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Strategies & Market Trends : Argentine stocks -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (129)	10/5/1998 12:36:00 AM
From: X Y Zebra	Read Replies (2) \| Respond to of 331

If we have a substantial slowing in the U.S. economy, some of the hazard in USD-pegging will be reduced. I think you, Z., may have also indicated as much. The key, then is to determine to what extent, all these foreign economies will impact the US growth. There are companies, say Lucent, Dell, Microsoft, Cisco, and others that in my opinion they will continue to grow. Lucent I understand, their sales outside of the US is between 20 to 25 %. The rest is here in the US and according to the company, they seem comfortable. In addition, they are also stating that growth in China is at a rapid pace..... These coupled with specific governments that will do whatever is at their reach to build currently non-existent infrastructures, and there are plenty of those situations. China is a major example. 70 % of the US economy is service oriented, and most of it is done within the US..... Is this sector about to change ? In addition.... I keep hearing that Capital flows will continue to be free of controls. (Malysia excepted, and for how long ?). So anyone in their right mind will put their money in the US Dollar as it seems to be just about the safest place. Imports, and a lot of excess capacity outside of the US will temper the effects of some the wage rise that one could assume would lead to inflation. On top of that... is the Federal Reserve the "de facto" central bank of the world ? In the US we have an impressive productive machinery that simply there is no match.... so perhaps the US will slow some.... but a recession ? I can not see it.... slower growth yes, but it will all be dependant of the overall impact from overseas. I do not believe anybody knows how to measure such, partly because the data from other countries can not be trusted. If the trade deficit increases due to cheaper imports.... that puts pressure on the US Dollar, on the other hand you get a lot of foreign investors buying dollars, because in their eyes, it is better than their own currency and or equities... So does that mean higher Dollar and the Federal Reserve lowers interest rates because they do not want to weaken further other currencies...? How else do you build "trust" in the other countries so individual investors will place their funds in foreign markets... if ever again ?? The consortium prefers a rapid growth engine, but the effects of global political machinations require that engine have a tamper-proof governor. The current system has no such device. The only such device I know that works effectively is the free market. The conflict between free markets and politicians is that they have opposing views when it comes to dealing with "inefficiencies of the available choices". The big problem I have with with gold (as a standard of value), is that the population of the world has reached a point in which it will preclude politicians of ever being able to apply the necessary discipline that is necessary to create such system of rigid discipline that it is required for a gold standard.... after all how are they going to feed their growing flocks ? It is in the best interest of governments to debase gold... so is it a great battle about to begin ? Actually, for governments it may pay them to let the price of gold to go up some... it only increases the value of their current holdings substantially... then... sell because they need the funds.... the old story of "Pump and Dump" ? There remain, in any case, risks that prevent us individual investors from entering many foreign markets with any force. Wish it weren't the way, because I'd like to take some larger positions. I just can't see it right now. Yes. I agree... it is looking more and more so... Or in more mundane terms... Would that be Champagne or Pilsner for you Sir ? Meanwhile.... if quarterly earnings improve.... what then ?? As I said... perhaps it all boils down to the fact that we have not learned yet to measure this so called "Global Economy".. It sure is getting interesting.... As to control.... yeah well... human nature is human nature.... Z. p.s. I guess that Soros theory of Reflexology may be working its thing.....(not necessarily "Magic") "I must state that I am in fundamental disagreement with the prevailing wisdom. The generally accepted theory is that financial markets tend towards equilibrium and, on the whole, discount the future correctly. I operate using a different theory, according to which financial markets can not possibly discount the future correctly because they do not merely discount the future; they help to shape it. In certain circumstances, financial markets can affect the so called fundamentals which they are supposed to reflect. When that happens, markets enter a state of dynamic disequilibrium and behave quite differently from what would be considered normal by the theory of efficient markets. Such booms and bust sequences do not arise very often but when they do, they can be very disruptive, exactly because they affect the fundamentals of the economy." The time is not sufficient to elaborate on my theory. I hae done so in my book The Alchemy of Finance." George Soros, testifying in front of the US house of Representatives, Committee on Banking, Finance, and Urban Affairs. April 13 1994. (Bold is mine) p.s.s. I guess Mr. Soros "got discounted" in his investments in Mother Russia.