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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (16698)	10/7/1998 8:59:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

George, I see both the 800 point rise in the Nikkei and the sharp rise in the Yen as "temporary aberrations". More so for the Nikkei than the yen. Japan is starting to look at some programs that are going to eventually bring them back from the abyss, and that is positive, but it will take them some time to get back into a growth mode, the current forecast for Japan GDP is -2% for next year (their own internal forecasts). The yen meteoric rise, I believe is connected with "urgent" unwinding of the carry trade by hedge funds (indluding LTCM?), and that has given the dollar a "bad technical knockout" which will take few weeks if not few months to correct. That will actually put pressure on the export segment of Japan's industry, further weakening the Nikkei short term, IMHO. I think that the strong relative position of the US vs Japan will in the short run bring the yen back down, to about 128 to 132 before the end of the year. This will, IMHO be the medium term last hurrah for the dollar vs the yen, as the yen will strengthen further toward the middle of next year. This, because our own trade deficit will force the dollar down. We are not going to close our doors and are going to run monthly trade deficits to help Asia in the range of $15 to $18 billions monthly, for at least a good six month, that will have a toll on the dollar. As we go into next year, however, I think that the failure of the EURO (well everyone says it is going to be a great success, but I think not), will start and reverse the Dollar vs Europe equation, thus in essence we will have slightly strengthening yen vs dollar, strongly strengthening Yen vs Europe and mildly strengthening dollar vs Europe. As for the markets here, we are in the midst of the Sep/Oct minimelt and I think it has some more to go. I still have 7200 as a bottom on the Dow and a target of between 1250 to 1300 on the Naz. I see a mild Christmas induced rally toward the end of the year ( could start, IMO anytime from the last week in October to the third week in November). That is about as far as the mauled turnips can see. Oh, I forgot, George, Gold, IMO, it will follow Searle's model with some additional strength here due to the falling dollar, but as the dollar regain some balance, the rally will fade and before spring of next year, I believe we will retest the 280 area. If we break $320 on gold, all bets are off (VBG). Zeev