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To: philv who wrote (21851)	10/17/1998 10:13:00 AM
From: waldo	Read Replies (1) \| Respond to of 116764

Stay tuned for more information on CB's lending practices >>Friend of Another (10/17/98; 07:13:18MDT - Msg ID:615) Where is gold headed? ALL: Gold looked as if it would drop last week, but it didn't! I think it even bounced off it's 220 day moving average (a good sign for Technical Analysis) on Friday. Why is it starting to move up now, at the end of this year? This night (MST) I will offer further reasoning to go with my earlier posts. Those writings dealt with how the Central Banks lent gold but never sold it! Now Another has opened the door (in his last post) for some analysis as to where gold is going and how soon. It should be interesting. Thanks FOA<< usagold.com W

To: philv who wrote (21851)	10/17/1998 4:20:00 PM
From: Alex	Respond to of 116764

'A Long Recession Ahead' The defensive market view from Prudential ------------------------------------------------------------------------ Asia, before and after the Fall AS CO-MANAGERS OF THE Prudential Pacific Growth Fund, STEVE AUTH and DAVID DESCALZI command over $120 million in assets. Since the start of the Asian Crisis, they have taken up a largely defensive posture in Asia, convinced that the region will continue to suffer until Japan cures its banking woes. Their radical advice to Japanese politicians? Bring in Western bankers to clean up the mess. Auth and Descalzi spoke with Asiaweek Contributor Louise Nameth: How will turbulence in Latin America affect Asian markets, if at all? AUTH: You wonder where this thing is going to end. Devaluations in Latin America would take away the competitiveness gained by Asia in its devaluation. If the peg in Brazil breaks it will bring enormous pressure on Hong Kong, particularly as the Monetary Authority has already made itself half- pregnant in its attempt to support the market. Do you have any notion of if and when Hong Kong and China will devalue? DESCALZI: A lot of it depends on Japan. If the Japanese continue dithering, then the Chinese may be sufficiently upset to devalue the yuan. AUTH: There may be another run on the currency, and sooner rather than later. Whether they devalue at that point is hard to say. Hong Kong and China have got huge reserves, over $200 billion between them, so they can almost decide whether to devalue or not, but I think it's now a matter of when not if. We're seeing that the pain of not devaluing is getting harder and harder for them to bear. Witness the Chinese making noises about difficulties in the export sector and Hong Kong's intervention in the markets. What about recent events in Malaysia? DESCALZI: The capital controls have made everybody much more nervous about Asia, because the question now is who is next? People say "What if Hong Kong does that, what are we going to do?" Hong Kong has been a haven for short sellers. If they announce controls, a lot of these guys are going to get beaten up. It's interesting that the Philippines and Thailand were smart enough to say "we're not going to do that." Do those countries look promising? DESCALZI: The Philippines probably has more potential for emerging than the other economies. While everybody else was racing ahead after the recession of l985, they were still in the doldrums, so they don't have to work themselves out of their excesses. Because they haven't overbuilt, their banks aren't overburdened. Our biggest concern is that [President Joseph] Estrada's populist instincts could make the budget deficit wider. Interest rates would then have to stay high and recovery would not be in the offing. But if he does work out, then I would probably be more optimistic about the Philippines than the rest of Asia. In Thailand it has finally kicked in that they need good, uncorrupt leadership. We're comfortable with the current leadership, we think that they're doing the right things. They're adhering to IMF policies, but they're a little slow cleaning up the financial system. They could have dealt with this a year ago. If we see progress on that score then I think that the opportunity for real recovery in Thailand exists. What about the rest of Asia? DESCALZI: Korea is a mess. There is too much debt, both internal and external, too much being made that nobody wants to buy. Singapore, as an investor in the region, is going to get hurt. With their holdings in Malaysia, Thailand, and Indonesia, they must be taking a pounding. The other side of the economy, the manufacturing side, the electronics side, is hurting just like everywhere else in Asia. Until there's a real recovery there, you're not going to see Singapore being led out of its troubles. We're very pessimistic on Japan. We don't want to hold banks because we think the bank sector is going to implode. If we hold a large company in Japan, it would be a world-class exporter. If we hold a small company, it has to be one that has good franchise potential inside Japan, and a more energetic approach to the way of doing business than the typical Japanese company. Indonesia is Carthage. We don't invest there. Are you expecting another correction in the U.S.? What would that mean for Asia? DESCALZI: Our view of the U.S. is not pretty right now. I wouldn't use the word grim, but we're expecting more downside. In terms of Asia as an investment destination, companies will pull in their capital expenditure budgets and their expansion plans as a result. Much of the miracle of Asia was in pure investment, which is why there is going to be a prolonged recession. Also, the U.S. ability to take Asia's exports will weaken a bit, because the American consumer will go back into hiding. Asia really does need a very strong developed world in order to take its goods. pathfinder.com