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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (2114)	12/16/1998 5:51:00 PM
From: John Pitera	Respond to of 99985

Jim--Ron was to bogged down talking about Iraq, The Impeachment, Rising Oil, and Amzn @ 300 -to get to Brazil, but there is a new day tomorrow. Below is a Reuters story on Brazil and emerging market debt, the last line of the news item points out that The Brazilian Brady C Bonds are trading at 58 and change, so they as yielding 16.5% a year say for 5 years, now they are US$ denominated so the market has been pricing them like their is a substantial chance of default. Russian Govt Bonds were trading in the 80's several weeks before the Russian default, The Market is worried about something or you could not buy these bonds so cheap. Best Regards, John Wednesday December 16, 5:14 pm Eastern Time Emerging debt slips amid Iraq, Brazil uncertainty NEW YORK, Dec 16 (Reuters) - Emerging debt slipped Wednesday amid the threat of U.S. military action against Iraq and pessimism about Brazil's ability to close is gaping budget deficit, market analysts said. "War will provoke a generalized flight to quality. You're going to see the U.S. Treasury market up and the stock market down along with emerging markets debt," said Thomas Trebat, managing director for emerging markets research at Salomon Smith Barney. "The Iraq situation is one more aspect of a generally gloomy end-of-year environment," Trebat added. Investors bid up U.S. Treasuries and other traditional safe havens on Wednesday and oil prices spiked higher amid signs a military strike amid the latest row between Iraq and the United Nations over weapons inspections. U.S. bombers and warships armed with more than 400 cruise missiles stood ready in the Gulf, and defense officials said they were awaiting an expected order from President Bill Clinton to attack. In addition, the lack of progress toward social security reform by Brazil's Congress this month has begun to weigh more heavily on the market with the approach of the new year. Analysts said hope was scarce that the new Congress, to be seated in January, will implement the reforms. "People continue to be worried about Brazil," said Paul Masco, chief emerging markets debt trader at Salomon Smith Barney Inc. Underlining the pessimism, Brazilian stocks were extending their losses in late afternoon trade Wednesday on sales linked to the expiration of Bovespa index futures contracts, traders said. The Bovespa index tumbled 6.33 percent to 6495 points by 1635 local/1835 GMT. The market's bellwether issue, Telebras preferred receipt , was also down 6 percent at 90.60 reais. Spreads of emerging bonds widened by about 11 basis points over U.S. Treasuries to 1173 in the late afternoon, said Masco, who cited J.P. Morgan's Emerging Markets Bond Index. Benchmark Brazil C bonds were down 1-7/8 to bid 58-3/4, Argentina PAR bonds were down 1-5/8 to bid 71 and Mexico PAR bonds were down 3/8 to bid 77