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

To: IQBAL LATIF who wrote (18791)	7/2/1998 12:50:00 AM
From: Raj	Read Replies (1) \| Respond to of 50167

Consider this: On its high, Japan pours in $5 billion into US mutual funds weekly. I dont know the exact amount into risk-free-treasuries...but it is considerable. A positive in Japenese economy would develop into a giant sucking sound of funds into Japan. Short term: inverse relationship of S&P w.r.t Japan. Long term, fundamentals may dominate. IMHO. Raj

To: IQBAL LATIF who wrote (18791)	7/24/1998 10:32:00 AM
From: IQBAL LATIF	Respond to of 50167

Markets are about integrated strategies-- the previous posts may deviate but the logical conclusions should reaffirm to the same pattern-- if we can predict the move up it would share failure of our models if the break of the supports cannot be easily predicted an excellent note on 2nd July as building blocks of the big rally were discussed so were the possibilities of upside potential and in the same manner the story of break below 1998-- To: +IQBAL LATIF (18785 ) From: +IQBAL LATIF Thursday, Jul 2 1998 12:32AM ET Reply # of 19031 The Global Alert report with a benefit of hindsight looks like holding well. I will keep the objectives for this ASEA rally same as my previous reports. I think, I had some reasons to believe that if 1918 has to be taken out and the DOWS 9050 or 9060 level, we needed this ' huge rally'. The market has appreciated the perception that ' Japanese' are ready to handle things differently. Now, if Japan is able to stick to its commitment of cleaning up the banks. I expected see smart money taking positions in Japanese economy before the laggards follow. It was for this reason I was positive on Japan, that positioning is now quite evident but we will not be out of woods until 17000 is taken out. The activity in ASEA has provided the tinder for this big fourth boast here in US. As usual I will like to be able to present the target of composite if 1918 is taken out. I would like to think that going by historical rise I would pin a point somewhere 2040-2050 for the next phase. I call this as a boaster stage. I would think that we may see a probe of 1918 we even may go up and clear 1924 as a result of ASEAN action today. However the new range would be 1880 and 1932. Economic numbers will rattle the markets intraday although I think that today's unemployment number is a no win situation for shorts. If it is very strong in light of yesterday NAPM and previous durable goods we will see market looking at strong number as a clear evidence of strong economy with a slowing down prospect. If it is weak it will only confirm that we are in a phase of soft landing. Difficult for calls of deflation to be given a serious hearing, the Cassandra's need to wait. I have no doubts that we will see a lot of movement between 1903-1931 intraday and a possible test of 1880 but until 1866 is taken out decisively this phase is intact. I see that all the necessary side events are falling in place for that run on to '2050 level'. I would assume that earnings revised heavily downwards during course of last few quarters would continue to show a tendency of beating the numbers. In the process as we move between 1880 and 1931 from now to next few days. The new stage can only come if Japan and Europe stays in course of economic recovery. The US corporate need mature markets and pent up demand, I see that we have a possibility of lower interest rates and a pent up demand. It may be on the back of possible domestic activity in Japan and as I wrote few days back renewed howls of cut in interest rates that 2050 phase is attempted. However I will keep a close eye on the building blocks. Every new stage in the market needs justification alongwith period of minimum of 4 quarters that I call as a period of consolidation. S&P at 900 with a P/E of 23 needed a solid base building and earning building phase. What we call technically a base building phase is actually market efforts to correct its speculative excesses. Within four quarters the 'lagging earnings' catch up with the levels and if economy and demand is strong enough the foundation of next leg is placed. Markets are all about future anticipation and not the current, it is the future possible macro-economic conditions one needs to know if market direction has to ascertained. The only discomfort I had so far was that unlike my previous 'bhumbo' predictions. I still see some missing blocks, for me for the market to move higher I need 55$ earnings by year end and a long bond yield of 5% by March 1999, looking at the real interest rates I have some visibility. I am one of first few people who have courage to go on record calling for a interest rate cut and not a rise. I know the big Gurus are confounded when they see this soft landing probability. If I can see that coming the 55$ and 5% I can also see the building blocks of 'Bhumbo' 2 being quietly placed. I also like this 'unique proprietary' approach of taking cue from global indexes in only certain phases of markets. I would be unfair if I fail to highlight this new deadly combination as I see it assembling. I needed one more element to be sure that a next phase is for real and that is to clearly define the markets from where demand will generate. Low interest and higher earnings alone are not enough I would reassert. Without new pockets of huge demand all of this would be immaterial. Where are new expanding growth possibilities? Where is the new demand going to emanate from. I look at ASEA and find the answer, also Japan gives me an indication that Europe-Japan and ASEA will provide the future for US companies to keep churning profits. The link of lower interest rates alone is not enough to increase aggregate S&P earnings we need to establish 'deep pockets of demand' also. Once we determine that interest rates are heading lower and area of demand is visible why not to stick neck out and let everyone know what are the real possibilities. With new round of lower interest rate environment we may see profits growing as pent up unfulfilled demand from Japan fuels this new phase. I totally agree that the script may give a feeling of no deviations but the road ahead is full of uncertainties and pitfalls. The new paradigm may be just a 'myth' but people like us who have so far correctly identified this 'paradigm' would like to write our new script and watch patiently if the drama unfolds the way we think it should. I may also venture