Chinook winds or spring thawgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
The Markets have gone wild and I wonder, whats up?
A thought. Do you know what Chinook winds are? They are a strange warming trend in the middle of winter. They only last a few days and they bring in tropical warmth to the northern rockies in the dead of winter. Chinook winds are not the same as a spring thaw.
I wonder. Are we seeing Chinook winds or a spring thaw in the financial markets. Is the newest surge in the markets the beginning of a new bull run or is it simply an anomaly, a warming in the beginnings of a new economic winter?
Beware campers. The warmth you feel could very well last only a few days before the reality of winter strikes. Remain in a state of preparedness. Seize the day, take advantage of the extra time afforded to you.
The myth of continuity. All things that are will not always be. Do not loose heart because of the song of the POLLYANNA. Take advantage of this time. If this warming is only the result of Chinook winds, use it to your advantage. Continue to gather, it may save a life.
IT may be that the dollar will loose its value. Will this mean that interest rates will be forced up to lure investors into government debt.
Will Brazil be the latest to stumble?
Will the credit bubble pop?
Will the Russian bear awaken?
Will John Doe investor run to the door when P/E ratios are exposed as unreasonable expectations due to low earnings?
When will the Y2K threat finally be realized by the average investor?
Chinook winds or Spring thaw? What extraordinary times we live in. ww
-- WAYNE WITCHER (WWITCHER@MVTEL.NET), January 08, 1999
We sold our stocks in November and put the proceeds into rural acreage with pasture, woods, ponds, barns and an 18 year old mobile home. I figure we purchased at a PE of 1.0 or less. The dividends that will pay out are fruit, vegies, eggs, meat, fuel wood, fresh water, tons of pecans and the ability to store several years worth of propane. This is the one stock that my wife picked out on her own and told me to buy it. Don't you just love those snap decisions.
-- Ed Stevens (email@example.com), January 09, 1999.
Came across this one today. The links from this SJMN breaking news source "disappear" so fast that they always rate a "full" post. (Sent a copy to PNG).
When everything else looks bad globally, where ya gonna go? To the one that looks "less" bad than all the rest. At least, as long as they can prop up the illusion.
Posted at 9:30 p.m. PST Friday, January 8, 1999
Falling dollar is mystery in soaring economy
New York Times News Service
WASHINGTON -- Even while the stock market hits new highs, a crucial indicator of foreign confidence in the U.S. government and its economy -- the dollar -- has been falling. No one can agree why.
By all the normal measures, it should not be happening. The U.S. economy remains remarkably strong -- President Clinton on Friday was hailing the longest peacetime economic expansion in the 20th century. The huge federal budget deficit that once was blamed for undercutting the dollar has turned into a surplus that is estimated to hit $76 billion this year. Inflation is practically nonexistent.
Yet investors are flocking to the Japanese yen. The dollar has fallen nearly 25 percent against the yen since August even as every indicator suggests Japan will remain the basket case of the world's major economies in 1999.
Last summer the dollar was trading around 145 yen, and many U.S. officials feared it would rise to 160, to the enormous detriment of U.S. exporters. Instead, it was trading around 120 yen by mid-December and bounced around 110 yen this week. What has changed in the fundamentals that are supposed to govern currencies over the long term? Very little.
The dollar did better against European currencies, but it is nonetheless down about 6 percent over the same period against the German mark.
So what is causing all this? It depends on who you ask, and where they live. In the United States, some say the cause is the swelling trade deficit. Others say it is the enthusiasm for the euro, the single currency that was introduced this week by 11 European nations. Even though the euro has fallen slightly against the dollar, it seems to be clearly on the way to establishing itself as the world's No. 2 currency. Still others say the dollar's decline is a byproduct of Japan's latest act of financial desperation, an unexpected increase in interest rates that appears to be drawing investors back to Japan, even if many fear the higher rates will further slow Japan's economy.
Ask foreigners, though, and many say the answer is being beamed around the globe 24 hours a day: the impeachment trial of Clinton. ``It's what I hear from friends and clients all over the world,'' said Sung Won Sohn, the chief economist at Norwest Corp. ``They see the chief executive of the world's greatest power going on trial and equate it to what would happen if that was occurring in their own country. And they conclude, rightly or wrongly, that the U.S. will not be able to provide leadership if things get dicey again.''
