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To: SE who wrote (3335)	9/5/1998 3:45:00 PM
From: Patrick Slevin	Read Replies (1) \| Respond to of 44573

A lot of interesting observations. <Greenspan says we are in a deflationary mode and everywhere on SI the word is all of a sudden bullish. This does not make sense. If we are in deflation, prices come down, earnings come down.> Delation, Inflation, anything that upsets equilibrium is long/intermediate term bearish. The market may pop up because of such readings short term but the greater picture changes substantially. Economic pressures will and do lead to adverse market conditions. <The bond professionals are 98.5% bullish> A worthless state. The stock jockeys were in the same mode 6 weeks ago. If the S&P declines much further the bond market will come back down with it. A Japanese problem eventually will create a repatriation of Japanese moneys and rock the bond market. It seems unlikely to bond bulls but it would take very little for it to occur; a decline in the Nik would be enough. A drop in the Yen would be as well. A decline in either would force the Bank of Tokyo to fund capital and the US Bond Market is the place they can do it the easiest. <it appears that oil is on the way up> If I recall correctly, Oil was holding the US Stock market up Thursday/Friday. That does not last forever either. The Financials (Banks) were getting absolutely clobbered Friday. The only times the market advanced Thursday/Friday (judging from memory....recall I was just glancing at charts---I was not here most of the time) was when the Nasdaq was strong. The Techs have assumed some leadership. It's time to use them as a Primary Indicator once again, replacing the Banks as something of a Bellweather.

To: SE who wrote (3335)	9/7/1998 2:58:00 AM
From: steve susko	Respond to of 44573

Your comments >>I think I also read that the estimates on the S&P 500 are being cut and right now stand at $44 to $45, down from $48. If we are in a deflationary mode, would a PE of 20 or better seem reasonable? What if we figure the mid point $44.5 and a PE of 15....that is 667.50. Wow.... >>> I can see market turning bullish if we drop a little more.Given your data, a P/E of 20 and earning of $44.5 will bring the S&P to 890. That's only 60 point from Friday low and 30/40 from Monday low. Somehow a P/E of 20 is more likely than a P/E of 15. BTW globex S&P up 20 as Asian markets rally on Monday.