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

To: Haim R. Branisteanu who wrote (31945)	10/18/1998 9:41:00 PM
From: BubbaFred	Respond to of 94695

From briefing.com " ... Bottom Line: The market is adjusting to the realization that earnings growth will be about 5% or less the next several quarters. A crash or bear market is unlikely until assumptions about long-term profit growth or interest rates change dramatically, however. That hasn't happened yet, but turmoil in Asia and slower U.S. profit growth means the market's gains will be limited to earnings growth, because the price/earnings multiple isn't likely to expand further. The modest up bias for options expiration was in place. Then the Fed changed everything. The further easing provided a very legitimate fundamental push to the market. But the move was not entirely unexpected. It was almost universally assumed that the Fed would ease at the November 17 FOMC meeting, and there was talk lately that a quicker move would be made. There therefore may not be all the much followthrough. In fact, after the previous Fed easing, the market dropped sharply as the focus quickly shifted to earnings. Something similar could happen again, although it is comforting to the world markets that the Fed is paying attention. ... " It is also interesting to note that the Fed waited until the markets were more stable. This reduced the appearance of panic. Yet, the Fed did act because lenders were becoming more cautious. Dropping the Fed Funds rate from 5 1/4% to 5% isn't exactly going to make them aggressive lenders now. As the old saying goes, you can't push on a string. The Fed's move thus has its dark side. It is a recognition that there are significant global, and U.S. economic threats. They can't lower rates all that much from here. The S&P 500 still trades at 26 times earnings (trailing 12-month as-reported basis). Revenue and profit growth is needed to keep the market heading higher.

To: Haim R. Branisteanu who wrote (31945)	10/18/1998 10:33:00 PM
From: bearshark	Respond to of 94695

Hi Haim: I was watching some show over the last few days and there was mention of more hedge-fund collapses. I think there will be some financial collapses but I do not know what effect they may have. The U. S. moved through quite a bit of it during the 80s. We will either muddle though it or we will have a world financial collapse. A variety of countries are now crying for help from the "rich" countries. Even the U. S. is talking about help. I think all of this talk is to get world-wide rates lowered. Maybe everyone is pressuring Europe. Additionally, this crying is to get the U. S. Congress focused on the IMF payment instead of someone else's sex scandal. Before the U. S. FED lowered interests rates the first time, I thought a 100 basis point move should be made in increments of 50 basis points. Maybe the U. S. Fed is doing something close to it in increments of 25. With a budget (not counting off-budget items) in balance, the U. S. can inflate its economy with fairly large tax cuts. I think there is a lot of firepower in the world to bail out countries in one way or another. The trick is to get the world financial system to work as one. I think that is what is going on now--a lot of jawboning to do just that. If countries can successfully work together, I would not want to bet against them. My main concern is what I am going to do tomorrow morning. This rally will be tested within the first three days of this week. Probably tomorrow. It will not be an easy read of this market.