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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (37396)	11/23/1998 10:53:00 PM
From: bluejeans	Read Replies (1) \| Respond to of 132070

Mike, Heck, there is only 4.75% or 19 cuts possible before the Fed ends up in Japanese handcuffs Do they have to do 1/4 pt moves or can they do 1/8 pt moves? They do have this fine tuning down to a Science now don't they? <G> Bob

To: Knighty Tin who wrote (37396)	11/24/1998 12:20:00 AM
From: Merritt	Read Replies (3) \| Respond to of 132070

Mike: I'm thinking there may be a different slant to the Fed's rate cut; something other than providing liquidity so banks can more easily make loans of dubious quality. When the DOW Industrials dropped below 7500 this past October, there was a lot of money that came into the market. It wasn't a general inflow, but was concentrated on several DOW components, and was of such an amount as to stop the decline in the index. Then a couple of days later, the Fed came up with its "surprise" rate cuts. On other boards there was speculation that the government was behind the intervention. A political reason for the action could be: "It's the economy, stupid," and as long as the market stays healthy, and the populace can see that they're getting rich returns on their various accounts, then I imagine that Clinton feels he'll retain his presidency. This gives his appointees, Rubin and Greenspan, incentive to keep the market from sinking. An economic justification could be related to the table contained in Cycle Pro, the link was posted here a while back, where it gave a projection of the drastic losses money center banks would incur, due to derivative exposure, if there were a protracted 30% decline in the averages. I think it may be a combination of the two that caused the intervention (if that is what actually happened, and IMHO it did). So I doubt there'll be any meaningful drop until after the impeachment proceeding is resolved. That would probably mean until after the end of this year, taking into account the usual bullish tilt the market has for the Christmas season (or the buy Rosh Hashana dictum). So if investor's attitudes are changed after the first of the year because of inflationary pressures from the trade deficit, or from the Fed increasing money supply, or foreign money gets repatriated due to an attractive gold-backed Euro, or the Japanese accelerate their yen repatriation in order to set up a yen-backed Asian economic bloc, or by negative earnings announcements and/or the lowering of analyst estimates, we could finally be ready for the BK. Unless the Fed keeps cutting rates, but then I don't know how much derivative exposure Goldman has to a falling market.<G> Of course that's all rank speculation, but I'd be curious to get your feedback. Merritt

To: Knighty Tin who wrote (37396)	11/24/1998 12:23:00 AM
From: SeaViewer	Read Replies (1) \| Respond to of 132070

MB: The chief investment strategist at Merrill Lynch said that the amount spent on buying stocks by all the banks increased by 100% over last year. This is largely due to the rate cut by Fed. Jeff

To: Knighty Tin who wrote (37396)	11/24/1998 8:25:00 AM
From: Ilaine	Read Replies (1) \| Respond to of 132070

Mike, interesting set of articles in this week's "Defense News" and "Space News" about the coming adoption of the Euro. Same set of articles in both rags. Among the points made: 1. John Weston, CEO of British Aerospace, told an audience of business people in Washington on October 7, that the Euro "will result in a core of 11 European countries commanding 18.6 percent of the world's trade and 17.8 percent of the world's gross domestic product. In other words, the European countries will command more trade than the United States." 2. European industrialists say that the Euro is key to wiping out the disadvantage they face, especially in the space and civil aircraft markets, whenever they are forced to denominate exports in dollars. 3. DaimlerChrysler Aerospace AG, intends to urge customers to write contracts in euros rather than dollars. DaimlerChrysler Aerospace expects to save 100 million deutsche marks annually simply by switching its accounting to euros. 4. Rheinmetall Industrie AG, Ratingen, Germany, predicts the euro will replace the dollar as the strongest currency in Europe within two to three years of its introduction. Rheinmetall intends to undertake the majority of its contracts in Euros. 5. John-Jacques Gauthier, deputy director for finance at Matra Marconi Space, stated that "What we hope to see, not immediately but in the coming years, is European customers demanding that contracts be in euros. I think our U.S. competitors would find that an interesting experience." 6. On the other hand, the world's largest arms importing region in the developing world, the Middle East, receives oil revenues, the major source of income for many nations there, from dollar-denominated contracts, and Bryan Callan, an analyst with Merrill Lynch, predicts that will make it difficult to persuade those customers to start denominating those contracts in euros. 7. This last one you may find ironic: John Makin, a senior fellow at the American Enterprise Institute, stated that there was no indication that the euro would be used as a reserve currency. It has to establish a track record. "One reason is the role of the European Central Bank, and its independence from political pressure, still is not clear, he said. Anyway, one more factor to weigh in the equations, coming January 1, 1999. Not long to wait and see.

To: Knighty Tin who wrote (37396)	11/24/1998 1:37:00 PM
From: valueminded	Read Replies (1) \| Respond to of 132070

Mike: I agree, we can not fix the problem of irresponsibility by making credit easier to obtain. So we presume that AG keeps cutting until he determines it is making the problem worse at which point he hibernates and we end up in recession with inflation. An ugly scenario but it would seem most likely. I am having a difficult time rationalizing what to do with cash. Are their some decent foreign funds (cefs) that you like currently. Preferably ones in which you feel we would get the double benefit of an appreciating currency and an appreciating market. I am considering a 1st third in IFN. I picked up some ECF recently and own a few dividend paying stocks USU and NH. Currently evaluating SLB but on the surface, it seems kind of high to me. Why do you like it and what kind of investment target do you maintain on it? In terms of puts, I am tempted with amazon / micron / gateway / apple / novellus / srcm etc. So many choices, but patience must be in order as they seem to march up daily. What is you most recent put position you added/initiated ? thanks