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To: bobby beara who wrote (15993)	8/16/1998 11:37:00 PM
From: philv	Respond to of 116893

The Asians are learning and one-upping America: As you all probably know, the H.K. market was up dramatically last Friday, a whopping 8.5%. What a joke. The lessons from the PPT were learned only too well. scmp.com (scroll down to the Hang Seng Close article). Here we have another agency interfering in the markets, big time. And, as I write this, China is taking a big hit, while Hong Kong is conveniently closed. The investor has a hard enough time trying to survive in the real world without C.B.s and governments rigging the system. I expect much more of the same as events unfold. Phil

To: bobby beara who wrote (15993)	8/17/1998 3:41:00 AM
From: Alex	Respond to of 116893

Beware the bear: an all-points bulletin to world markets By Alan Deans In just one month, Wall St has slumped nearly 10 per cent from its mid-july record peak, wiping billions off the value of US stocks. The decline has triggered questions about the ability of the US to buffer worsening conditions in Asia and beyond. It also raises doubts about Australia's ability to weather the storm. "We are in a bear market," says Richard Russell, the cult Wall St forecaster who picked the 1973 and 1987 slumps as well as the latest. "Historically all bear markets have wiped out at least half of the previous bull market's advance. We could be under 5000 before this is over." Nor is Russell a lone voice. Merrill Lynch's chief investment strategist, Charles Clough, is so bearish that he is telling people to have just 40 per cent of funds in shares. Global portfolios should have only 33.3 per cent in US shares, compared with a normal 41.3 per cent weighting, he says. It is a huge call for a market that peaked at 9338 only four weeks ago. At the heart of the sell-off is a significant waning in confidence in the face of poor earnings and the Lewinsky crisis in the White House. Offshore developments have intensified the black mood. Moves by Japan to fix its battered economy are in doubt, with the yen plumbing new lows. China's currency strength is being questioned, while Russia is now in danger of total economic collapse. Even the pillar for growth and reform being offered by a newly unified Europe seems under stress. As US investors respond by downgrading their sharemarket hopes they have shifted more of their funds into bonds and short-term money market securities. Investment Company Institute figures highlight a sudden rush into money market mutual funds in the first week of August. Retail money market funds boosted their assets by $US12.15 billion, or 1.65 per cent, while institutional money market funds were up by almost $US10 billion, or 2.1 per cent. Californian researcher Trim Tabs confirms big inflows into bond funds late in July, when the Dow dropped through 9000, and again early in August after its 300-point, one-day plunge. Importantly, flows into bonds and bond-hybrid funds for July were running 83 per cent ahead of the same month last year. Anecdotal evidence also has it that investors are looking for safety. The Franklin Templeton funds group is among a number to report that investors are asking about putting their savings into money funds. A perennial bull, Goldman Sachs' Abby Joseph Cohen, has been trying to calm nerves. Thursday morning she gave a rare pep talk to her colleagues, reiterating recent messages that the impact from Asia should be muted and that the profit growth outlook was not as bad as it seemed. The market fell by 93 points anyway. Others are also bullish. Lehman Brothers' Jeffrey Applegate, for example, is telling investors to keep 80 per cent in shares. So bullish is Donaldson Lufkin and Jenrette's Tom Galvin that he has lifted his weighting for stocks from 50 per cent in March to 75 per cent now. And as some analysts explain, at this stage Wall Street is not even officially in a bear phase. Stocks need to fall 20 per cent in value to earn the dreaded bear distinction. So far blue chip indices such as the Dow Jones Industrial Average and S&P 500 are 10 per cent below their July record peaks. But for an increasing number of funds managers and analysts this fall is enough to prompt defensive action. They have already dumped many illiquid small company stocks, and are switching huge sums into safe havens such as bonds and Treasury notes in the belief that the prices of leading shares will fall further and that interest rates will be cut. Certainly Richard Russell is adamant - the bear market hasÿ arrived. His forecasting method tracks the performance of both industrial and transportation stocks, picking turning points when the trend of one differs from the other. This so-called Dow Theory is time proven, and so followed closely by hundreds of thousands of investors. Asked how long the bear market could last, he says a couple of years. "It depends on whether the Federal Reserve lowers rates and whether the Government decides to fight it." Despite this, some investors are bottom-fishing. Research firm Birinyi Associates has released a report showing that just when program trading by large funds was flooding the market and pushing prices down, small investors were strongly buying. afr.com.au