to think that if non-farm and unemployment numbers come strong the market in light of yesterday's numbers would ignore that, a short blip is possible post numbers, but overall it would be taken as a good sign that economy. As I look in my crystal ball I see economic numbers today (ONLY) as a no win situation for shorts, whichever side they come due to this mix of confusing data the market will interpret them bullishly. Let us see how right or wrong we are. The only test of a futuristic predictions are 'ground realities'. VTo: +IQBAL LATIF (18785 ) From: +IQBAL LATIF Thursday, Jul 2 1998 12:32AM ET Reply # of 19031 The Global Alert report with a benefit of hindsight looks like holding well. I will keep the objectives for this ASEA rally same as my previous reports. I think, I had some reasons to believe that if 1918 has to be taken out and the DOWS 9050 or 9060 level, we needed this ' huge rally'. The market has appreciated the perception that ' Japanese' are ready to handle things differently. Now, if Japan is able to stick to its commitment of cleaning up the banks. I expected see smart money taking positions in Japanese economy before the laggards follow. It was for this reason I was positive on Japan, that positioning is now quite evident but we will not be out of woods until 17000 is taken out. The activity in ASEA has provided the tinder for this big fourth boast here in US. As usual I will like to be able to present the target of composite if 1918 is taken out. I would like to think that going by historical rise I would pin a point somewhere 2040-2050 for the next phase. I call this as a boaster stage. I would think that we may see a probe of 1918 we even may go up and clear 1924 as a result of ASEAN action today. However the new range would be 1880 and 1932. Economic numbers will rattle the markets intraday although I think that today's unemployment number is a no win situation for shorts. If it is very strong in light of yesterday NAPM and previous durable goods we will see market looking at strong number as a clear evidence of strong economy with a slowing down prospect. If it is weak it will only confirm that we are in a phase of soft landing. Difficult for calls of deflation to be given a serious hearing, the Cassandra's need to wait. I have no doubts that we will see a lot of movement between 1903-1931 intraday and a possible test of 1880 but until 1866 is taken out decisively this phase is intact. I see that all the necessary side events are falling in place for that run on to '2050 level'. I would assume that earnings revised heavily downwards during course of last few quarters would continue to show a tendency of beating the numbers. In the process as we move between 1880 and 1931 from now to next few days. The new stage can only come if Japan and Europe stays in course of economic recovery. The US corporate need mature markets and pent up demand, I see that we have a possibility of lower interest rates and a pent up demand. It may be on the back of possible domestic activity in Japan and as I wrote few days back renewed howls of cut in interest rates that 2050 phase is attempted. However I will keep a close eye on the building blocks. Every new stage in the market needs justification alongwith period of minimum of 4 quarters that I call as a period of consolidation. S&P at 900 with a P/E of 23 needed a solid base building and earning building phase. What we call technically a base building phase is actually market efforts to correct its speculative excesses. Within four quarters the 'lagging earnings' catch up with the levels and if economy and demand is strong enough the foundation of next leg is placed. Markets are all about future anticipation and not the current, it is the future possible macro-economic conditions one needs to know if market direction has to ascertained. The only discomfort I had so far was that unlike my previous 'bhumbo' predictions. I still see some missing blocks, for me for the market to move higher I need 55$ earnings by year end and a long bond yield of 5% by March 1999, looking at the real interest rates I have some visibility. I am one of first few people who have courage to go on record calling for a interest rate cut and not a rise. I know the big Gurus are confounded when they see this soft landing probability. If I can see that coming the 55$ and 5% I can also see the building blocks of 'Bhumbo' 2 being quietly placed. I also like this 'unique proprietary' approach of taking cue from global indexes in only certain phases of markets. I would be unfair if I fail to highlight this new deadly combination as I see it assembling. I needed one more element to be sure that a next phase is for real and that is to clearly define the markets from where demand will generate. Low interest and higher earnings alone are not enough I would reassert. Without new pockets of huge demand all of this would be immaterial. Where are new expanding growth possibilities? Where is the new demand going to emanate from. I look at ASEA and find the answer, also Japan gives me an indication that Europe-Japan and ASEA will provide the future for US companies to keep churning profits. The link of lower interest rates alone is not enough to increase aggregate S&P earnings we need to establish 'deep pockets of demand' also. Once we determine that interest rates are heading lower and area of demand is visible why not to stick neck out and let everyone know what are the real possibilities. With new round of lower interest rate environment we may see profits growing as pent up unfulfilled demand from Japan fuels this new phase. I totally agree that the script may give a feeling of no deviations but the road ahead is full of uncertainties and pitfalls. The new paradigm may be just a 'myth' but people like us who have so far correctly identified this 'paradigm' would like to write our new script and watch patiently if the drama unfolds the way we think it should. I may also venture to think that if non-farm and unemployment numbers come strong the market in light of yesterday's numbers would ignore that, a short blip is possible post numbers, but overall it would be taken as a good sign that economy. As I look in my crystal ball I see economic numbers today (ONLY) as a no win situation for shorts, whichever side they come due to this mix of confusing data the market will interpret them bullishly. Let us see how right or wrong we are. The only test of a futuristic predictions are 'ground realities'.