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Technology Stocks : Command Systems, Inc. (CMND) -- Ignore unavailable to you. Want to Upgrade?

To: Bald Eagle who wrote (1293)	8/11/1998 5:00:00 PM
From: Big Dog	Read Replies (1) \| Respond to of 1956

*OFF TOPIC* Aug 11, 1998 FOOL PLATE SPECIAL An Investment Opinion by Alex Schay Global Market Decline Revisited World equity markets are in a slump. Tokyo's Nikkei 225 index fell 1.40% largely on lack of confidence in a turnaround and the yen falling to an eight-year low against the dollar. Hong Kong equities nose-dived 3.62% to a five-year low, and German stocks are off 3.40%. Russia's main stock market index, the RTS, was down 11.01 points, or 9.11% -- slightly better since the end of a trading halt. And what of the usual problematic Asian suspects like Indonesia, Malaysia, South Korea, Thailand, and the Philippines? Well, in that order, the Jakarta Composite is off 3.35%, the Kuala Lumpur Composite is down 5.26%, the Korean Composite was cut a slight 0.22%, the Thai Stock Exchange was clipped 1.75%, and the Philippines Composite was "Marcosed" 3.82%. Buying pushed the yield on the 30-year bond to a historic low. The above documented drop in Asian markets, plummeting confidence in Japan's economy, and a major strengthening of the dollar to new eight-year highs against the Japanese yen prompted the latest flight to the "safe haven" of U.S. Treasuries. Is the situation in Asia getting worse? Let's just say if anybody were to go broke because of problems in East Asia, it would be Japanese banks -- and that's probably not going to happen considering the following: The "problem" countries in East Asia represent less than 4% of global international bank lending, and still only account for 6% of Japanese bank lending. If 30% of all the Japanese loans to Thailand and 15% of all the other loans to East Asian nations failed, the net effect would be a 1% drop in Japanese bank loan book (according to David Roche of Independent Strategy). What's the bottom line for the U.S.? Well, East Asian capital market crises generally result in higher risk premiums, higher interest rates, lower economic growth, and lower profit growth. Yes, nothing new here, except the fact that U.S. growth in corporate profits continues to be incrementally lowered by the major institutions as a result of continued earnings impacts from Asia. Merrill Lynch, for instance, began the year with a top-down forecast of a 3% gain in S&P 500 operating earnings. In the second quarter, S&P 500 operating EPS was up just 2% from a year ago. Merrill recently lowered its top-down earnings estimates for 1998 by $1. This would bring its figure for S&P 500 operating earnings up just 1% to $45 this year, as cyclical sectors continue to get squashed. However, the 1999 estimate is unrevised at $48.50, implying a pickup in momentum to around 8% next year. Merrill believes that crummy growth will eventually lead to the Fed easing up on monetary policy. Now, predictions abound, but what is certain is that price changes track with business results. Investors that continue to focus on the business risk specifically associated with their companies will continue to do well in the long term.