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

To: Zeev Hed who wrote (4509)	6/14/1998 9:22:00 AM
From: Step1	Read Replies (1) \| Respond to of 9980

Zeed, hardly representative of all investors in Japan but... I think they are mostly looking at land prices. When these go up too what else is there that can go up? P/E of 80 I have heard although as I have posted before it was mostly based on land assets that companies held and not their earnings per share. Some stocks produced no earnings whatsoever but happened to have an old warehouse in a valuable area so the stock reflected the price of that and not the earnings. I believe this to be correct, opinions welcome. sg

To: Zeev Hed who wrote (4509)	6/14/1998 9:24:00 AM
From: Otimer	Read Replies (1) \| Respond to of 9980

Consensus for summer rally on or about 24th 1=yes 2=no

To: Zeev Hed who wrote (4509)	6/14/1998 10:12:00 AM
From: MikeM54321	Respond to of 9980

"I do not think that the Japanese investor needs to actually invest in the US stock market to create excess liquidity here, it is quite sufficient that they invest in the bond market. Such an action has a double effect, first they put pressure on our interest rates (to decline), second, as our rates go down, US monies that would have gone to treasuries is diverted to stock." As a matter of fact, one of the primary drivers of the European equities markets is this same situation. Europeans want a better return on their investments because interest rates are low in Europe. England is the only industrial nation in the world with higher rates than the US (and not even that much higher). So Europe is a good example of the validity of Zeev's statement. So as Japan's money flows into US debt, interest rates go down, stock market goes up. MikeM(From Florida)

To: Zeev Hed who wrote (4509)	6/14/1998 2:37:00 PM
From: Gersh Avery	Read Replies (2) \| Respond to of 9980

Zeev .. since you mentioned liquidity One more item to consider: The US Federal Reserve The foreign investment in bonds lowers interest rates .. OK so far. Excess liquidity flows from bonds into stocks .. OK Stocks go up as a result of our liquidity driven market getting another fix .. OK Now then .. interest rates have lowered below the Fed target of %5.5. So what do they do? Drain liquidity to maintain the target rate. How much do they drain? However much is required to hit the target. Where does the liquidity come from? Thursday was an example. There was a liquidity margin call that went out. Again, I think that there is a real danger of the two economies being linked in a very bad way. Gersh

To: Zeev Hed who wrote (4509)	6/14/1998 2:54:00 PM
From: Gersh Avery	Read Replies (2) \| Respond to of 9980

Zeev More regarding liquidity I would not be surprised to see the DOW hit the 10k mark in two or three days. With the Japanese announcement liquidity will flow out of there, yes. It will hit our shores hard. For our DJIA to hit 10k really is not that far up. In addition the Fed announced Friday that they were adding liquidity to our system. I would guess that they figured a need for the sake of interest payments. So with added liquidity from the Fed at the same time as the increase in flow from over there we are ripe for a blow off top. I have gone from 100% cash to 100% invested in stocks Friday and will pull back out Thursday or Friday. This is quite tricky for me as my 401k takes three days to make the transition. For me to be fully invested Friday required me to place the order last Tuesday. Gersh