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

To: Lee who wrote (18962)	7/16/1998 5:51:00 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

I think I have explained this issue many a times I see anamoly in the real interest rates which are far too high- going forward 'inflation' will be adjusted lower hence the long bond will head lower-- the short end of the yield curve cannot stay higher in a situation where we have low inflationary growth- since the short end cannot stay higher as such I am thinking about a whole shift of the curve down-- economic environment I project, we need to have a normal looking yield curve with long end at 5% and short end at 4.75%. The theoritical definition once in place needs global fundamental outlook to work around it-- this is how I think we will see it happening- Japan in six months moves out of this depression-the growth in Japan in my opinion will be better in next two quarters-- Last Tanken survey gave us some earlier indication of what will happen in Japan. US corporate profits will peak within this cycle of growth in next few months-- I expect unemployment to rise to 4.9% in three months time Cap utilisation and NAPM will touch down around 76 and 46-- now somewhere at this point market will be around 8250 coming down from peak of 9800 or even higher- US economy will show signs of weakness whereas Japan and Europe will show increased domestic demand so it is not US legs that will carry Japan rather it may be Japans own domestic demand and fiscal cuts plus affect of stimulas. At the moment US economy real interest rates are far to high in my opinion we need this shift of yield curve to lower levels- the affect of ASEA and continued economic slowdown is leading us to a soft landing that will coincide with Japanese and European takeoff- there in my opinion I see a period of two to three quarters of US economic slow down and intitial Japanese take off that will be more domestically induced. We may see US growth slowing to levels where short term interest rates may needed to be adjusted downwards. The demand from Japan and ASEA will take atleast two quarters after take off to start affecting US markets, under these circumstances keeping in view the level of real interest rates I see that we have nowhere to go on short end but lower.I hope I have been able to explain with the best I can- please do point out where do you think I am thinking wrong.