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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: MGV who wrote (8718)	10/1/1998 2:43:00 PM
From: dougjn	Respond to of 22640

Let me ask you this about the Cardozo wins without a second round, scenario. Say that happens. And they make some noise about cutting spending, the SS reforms, etc. And the legislature does some of them fairly soon. But the speculators, eyeing Brazil as the best current big target to fail, noneless press their bets. Figuring that in this very nervous environment, money may be very nervous about flocking back to Brazil for some while even if they DO make progress on their budget. Meanwhile Rubin makes noise, but the IMF can only spare 30 bill or so. Which isn't enough to keep the sucking out of Brazil's reserves at the frightening rate of 22bil a month from continuing and accelerating. Result? Devaluation. Which then keeps going for a while, as the debt burden only looks more crushing, and investors, both foreign and Brazilian flee into dollars. So Brazil adopts currency controls. Which spooks everyone from venturing back into TBR, since they might not be able to get back out again. Yes this is pretty gloomy. But it seems all eyes are now on Brazil. And that is not likely, in this environment, to be a good thing. Doug

To: MGV who wrote (8718)	10/1/1998 3:12:00 PM
From: dougjn	Read Replies (1) \| Respond to of 22640

The Bond Says Worry By James J. Cramer 10/1/98 1:31 PM ET You like equities? You gotta root against the bonds. You hate equities, the bonds are your friends. You want the market to go to 7400, you gotta hope the 30-year bond ramps to the 4.75% level. It is at 4.92% as I write this. Wow, is this counterintuitive from everything we know for the last 20 years? But it is the gospel. It has to do with the fact that guys like me, hedgies, just stare at that bond because we know it can't lie. And that bond is saying something, mostly that the world is going to %#$&^#&^ in a handbasket. The bond simply isn't supposed to be here given the manufacturing index, the housing market, the auto market, the retail market, the oil market, the gold market. But the bond is so liquid and so truthful that I don't think it reflects a short squeeze -- that all of that current data are nullified. The bond says we must be worried. As the battle here is against systemic risk -- in other words, that the system will fail, the center will not hold -- if you see the bond sell off (interest rates go up), that's good news! Most people who do what I do can't believe this 30-year bond's rally. It is so unprecedented, so scary, that it has everybody spooked and fooled, so I dare not hazard a guess where it goes. But I know from here, if bonds go up (rates go down) the market is going lower, not higher. Amazing.