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To: Elwood P. Dowd who wrote (31764)	8/28/1998 6:51:00 AM
From: rupert1	Respond to of 97611

Thread: For those interested in an overnight reading from Europe. Japan's drop in excess of 3% was largely affected by Wall Street's drop in excess of 4%, and reflects a degree of irrational fear. There is a growing belief that Japan will print money as it did earlier this year, and bring about market recovery. Europe opened dramatically down but has staged a steady recovery. The opening fall was largely constituted of "marking down" by dealers. The Swiss market was down more than over 7% but is now 1.5%. Germany was down more than 5% but is now about 2.4% France was down more than 3% but is now only .60%. Spain is still down heavily (about 5%) because of exposure to Latin America. Victor

To: Elwood P. Dowd who wrote (31764)	8/28/1998 7:13:00 AM
From: rupert1	Read Replies (2) \| Respond to of 97611

Thread: Continuing my report from Europe. The appearance of Yeltsin to meet the Bulgarian President today has brought some relief; at least he is not drunk, too sick, or in prison. In fact, he looks quite good. Speculation is that (a) he will hold out as long as he wants if the the West (including Germany, Britian, France) supports him; he needs their support because he has no signficinat support in Russia although he may be tolerated as a figurehead by all parties to allow the power struggles to go on before the next election (b) that he is negotiating an insurance package for himself in exchange for a dignified departure in the next few weeks or months (c) that the issue of Yeltsin obscures the real struggle which is about economic policy. Purists from the left would want a return to state intervention but not full-blown communism, purists of the right would want to press ahead with cowboy capitalism. It is unlikely that either side will want to whip up the masses to achieve their ends. It is doubtful that the masses would want a return to strict state controls except as a short-term emergency measure, but also doubtful that the masses have much faith in cowboy capitalism and the robber barons who have been corrupting Russia. Clinton's vist is important and is the intervention of Germany and the other larger European countries and the European Union. Whatever the ideologues in Russia want, they need cash. The IMF and its Western masters will be engaged in a struggle to find a middle way with the Russia body politic in the next couple of weeks. They will be lookign for stability and trust rather than for pure capitalism. They will have to accept soem form of state intervention. The USA and Europe will not let Russia fail - its is a client state. The Russia Prime Minster will make and address to parliament today. It will cotnain some kind of statement of the situation and some kind of strategy. This will be a holding action until the bargains with the US and the West have been struck. The American media have exaggerated the threat of Communism, they have exaggerated the "power vacuum" and "ungovernability" of Russia. To that extent some of Wall Street's negativism is based on ignorance and fear. While I do not expect clarity and confidence to come flooding back today, and while there may be more falls in markets, they should be moderate and there will be the beginning of attempts to consolidate and even to recover some losses. But I would not expect this to be convincing. A significant short-term rally might come after Clinton's visit - or during it - or if Japan starts printing money, or if the Fed hints at a rate reduction. Victor

To: Elwood P. Dowd who wrote (31764)	8/28/1998 7:20:00 AM
From: rupert1	Respond to of 97611

Thread: CPQ and international turmoil. Michael Dell stated with his usual clarity during last Winter's Asian crisis, that those countries facing recessions and slump would need to spend on computer power even more; that deflation in those regions translated directly to cheaper component prices, which Dell could pass unto its customers within days, while retaining or improving its profit margins at the same time. This argument could be made in the present situation, but we are almost one year into the Asian crisis and have bottomed out. To the extent that COMPAQ can make the same arguments as DELL then COMPAQ should survive and grow, notwithstanding temporary setbacks arising solely from market factors. Victor