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To: Seaworthy Lyric who wrote (7572)	10/4/1998 5:12:00 PM
From: Joseph G.	Respond to of 86076

<<but then the strength of DM will probably narrow that spread considerably...>> That's right, and even now all future Euro currencies trade very close together. In Europe there was a bubble too, possibly same people who MOMOed US market also traded in Europe (last two years). The relative decline in constant currency terms is not much different for a "global investor".

To: Seaworthy Lyric who wrote (7572)	10/4/1998 6:29:00 PM
From: Joseph G.	Read Replies (2) \| Respond to of 86076

<<Economists say Euro stocks set for fresh tumble LONDON (Reuters) - Europe's stock markets looked set for a fresh tumble Monday after this weekend's meeting of G7 finance ministers failed to produce decisive action to stem turmoil in the world economy, economists and strategists said. A flight to quality would send bond prices and the mark higher, and the frantic sell-off in global stock markets would gain fresh pace, they said. "Stock markets are looking over the edge of the precipice with a severe sense of vertigo," said Bear Stearns International chief economist David Brown in London, forecasting at least 3 percent off the FTSE 100 and 4 percent to 5 percent off Germany's DAX and the Paris CAC index at Monday's opening. The FTSE 100 and DAX indices ended Friday at their lowest closing levels since mid-November last year. The German index finished the week 12.4 percent lower, while the FTSE has fallen 23 percent from its mid July peak. The mark would be a major beneficiary of renewed investor caution over the dollar amid continuing turbulence in Latin American markets, especially Brazil. Capital looked set to keep flowing into euro-bloc currencies, economists said. Jim O'Neill, chief currency economist at Goldman Sachs in London, said that in the absence of new initiatives by the G7 in Washington, the need for decisive action to resolve Brazil's financial crisis was more pressing than ever. "We're in for more turmoil. This weekend hasn't lived up to expectations, so there's disappointment there. But the key to stop it turning into a bloodbath is Brazil," he said. Interest rate cuts were key to any market recovery, economists and strategists said, and financial markets were looking for further rate reductions in the U.S. in the coming weeks as well as lower borrowing costs in Britain. "The markets need evidence that the West is going to stop the Asia problem spreading and a bigger fighting fund is needed for Brazil. But most important is that the West takes action to show that U.S. and Euro economies are not going to be polluted by Asia's problems and that requires aggressive interest rate cuts," said Gerard Lyons, chief economist at DKB International. However, on Sunday World Bank President James Wolfensohn said he saw G7 coordination on growth but played down prospects for any coordinated rate cuts. "This was supposed to be the weekend when G7 said something constructive about the yen and about interest rates. The markets were looking for a bold commitment, for G7 to throw down wallets on the table and bail out beleaguered emerging markets. All they've got is promises and rhetoric," said Brown, of Bear Stearns International. Cuts in Germany and France were a prerequisite to avert the threat of global recession, they said. "Europe needs to be put under pressure," said DKB's Lyons. "One of the recurring themes of U.S. policy statements is that Japan needs a fiscal boost and banking reform but it is crucial that Europe like the U.S. responds with speed and foresight to the mounting crisis," he said. Germany and France are unwilling to cut rates in the run-up to the launch of European economic and monetary union (EMU) in January. "EMU has diverted policy-makers' attention from the need to cut rates aggressively because of the global deflationary shock," said Lyons. However, some economists were more sanguine. Charterhouse chief economist Richard Jeffrey said that although the FTSE 100 may come off another five percent in the next two weeks, dividend yield and price-earnings valuations looked "sensible" on a long-term basis and further weakness could attract buyers. The flight to quality in bonds might persist in the near term but the redemption yields on which major Western markets are currently selling looked too low on a three- to five-year view, he said. "This is a mini-crisis, largely based on falling confidence, and not the end of the world," said Jeffrey.>>