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

To: Eggolas Moria who wrote (51138)	3/10/1999 10:54:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Gary, Graham & Dodd , Valuations do not serve as a timing tool but they do quantify risk. We are in a mania IMO so not much will work but there is a limit to debt expansion. Mike

To: Eggolas Moria who wrote (51138)	3/10/1999 11:43:00 AM
From: Earlie	Read Replies (4) \| Respond to of 132070

Gary: Here are a few personal "worry beads" with respect to this mania-driven market. As indicators, not one of them is infallible, but as a collection, they sure throw a bit of weight in one direction. - U.S. trade imbalance,....off the graphs. - U.S. current account deficit,.... a one way street to a cliff, particularly since the U.S. economy requires a massive (as in $2.0 billion per day) net foreign flow of funds. - The Japanese, who have been the main lender to the U.S. for years, can no longer afford the luxury. Japan itself is heading for the economic garbage can. - despite all the baloney, the main driver of the U.S. "economic miracle" of the past several years, has been interest rate reductions. That appears to have run its course (see long bonds and bond market lock-up of last Fall). - The vaunted Fed is not in control, it is now in crisis reaction mode. Check out Fannie, Freddie, Euro dollar markets, LTCM type situations, off-balance sheet derivative exposures, etc. for details. - A wall of treasuries are trying to "go home". U.S. rates may have to move up to keep that wallpaper offshore. The alternative is a monetization of remarkable proportions,.....hard on the dollar. - Corporate debt levels are on a rocket ride. Corporate earnings are declining. Corporate stock prices have not discounted these facts,...yet. - Personal consumption is rising out of all proportion to earnings and savings. Consumer debt is off the graphs. - capacity utilization is falling. It has been doing this for well over a year. Corporate cap ex has not yet been cut back. - PCs sales growth has been the main driver of the U.S. expansion. That growth has run its course for this cycle. The next two years will be particularly ugly as PC sales that would have more naturally occurred in 1999 and 2000, were dragged back into 1998 by Y2K worries. - Mutual funds are swimming in over-valued tech stocks. Portfolios today carry inordinately high percentages of tech stocks and at exaggerated prices. Double jeopardy. - Inventories are rising,....in all parts of the world and in virtually all producer categories. - Shipping is shrivelling world-wide. - Commodities are in the tank. - Latin America has caved in. U.S. banks have huge exposure. L.A. is also a big U.S. trading partner. The trade imbalance gets worse. I could easily add much more. It doesn't appear wise to ignore the weight and preponderance of these factors in dealing with the stock market. Best, Earlie