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.

Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (47706)	7/13/1998 1:24:00 PM
From: WBendus	Read Replies (1) \| Respond to of 58727

It looks like the Bonds may finally be toping out. The have broken a two month up trend today and a longer weekly trend appears to be rounding out. Should this pop in rates grow some legs, the market could be in some trouble. It is obvious that wall street is already looking at 99 earnings and seemingly ignoring 98 results. Should the expected 16% plus earnings growth in the s&P not pan out, it could mean troubles for our markets considering that those earnings have been discounted by low rates. I suspect that it will take a couple of weeks to realize what the effects of the Japanese elections will be and how well the IMF bailing out of Russia will go. I think that the Japanese elections will be a slow, net positive and that the Russian bail out may prove to be fruitless. I think that the short run, through the middle of august, continues to be up. Strong cash flows to mutual funds should provide for that. But if the 3rd quarter is as disappointing as the 2nd, that combined with a seasonal slow down in cash flows to mutual funds could spell a disastrous free fall in the market. The factors which I feel would lead to this sell off include: 1) Japanese yen strengthening against the dollar on the heels of a meaningful attempt to revive the Japanese economy. The Japanese have sent a strong message with their ballots that this is what they want. 2) Repatriation of all those Yen which have supported the US bonds, causing rates to climb back towards 6%. 3) '99 estimates to be revised downward to single digit growth for the S&P. Continued warnings in the 3rd quarter should bring the growth rates down a couple of percentage points. This is an awful lot to ask for to get another substantial correction. Even if 1 and 2 do pan out, getting analyst to revise their estimates downward will be incredibly difficult to do since they will view weakness in the dollar as a positive for multinationals. Beyond that, since a portion of their compensation is derived from support of investment banking, it is too their short term financial benefit to keep stock prices lofted. Comments and discussion welcomed. Wayde.