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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (31013)	10/9/1998 10:12:00 AM
From: Joseph G.	Read Replies (1) \| Respond to of 94695

Can't you buy more Spoos, and also rally your BullSucker friends - I need to reload ... BUY BUY BUY !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! GO GO GO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

To: GROUND ZERO™ who wrote (31013)	10/10/1998 12:18:00 AM
From: flickerful	Read Replies (2) \| Respond to of 94695

Dramatic slump in long-dated bonds... ft/9 oct 98 By Nicholas Leonard There were heavy falls in long-dated government bonds in Europe and the US on Friday with prices showing losses of more than two percentage points. Dealers said the markets on both sides of the Atlantic were in disarray with spreads widening and liquidity tightening. Hedge funds and other over-borrowed short-term traders were rushing to reduce their exposure and cut their bank debts or place their dwindling market-related financial assets in "safe haven" bank deposits or short-dated near-cash instruments. The market places of New York, London, Frankfurt, Paris and other major centres were destabilised by a host of rumours about the plight of hedge funds operating in the unpredictable and volatile bond and currency markets. Bond traders were trying to square their books and eliminate excessively vulnerable positions ahead of a long weekend in New York. The bond markets of the US will be closed on Monday, October 12, for Columbus Day although equity dealings will continue. There were rumours on Friday afternoon that the US Fed could hold a special additional meeting to review interest rate policy before the next scheduled gathering of its key policy committee, the FOMC, on November 17th. The strong expectation of more cuts in US interest rates underpinned short-dated T-bonds and the gap between the yield at the short-end and the very long widened to more than a full percentage point - from just over 4 per cent short to just over 5 per cent long. The trend towards downwards convergence of interest rates among the euro-11 continued on Friday with a reduction of the repo rate in Portugal from 4.5 per cent to 4 per cent. Interest rates in Spain were cut earlier in the week. Expectations of a reduction in Italian interest rates have had to be suspended for the moment, following the one-vote defeat of the government on a confidence motion over the budget. Romano Prodi, the prime minister, has resigned but Luigi Scalfaro, the president, has asked him to form a caretaker government. Although the course of immediate political events is now uncertain, dealers in Milan reacted relatively calmly on the view that, come what may for the coalition partners, the lire will enter the euro zone on time in January. Initial losses in the lire, government bonds and shares in Milan were quickly trimmed. Trading in both the dollar and the yen was overshadowed by continued uncertainties on the political and economic front. The dollar was helped by the prospect of an IMF rescue package for Brazil but the yen was being sold again on worries that the saga of steering the bank salvage deal through parliament may once again be hitting problems with minority parties. Kiichi Miyazawa, the Japanese finance minister, ruled out intervention to reverse this week's recovery in the yen but the Economic Planning Agency said that the upturn in the yen might have a 'negative impact' on the global economy. Merrill Lynch released the gloomiest forecast so far seen for the Japanese economy in the year from April 1999 to March 31st 2000. It now expects the gross domestic product to FALL by 2.5 per cent in that year against its previous prediction of a rise of 1.2 per cent. Despite the dramatic surge of the yen to a best level of 112 to the US dollar during this week, Merrill Lynch said that it expected the yen to be at 157 to the dollar next March and 170 by March 2000. Merrill Lynch's forecast of a fall in Japanese economic activity in the current year to March 1999 at 1.7 per cent is very close to the government's estimate. Meanwhile, the revival of the yen this week prompted rumours of an imminent cut of half a percentage point in interest rates in Hong Kong. It has also eased fears that the HK peg to the dollar may be at risk and it has taken the pressure off China in its efforts to preserve the value of the yuan without damaging its export prospects. Karin Lissakers, US executive director of the IMF, admitted on Friday that it had made misjudgements in its approach to the problems of troubled Southeast Asian economies in 1997: "You had credit creation, you had growth....the classic case for a response of fiscal tightening. But I think, and all those on the board would agree, we were wrong. It was probably the wrong prescription". One of the problems for the IMF and other would-be prescribers of prescriptions is that the exponential growth of short-term trading and complex interlocked derivatives deals on options, futures and swaps have totally undermined the normal 'laws' of the markets. This was evident in the response in the markets to the cut in UK interest rates on Thursday. Normally, such a change would tend to lower the value of the pound. Instead it went up. There are parallels with the discoveries of physicists in the quantum world of waves and particles where, in contrast to the everyday Newtonian universe in which atoms and their aggomerations, including financial operators, live their lives, it is apparent that effects can as easily precede causes as be the consequential result of them. The pre-emptive nature of derivatives activity has similarly transposed the former 'laws' of market behaviour. Alice would have understood once she returned from her trip through the looking-glass. In Russia, the Sverdlovsk region, which is 750 miles away from Moscow,said it might respond next year to the collapse of the rouble by launching a new internal currency of its own. The central bank in Moscow called the concept 'senseless'. The troubled futures market, LIFFE, appointed a new chief executive. He is Hugh Freedberg who used to be in charge of the investment bank, Hill Samuel. In economic data in Europe: the German Chemical Industry Association cut its forecast growth rate for 1998 from 4 per cent to 0.5 per cent. French GDP growth in the second quarter was revised down from 0.7 per cent to 0.6 per cent. The official data body, Insée, predicted annualised growth in the current quarter of 2.5 per cent against an average of 3.1 per cent for 1998 as a whole. "The outlook is starting to be eroded," it said. In the Netherlands, year-on-year consumer inflation in September was 1.7 per cent. In Switzerland, unemployment in September eased from the August level of 3.4 per cent to 3.2 per cent. The comparable figure in 1997 was 4.9 per cent. In Norway, consumer prices in September were 2.5 per cent up on a year earlier.