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

To: Frodo Baxter who wrote (4483)	6/12/1998 11:58:00 PM
From: MikeM54321	Respond to of 9980

Michael Sphar asked a while back: Mike, or anyone, extrapolating on the early warnings coming from tech companies, what do you think the impact of continued and probably increasingly poor results being reported in Q2 and Q3 will have on Fed policy in the July, Aug, Sept time frame ? ************************************************************* I write: How does our over inflated equities market, selling at a PE of 24 plus, deal with it(Asian problems)? They dealt with 1.5% and under growth in 1Q98 pretty well. But that was supposed to be, "Oh don't worry. Q1 is the bottom. Q2 we will pull up and out of it." But what happens if Q2 doesn't? What about Q3? Lawerence writes: A couple Fed cuts should do it. Lawerence, You won't get any argument from me. I agree that rate cuts are coming because people will be waking up to the realization Q2 isn't going to be any better, and probably worse, than Q1. And I also agree with you there is room for at least two cuts. Maybe three, depending upon how big the Feds whack it. Wall Street professionals will really, "Whoop Up" some Fed cuts for all their worth. And, as a result, it will keep our over inflated equities balloon full of air for some extra quarters. But I still have some serious doubts a few rate cuts will do much for corporate profits. I think that has to come from the recovery of Asia (I mean Japan) or some super spectacular growth in Europe. Therefore, eventually our equity markets will have to correct to get more in line with corporate profits (IMVHO). MikeM(From Florida)