Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: IQBAL LATIF who wrote (18625)	6/18/1998 12:57:00 AM
From: FJV	Read Replies (1) \| Respond to of 50167

IQBAL, I've been a lurker on this thread for a long time. I must say that you have consistently awed me by your cogent market predictions, macro-economic and political insights and your uncanny ability to "see the whole." Almost invariably, when I read your treatises, your logic is so elegantly concise and apparent, that I'm left with a higher sense of understanding and clarity about those issues which had previously been enigmas to me. I sincerely thank you for the education. I am puzzled, however, by your optimism regarding Japan. The liquidity trap the Japanese have placed themselves in is very difficult to remedy. The policies of growth via export has only served to create a currency crisis with far reaching consequences. Their "big bang" has benefited American investment bankers, but only exacerbated the capital outflow because American equity and debt markets and the currency have all been more attractive to those in control of Japanese capital than Japanese investment vehicles. The Travelers and Morgans have only made matters worse in Japan by effectively draining liquidity. It will take some time for the banking system to recover from the avalanche of bad debt littering their books as a result of easy money being thrown at over capacity. The mix is deadly when the bubble bursts as it has in ASEA. The much maligned RTC here in the US forced the S&Ls into health when a similar crisis hit us. Japanese banks have yet to be forced to swallow the bitter pill. Interest rates can't go much lower- so monetary policy won't help. The Japanese people don't spend during hard times - they save. So a tax cut will probably not provide the boost in domestic consumption necessary in order to kick start the economy. Does Hashimoto have the political will and clout in order to effect the kind of massive "New Deal" style spending programs necessary to change the psychology? Can the banks be forced into reform? One day of US Treasury currency intervention does not a recovery make. Can it all be done before we see the yen fall further, possibly causing China and HK to devalue? I hope so - but I wish I had more confidence in the Japanese power structures ability to act immediately. Rubin has bet on an immediate Quid Pro Quo from the Japanese. I hope the gamble works, because we have just played our only trump card. I don't wish to be negative. At times I envy your optimism. I would very much appreciate your feedback. Please convince me that my pessimism is ill advised. Again, many thanks for your generosity of knowledge and spirit. Franco

To: IQBAL LATIF who wrote (18625)	6/18/1998 1:27:00 PM
From: Judy	Read Replies (2) \| Respond to of 50167

Listen to the market ... I would be cautious on IBM and say calls at strike 115 is ambitious on a technical basis, 115 is the 50-day ema and a stock seldom penetrates a major support from below in a single attempt. Last quarter's earnings report showed slowing growth in all areas except the service area and I don't believe that alone can fuel an upward move in IBM. IBM may do a dead cat bounce should the DOW move up. But keep in mind that analysts usually do the obvious ... they downgrade stocks in a downtrend, and they downgrade the weakest first. Note the order of analyst downgrades for the sector ... GTW then IBM then HWP. CPQ should be next ... but they will probably hold off on DELL since every analyst that downgraded DELL in the past got pie in the face.