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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (662)	9/15/1998 3:32:00 PM
From: X Y Zebra	Read Replies (1) \| Respond to of 3536

The current account deficit has increased from an annualized rate of $140 billion in the second quarter of last year to $226 Billion in the last quarter, as net exports from the U. S. have fallen by $74 billion. It may be that the recent drop in the dollar against the yen, despite the quarter-point rate cut by Japan and its weakness against the German mark, reflect growing market concerns about the growing supply of dollars provided by the widening trade deficit. However, given the strains that emerging market currencies are under, this softening in the dollar is a welcome development. A few questions on the above: 1. Following the above, and given the recent and expected continued weakness of foreign economies (as consumers), is it safe to assume that further increases in the trade deficit, (lower US exports as said foreign consumer markets are weakened), are to be expected, hence further dollar weakness can be expected? 2. Would that mean then that the fed would be less likely to lower interest rates ? 3. Is today strength in the Latin American markets a vote of confidence in Brazil, Mexico and Argentina or is it simply that they are far oversold ? On Soros testimony: Mr. Soros's has requested that international financial markets should have a degree of "supervision by regulators" and wish to further fund the IMF, and set up of some kind of "International FIDC", claiming that the efficiency of free markets on the developing nations, has proven too harsh on the same. He argues that this will eventually come back to hurt the US markets. He also suggested that these regulators would be perfectly capable of achieving the task as Mr. Greenspan has done in the US. (at least so I understood). Now the question are: 1. Is he suggesting so because he is genuinely concerned about these markets. 2. Or.... is he seeking a way for his reported losses to be somehow softened or given a chance to recoup by the hope that the IMF intervention in Russia, gives this market a new lease in life. He seemed to favor betting on the side of free markets when he bet against the Bank of England, a few years ago.... As in: "The beauty depends on the eyes of the beholder". (and the size of the beholder's loss). Perhaps the turnabout is the result of wisdom gained by the acquired wealth, now somehow reduced... It seems to me as painful as it may be, the harsh discipline of free markets would be the only medicine likely to cure the chronic lack of honesty by foreign presidentes, dictators, potentates, and other sundry supremos of foreign lands... I would appreciate comments. TIA.