economy. Intrigueingly, this line of argument does not appear to be shared by a large segment of international investors. Quite the contrary, the threat of deflation is very much on the mind of money managers when deciding where to put their money. A new survey by Merrill Lynch showed that U.S. fund managers were strongly bullish on U.S. treasury securities, outnumbering bears by a record 60% in may, up from 31% in April. Moreover 50% of U.S. money managers expect the Federal Reserve's next move to be a cut in interest rates while only 30% expect a hike, a reverse of the positions only a month ago. Another factor that might explain the gloomy outlook is the perceived risk of contagion, a phenomena that even monetary officials do not fully comprehend. "I think we do not understand contagion all that well" said one senior EU official. "If you look at ways that different currencies around the world come under speculative attack there is nothing much in the news to justify the outflows." Since the beginning of Asia's crisis last year some analysts have argued that the most potent threat to Western economies is the banking system., with the exposure of European institutions, for example, amounting to $150B U.S.>>

To: MikeM54321 who wrote (4427)	6/12/1998 3:06:00 AM
From: Frodo Baxter	Read Replies (3) \| Respond to of 9980

All, It looks like the near-term "fire" vs "ice" scenarios are working out towards "ice". Evidence: - Oil. Cheap. - Gold. Cheap. - Yield curve. Flat and low. The market is discounting significant deflation. All this despite labor tightness and flush liquidity. The market is telling God (i.e. Greenspan) that he needs to cut rates. Now I know some of you of particularly ursine proclivities thinks is the beginning of some kind of 1929-style depressionary spiral. But you have yet to make a case for why the Fed doesn't have enough maneuvering room to avert this nonsensical and implausible nightmare.

To: MikeM54321 who wrote (4427)	6/12/1998 6:55:00 AM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

Re: Asia Warnings Has market cap of $348 million. Annual sales of $450 million. This release is a little strange. Sounds like the real problems may not be related to Asia, but may have been a convenient excuse. Just my pure guess. MikeM(From Florida) ********************************** Brush Wellman Comments on Second QuarterPerformance CLEVELAND--(BUSINESS WIRE)--June 11, 1998--Gordon D. Harnett, Chairman, President and Chief Executive Officer of Brush Wellman Inc. BW today commented on the outlook for the second quarter. "During the second quarter, capacity constraints and start-up issues on our alloy expansion have inhibited our ability to meet customer demand and have adversely impacted operating costs. In addition, our second quarter revenues are being affected by an apparent slowdown in some markets, particularly in Asian and U.S. electronics sectors. Also, earnings continue to be pressured by the strong dollar. Therefore, it now appears that second quarter 1998 diluted earnings per share could be as much as 50% lower than the second quarter 1997 earnings of $0.46 per share, diluted. Brush Wellman Inc., with headquarters in Cleveland, Ohio, is a manufacturer of engineered materials. The Company and its subsidiaries supply worldwide markets with Beryllium Products, Alloy Products, Ceramic Products, Precious Metal Products and Engineered Material Systems.