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To: Captain Jack who wrote (32097)	9/1/1998 8:32:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

Thread: In Europe this morning there is a calm, concern. The calmness is evident in the relatively low falls - most in the 0.50 to 1.50% range. Even the UK which was closed on Monday and had some catching up to do never got lower than a 2.75% fall and is now only 1.5 down. The concern was analytic. Many analysts have spoken or written of what could go wrong, theoretically. (This includes Japan, Latin America, the effect of the loss of capital assets on consumer spending, the effects of a weakening dollar arising from perceptions that the Feds will have to lower interest rates and so on). But most, if not all analysts, judge that this is a normal, if violent, correction in a bull market caused by overvaluation in the US and triggered by exaggerated US fears about the effects of Russia political unrest. The immediate problem is Wall Street. Will it continue to overreact or will it start buying again and stabilise matters. On the Russia matter, most understand that the PM Designate would not have been confirmed by the Duma yesterday and will probably not be confirmed next time. The debate is about whether a new candidate acceptable to the Duma will emerge - but most think that this will not be so. It is normal for the Duma to capititulate on the third vote when it has squeezed as much political capital as it can from its power of confirmation. However, this time, given Yeltsin's weakened popularity, there is a lot of calculation going on whether the communists might actually want to force Yeltsin to disband the Duma and call elections - they fancy they might win in such elections. Clinton's visit has some contribution to make in so far as he can convey that the West and all its economic and monetary aid would favour Yeltsin and his reforms and would not look kindly on a communist dominated Russia. But many Russians are leery of Western reforms. The delay in establishing a government will be unsettling but it may prove useful. It has prevented Yeltsin giving in to reactionary forces, and in the intervening period, it allows the West to work behind the scenes to put flesh on a recovery plan which can be implemented by the new govt. I still think the US market has a wall of worry to overcome from tax selling in September and October. Personally, if I can avoid margin calls, I intend to hold. Victor