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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (9044)	10/18/1998 7:46:00 PM
From: RockyBalboa	Respond to of 22640

European Rate cuts? Yes, the investor community would welcome a money market rate cut in Germany and France. But compare the US and EURO situation to 1993-1994 when the Deutsche Bundesbank held their grips tight and did not lower, even when asked by European neighbors like France. The dollar weakened, like today (which was one of my bets months ago, paying off), and finally the EMU was torn into pieces. Now the situation has changed as Europe stands at the dawn of the EURO conversion. It means that "weaker" countries like Portugal, Spain and Italy take part in a unified currency. The Bundesbank responded each call to lower rates with their stubborn fear that the EURO will be too soft then, so they let the interest rates converge to the already lower German rates. Italy faces an adjustment so no one is willing to arbitrate a 1 percent rate differential out of it. Talks set the adjustment as high as 5% now. Bearing the fear the EURO could be blasted away by the very last moment the BUBA and French central bank, both EURO strongholds seem to be completely tied in their seats. Whatever BUBA chief TIETMEYER said in recent past was full of fear, repeating the denial that there is a serious crisis throughout the financial world. The markets did not believe it and the major indices of Germany, France and Austria, lost some 30% in the past few months regaining little so far, much less than the surprising strong US stock markets. The european bond markets ran into a hefty rally sending 10y rates beyond 4%, a level not seen the last 70 years. Likewise, Bund spreads widened and put a heavy toll on financial institutions although never that openly discussed as in the U.S. And into this shady light a BUBA chief stands up in order to defend inflation and aim monetary goals where we, like the US in part, can not see any inflationary pressure but deflation at the producer price level along with shrinking purchase power and increasing unemployment rates, far exceeding US jobless estimates. To add it up, Italy sent away its centrist Romano Prodi, just to see that notorious reform communist leader D'Amato creates an emergency regime for the first time in Italy history. ... "Our portfolio did well staying bear in Europe while slightly long in the Americas as well as the U.S." Greetings from Europe C.