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

To: kormac who wrote (16734)	10/10/1998 5:32:00 AM
From: John Hunt	Read Replies (1) \| Respond to of 18056

Contrarian Market Rap - Oct 9/98 stocksite.com << Here we are again, in what looks to be a run on dollar assets and a decline in bonds. (I'm sure the Japanese are taking their money and going home). We have an even bigger potential for a crash because the speculation has lasted longer, with more of the public participating. There is a lot more rocket fuel, not in the form of insurance, but with substantially more dangerous derivative exposure because it is so massive. It seems kind of ironic that Rubin constantly has been haranguing the Japanese for failing to stimulate domestic spending. Now it looks like Japan will have a chance to turn the tables. The joke will be on us since Japan is a creditor country and the U.S. is a net debtor country. If Japan begins to repatriate, remember that they are holding all the cards. I always thought it was very dangerous for Rubin to browbeat the Japanese when ultimately they held the trump card: They could sell their treasury bonds. People have worried for years what would happen if they decided to sell treasuries. The Japanese don't like to upset the apple cart, but if that occurs things are going to get messy. Along those lines, here is a quote from a deputy of Sumitomo Bank, Mr. Kato: "Global deflation is favorable for net creditor countries such as Japan and harmful to net debtor nations such as the U.S. It will raise the demand for cash-like assets in net creditor nations such as JGBs." Mr. Kato knows the score on the door, and his statement may be kind of a shot at Rubin and the boys. This is just another reason why I don't like long-dated paper. >> Hi Seppo, Thanks for the 'secret deal' article. John