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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: mammoth who wrote (7026)	10/23/1998 2:18:00 PM
From: TokyoMex	Respond to of 119973

Brought To You By Enter Symbol: Symbol Lookup Quote News New! Chart Earnings Fundamentals Fund Profiles SEC Filings Research New! Stock Snapshot Co. Capsule Annual Reports Newsletters Choose and hit Go! Power Portfolios Tool Descriptions Other Services Baseline Reports INVESTools Mortgage Finder Card Finder Signal Online CBSMW Live More From Kellner lAnother cut? Blue Christmas Tail wagging dog? Wall St. zoo Japan's woes Kellner's forecast LegalOptions New! Sports Biz New! Dollar volume Option Quotes The buck drops here By Dr. Irwin Kellner, CBS MarketWatch Last Update: 10:17 AM ET Oct 23, 1998 Kellner's forecast Previous Kellner gems NEW YORK (CBS.MW) -- It's not the worst thing in the world. A weaker dollar may well be just what the doctor (Greenspan, that is) ordered. To be sure, the Fed chief probably wasn't counting on the dollar plunging almost 10 percent in one day against the Japanese yen, as it did two weeks ago. That brought the buck down some 23 percent from its earlier highs to its lowest level against the yen since June 1997. (See historic data on the dollar-yen exchange rate.) On a trade-weighted basis, taking into account the currencies of all of our trading partners, the dollar is now about 10 percent weaker than it was in late August. (See our foreign-exchange data.) Unwinding of positions It wasn't so much the fundamentals that were responsible for the dollar's retreat as the unwinding of positions taken by various hedge funds. But whatever the reason, the weaker greenback has arrived just when it was needed the most. For one thing, it will provide relief to those U.S. companies that export or that compete with goods coming in from abroad. This will help narrow our burgeoning trade deficit, which hit a record $16.8 billion in August. And as our trade gap shrinks, it will give a lift to U.S. economic growth. See related story. In this regard, the punier greenback will have the same effect as another reduction in interest rates or a cut in taxes. At the same time, it will help restore a measure of pricing power that many firms lost as the dollar was strengthening. This will help corporate profits, as will the fact that overseas revenues will translate into more dollars when U.S. companies bring these earnings home. Win-win Believe it or not, other countries are also glad that the dollar has lost some bulk. Clearly, other economies that tie their currencies to the dollar, such as Brazil and Hong Kong, are breathing easier; they, too, can expect to be more competitive in world trade. The stronger yen will also help the emerging nations of Southeast Asia as well. Either they will be able to sell more goods to the Japanese, whose international buying power has risen, or, if they compete with Japan, they will have a currency advantage they didn't have earlier. Needless to say, the combination of the stronger yen and weaker dollar takes a lot of pressure off China to devalue. And that reduces the likelihood that other currencies will be subject to speculative attacks. Even more significant is the fact that with the pressure on their currencies now abating, several emerging nations have been able to lower their interest rates. Besides calming financial market tensions, this drop in rates will boost their economies, making them better prospects for goods made here in the U.S. What's the catch? At this point you're probably thinking if it sounds too good to be true, it probably is, so what's the catch? Well, like anything in economics, there are two sides to this coin. The main thing to watch out for is a reduced foreign appetite for U.S. stocks and bonds. A weaker dollar (or, at the very least, a recognition that currency values are no longer a one-way bet) will cause many overseas investors to think twice before diving into our financial markets. This may keep equities from rising much further while slowing the inevitable descent in bond yields. (See Bond Report.) This new view of the dollar could also expose more hedge funds to a reality check. Long-Term Capital Management may not be the last of its kind to run for cover. Another risk could be a pickup in the rate of inflation here in the U.S. But I wouldn't lose sleep over this, since many other factors have been keeping prices steady, and they are still extant. All in all, consider the weaker dollar as a welcome development—unless you've got plans to travel abroad for the holidays. Then again, you could always stay home and mingle with the influx of tourists drawn in by their stronger currencies. Dr. Irwin Kellner, chief economist of CBS MarketWatch, is Weller professor of economics at Hofstra University. CBSMW MarketPlace "Electronic Day Trader" and more... Save 20-40% off list at the CBSMW Bookstore! Download free trials of business software! Personal Finance There's never been a better time to lock in a mortgage rate at GetSmart! Intro 2.9% APR! NextCard Visa. Free Products/Trials Check out Baseline's Free Company Report of the week. Free trial subscriptions to investment newsletters. Free annual reports for hundreds of companies. FRONT PAGE NEWS INDEX HEADLINES NEWSGUIDE MARKET DATA GLOBAL MARKETS MARKET MONITOR CHARTING PORTFOLIOS MUTUAL FUNDS WEALTH CLUB STOCKCHAT TRADING CENTER INVESTOR'S PRIMER FEEDBACK ADVERTISING COMPANY INFORMATION CBS MARKETWATCH RT CBS MARKETWATCH LIVE © 1998 MarketWatch.com, L.L.C. All rights reserved. Disclaimer. MarketWatch.com is a joint venture of CBS and Data Broadcasting Corporation. 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