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To: Zardoz who wrote (21256)	10/9/1998 10:03:00 AM
From: Alex	Respond to of 116764

Regulations on derivatives needed: Miyazawa ------------------------------------------------------------------------ Finance Minister Kiichi Miyazawa said Friday regulations on derivatives transactions are needed to prevent financial turmoil and criticized the International Monetary Fund (IMF) for imposing harsh economic reforms as a prerequisite for its loans to emerging economies. ''It's no good to let derivatives destroy the economy of a nation forever,'' Miyazawa said in reference to derivatives-related rapid flows of short-term capital that have jolted Asian developing nations and other emerging economies.

To: Zardoz who wrote (21256)	10/9/1998 7:31:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116764

Wall Street puts on October crash helmet 05:00 p.m Oct 09, 1998 Eastern By Pierre Belec NEW YORK (Reuters) - Welcome October. Yes indeed, stock investors have many reasons to worry about October, a month traditionally disastrous for stocks: five of the 10 nastiest market drops occurred in October, in 1929, 1932, 1937, 1987 and 1989. Now add to that list the October 1997 fall that wiped out 554 points from the Dow Jones industrial average. That drop, the biggest ever in point terms for the world's most closely watched stock index, came as global financial markets realized that there was an economic meltdown in Asia. The experts say this year, the market is very susceptible to the October jinx because of the spreading economic turmoil, which has dragged the Dow down more than 1,800 points to a recent low of about 7,500, from its record 9,337.97 on July 17. The Dow is down 2 percent for the year after being up an impressive 17 percent at its summer peak. The outlook is grim and the experts are betting that the economic news will get worse before it gets better. Federal Reserve Chairman Alan Greenspan said the 1999 outlook for the U.S. economy had weakened and some of top Wall Street economists see a slowdown or a mild recession next year, thanks to the fallout from the Asian contagion. President Clinton put it bluntly this week, telling the International Monetary Fund and World Bank that the world faces perhaps its ''most serious financial crisis in a half century.'' The big concern is that economic policy-makers are not moving fast enough to keep global economic growth from coming to a halt. ''Investors are counting on a lot of things and the worse that could happen is if people give up on seeing a solution to the current problems,'' said Arnold Kaufman, editor of Standard & Poor's Outlook investment advisory newsletter. ''The market is counting on Japan doing something to get its economy out of recession, on a rescue plan for Brazil and a continued drop -- as much as 1.25 points -- in interest rates by the Federal Reserve,'' he said. Investors have had a crash mentality in October and they'll now be bracing for the next jolt. Wall Street had its first meltdown in October 1929 when the Dow fell 20 percent in just two days. The next unpleasant memory was the stomach-churning, one-day drop of 23 percent in 1987, which led to the shortest bear market ever, lasting less than two months. That shakeout took place after buying excesses had priced stocks out of this world. Now that the global economy is ailing, wary Wall Streeters are keeping their eyes wide open, watching for more land mines. Adding to the tension is the impeachment inquiry in Congress into whether President Clinton committed crimes in the White House sex scandal. What's troubling, analysts say, is that investors' mind-set has changed dramatically and they are magnifying the negatives while downplaying the positives. This could fuel a compressed market fall. The gloom over economic recessions in Japan, other parts of Asia and Russia is not expected to lift soon. And the contagion is showing signs of spreading to Latin America, and perhaps the United States. Financial markets were disappointed but not surprised this week that the seven richest countries were unable to do anything to help the one-third of the world's ailing countries out of their economic mess. The problem for Corporate America is that the struggling countries will not be able to afford to buy U.S. goods and in the end, that will pressure earnings. In the past, bloated stock valuations have played a big role in greasing the skids for bear markets. Now analysts say investors may be repeating mistakes by paying too much for stocks based on overly optimistic views of earnings growth. In 1929, the price-to-earnings ratio of the companies in the Standard & Poor's 500 index was 24 times earnings. In 1987, it was 21. This summer, the P-E was at a record 30 before investors realized that trees don't grow to the sky, and the market went into a three-month correction. Kaufman said the P-E has since dropped to 25.6 but stocks still have room to fall. ''The market is possibly within 5 to 10 percent of fair value,'' he said. Sure, many stocks have fallen 50 percent from their highs. ''But the speculative excess has still not gone out of the stocks that make up the Dow and S&P 500 indexes,'' Kaufman said. ''The stocks are still commanding premiums because people are confident about the strong U.S. economy and that money will keep pouring into 401(k) retirement pension plans.'' At best, the market could grind sideways for awhile and at worst, one of the biggest bear markets in years could hit Wall Street. The bears may not be out the woods, yet. Not by a long shot. For the week, the Dow Jones industrial average was up 114.83 points at 7,899.52. The Nasdaq composite index was down 122.49 at 1,492.49. The Standard & Poor's 500 index fell 18.28 to 984.32. (Questions or comments can be addressed to Pierre.Belec@Reuters.com) Copyright 1998 Reuters Limited