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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Mason Barge who wrote (6019)	6/26/1998 2:05:00 AM
From: Jess Beltz	Read Replies (4) \| Respond to of 10921

I would like to add something here. I think that the US market in general is dangerously close to becoming a bubble in its own right. The recent big gains in the Dow and broader indices are very likely due to the belief that the Fed will not raise rates in the foreseeable future because we're moving into a "help Japan" (at all costs) mode and any raising of the spread between Japanese and US rates will help stimulate the capital flight that is whacking the yen. However, and this is the point of this message, although Clinton is here in Asia and talking about economics (this was the cause for the big gain in the Hang Seng yesterday - which is largely being given back as of this moment), NOT ONE THING HAS BEEN FIXED IN JAPAN YET!!! In fact, last week (or maybe early this week) there was an ASEAN meeting where regional trade ministers were trying to set up an Asian Free-trade zone similar to what Clinton has been pushing in the Western Hemisphere, and one country adamantly refused to open up its markets to anyone. Care to guess???? That's right, Japan. I was talking to two very good financial economists two days ago (my own department head, Professor K.C. Chan and Professor Ronald Anderson , distinguished visitor from Catholic University in Belgium) and the consensus we came to was that Japan must (1) continue to devalue its currency and dramatically increase the money supply there, playing with inflation to get business stimulated and also get people out of their cash hoarding mood, and (2) Simultaneously reform the banking sector. Prof. Anderson pointed out that they may not accept an RTC type solution, and this is supported by the Japanese mood at the Asean meetings. The Japanese are getting tired of being dictated to by the West (basically, all of the stimulus packages they've attempted so far have been dictated to them and they've all failed) so Rubin may have to adopt a more conciliatory tone with them. However, and this is the point, without BOTH of these measures, Japan is doomed, and will take the rest of Asia with it for the foreseeable future. And (1) will gurantee more short-term pain for the regional currencies and economies in any event. Even if Japan were to begin all of this tomorrow, Asia is several years away from real expanding economies again. There are going to be major drops in orders to Asia and a flood of really cheap imports from Asia for a long time to come. I do NOT understand Wall Street's mentality at all, and again, NOT ONE THING HAS BEEN FIXED IN JAPAN YET. I think for all of the current exuberance, there is a major league correction coming. I'm not sure what will trigger it (short of the continued denial and confusion from Japan,) but I would say for the Summer, keep a hair trigger on your long positions. October (this coming Fall) is shaping up to be another fun month. jess. PS - By the way, at the FIRST sign of real reform in Japan, I will be in the oil and semi markets with both feet (my own equity AND the bank's). I just don't see any blue in the sky yet, and the storm clouds I can see are giant thunderheads. jb.