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

To: IQBAL LATIF who wrote (18662)	6/22/1998 11:36:00 PM
From: IQBAL LATIF	Read Replies (3) \| Respond to of 50167

Last night was the first time SOX was able to take out 242=3 area, I see a major resistance of SOX above 250. I would also like that Nasdaq closes above this 1800 reistance twice and move on to attack the next resistance that is 1818-28 area. Alongside Rut is also facing its next at 450 area, DDX at 140 is at nearly all times low I see a possibility of a quick trade if PSE and SOX crosses 250 and 332 I would like this DDX to jump nearly a 20 points from here. I will also keep very cautious watching the overall market and its ability to take out the next resistance at 8910 on SPU I would conside 1107 as a support we close below it we can visit somewhere back to 1100 -1092 area. If PSE RUT composite are able to take out these immediate targets on closing basis I will like to play indexes with tight stop losses. The point is that overall market is facing quite an uphill task as it approaches the second quarter earnings the full affect of ASEA slow down will in third quarter take it tool as exports fall further, I also expect $ to weaken in 3 to four months if current accout deficit is maintained at this level. I will like to see growth in Europe to compensate for the fall in ASEA but capacity utilisation, industrial production and key inciators assume new importance to start looking for new evidence of slower econoy resulting into slower growth of corporate profits. I think last night action on SOX was driven by institutional buying of INTC and TXN, semis might attract more attention if these bellweathers close above 757/8 and 60$ in such a case chances of a renewed attempt to 300 on SOX is a good possibility, on overall DJIA I would keep a short range focus and would like 1127 on SPU to be taken out as well as 8910 to make the trend clearer. I think Japanese by second week of July will bring in a package to correct the inherent entrenched problems of their economy. I do not think that strucural problems can be corrected overnight but a bold step like attacking the bad loans will help the markets which is going to reward aggressive appraoch to break the stalemate. I will also keep a close eye on Yen /$ above 140 will most likely attract colective intervention but ofcourse it will also indicate that markets do not consider Japanese to be serious enough to attack the problem of dmoestic demand and they still like to make their way out of this recession through export led policy. This in view of special circumstances of region can be explosive. Chinese who have seen their exports being driven down will have no other choice but to devalue, this may threaten the peg but I think that Hong Kong $ will be able to face the Chinese devaluation much better than discount accorded to HSI. It is one of those events where we get a cool reminder that we live in a world where inter-connectivity between economies has blurred the lines of political control it is events in remote places far and away from our living rooms which are affecting our bottom lines. What an interesting age to live in.

To: IQBAL LATIF who wrote (18662)	6/23/1998 10:39:00 AM
From: Lee	Read Replies (1) \| Respond to of 50167

Ike,..Re:<<new configuration of increasing current account deficit on one hand, yawning trade gap that is falling exports and stagnant imports>> This is not a simple subject and I don't know exactly how to respond, never mind that an understanding of thermodynamics doesn't qualify one to address complicated economic interactions.<g> I did go back and look at some articles by Stephen Roach, the economist at Morgan Stanley to get some numbers. - US balance-of-payment gap is currently 2% of GDP and expected to rise toward 3%; however, at that time, GDP was expected to be in the 3% annual range or less. The economy has surpassed all expectations here and the last revision came in at 4.8% for Q1. As long as the economy maintains this kind of growth, the ratio between output gap and GDP can remain in the 2% area. - Trade gap showed a 9+% increase to 14+ billion in most recently reported number. This also adds to the current account deficit. I don't have the exact composition of exports and imports but non-Japan Asia accounts for only 7% of Global trade and the US part of that number is small. So to see these facts in proportion, I have to dig up the absolute numbers. - Expected budgetary surplus will help to offset the rising current account deficit. If the US economy, corporate earnings, can continue to grow at or near recent levels, and if the dollar remains strong, and if inflation remains at current levels, then it would appear this equilibrium (maybe shaky) could continue. But there are a lot of 'ifs'. <g> Regards, Lee