Just this week, HSBC Securities, part of the HongKong & Shanghai Bank group, warned investors in a report to keep an eye on ``political stability'' in Washington. It notes that the market calculus is that Clinton will stay in office -- but of course the market calculus is based on the conventional wisdom blaring from television sets. And the conventional wisdom has been notably wrong at almost every major turn in the last year of handicapping the Washington scandal.
``The quick fix is not likely to be so quick,'' HSBC concluded, ``and the odds could change as well.''
To many Americans, an impeachment explanation for the dollar's troubles seems outright ridiculous. But the fact of the matter, says Robert Hormats, the vice chairman of Goldman, Sachs & Co., is that ``there is no wholly rational explanation for this.''
As always when currencies lurch in one direction or another, the effects are complex and unpredictable. Some of the decline may simply be a feeling that the sharp rise in the dollar over the previous couple of years had gone too far. American farmers, steelmakers and some big manufacturers have been complaining for over a year that a strong dollar, combined with the collapse of most Asian economies, was killing their business abroad and undermining their efforts to compete with cheap imports. For them, a weakening of the dollar is welcome news -- and it perhaps partly explains the stock market's recent surge.
Friday the dollar settled at 110.93 yen, down from 111.04 Thursday. It was up slightly against the euro, which fell to $1.15540 from $1.16700.
Still, no one seems to be celebrating at the U.S. Treasury. There, sharp fluctuations in currencies are viewed as one of the volatile fuels that have fired 18 months of global instability. The countries that linked their currencies to the dollar -- chiefly Thailand and South Korea -- could not sustain the connection as the dollar strengthened, making their products less and less competitive abroad.
Just because a rising dollar was bad news in 1997, though, it doesn't follow that a weakening dollar is necessarily good news in 1999. The world has changed a lot since then.
More than ever, the ground zero of the world's economic troubles is Japan. A bad year for Japan could mean a bad year for the rest of Asia, because there will be no engine of regional growth. And the strengthening of the yen is grim news for Japan's exports -- the best hope Japan has of limping back to growth by the end of this year.
So in a strange way, the Clinton administration finds itself as worried about what a weak dollar means for Japan as what it means for America.
``We're in this odd position,'' one senior administration official said this week. ``What looks like good news for us could in fact turn out to be pretty troublesome for the world.''
The unresolved question is whether the fall of the dollar and the rise of the yen says more about what investors around the world are thinking about America, or what they are thinking about Japan.
Sung noted that ``America is saving less and less, and that is leading to some pessimism, and it doesn't look like the current account will be turning around soon.'' The current account is the broadest measure of financial flows.
Also, the talk of declining profits later this year clearly has many investors around the world spooked. These factors, combined with the political uncertainties of impeachment, create nervousness about the champion economy of the 1990s.
But perhaps the more mystifying change of perception concerns Japan.
The country's economic outlook is hardly improved; the best prognosis calls for1999 to be a lot like 1998. But in one of those oddities that has peppered the Asian financial crisis, interest rates in Japan, which have been at rock bottom, are going up. And that may be luring money back into the country.
The rates are going up because the Japanese government is issuing bonds with unaccustomed abandon, to finance a growing deficit as it tries to stimulate the economy. The higher rates -- combined with the cuts in American rates several months ago -- have narrowed the previously huge gap between Treasury bonds and Japan's offerings.
More surprising, Japanese officials seem to be encouraging the rising yen. Earlier this week Eisuke Sakakibara, the Finance Ministry official once known as Yen for his ability to move the markets (an ability that has waned), referred to the U.S. stock market as ``bubble-like.'' Sakakibara has expressed that view many times before, making the argument that the United States today looks like Japan in 1989.
But perhaps Japan's top motivation for tolerating a high yen, no matter the damage it does, is political. The embrace of the euro confirmed a Japanese nightmare -- that years of weakness have undermined the yen's role as the world's second currency. So Japan's politicians, led by Prime Minister Keizo Obuchi, are circling the globe this week talking about a currency triumvirate -- the dollar, the euro, the yen. To make that stick, there needs to be a strong yen, not a weak one.
-- Diane J. Squire (firstname.lastname@example.org), January 09, 1999.