"A Crisis is Brewing" by Bert Dohmen

(Y2K) Aug 15, 17:09

Unbeknownst to many investors, a crisis is brewing. While Wall Street is telling the public that they have nothing to worry about with the Y2K problem, the big money is fleeing to safety.

Suddenly there is a rush out of corporate and other types of bonds into U.S. Treasury securities. Its a flight to safety. Spreads have widened unexpectedly, which is giving derivative players who had bet on normal relationships, big losses. The multi-trillion dollar swap market, which is primarily the large banks around the world trading interest rate instruments amongst each other, yesterday had a spread much wider than at the worst time of last years worldwide financial crisis. This is not a few daytraders panicking because they are over extended. These are sophisticated professionals in the largest financial institutions.

Without wanting to panic anyone, I believe the potential of a serious financial crisis exists over the next several months. Dont think that the Y2K problem wont come til December. The big money prepares far in advance. In fact, I believe that the rush to the exists has started, and that it will accelerate as each one tries to beat the other out the door.

The emerging countries financial markets are the most vulnerable. Once the selling accelerates, there will be no buyers and these markets will plunge into a bottomless pit. How do you profit from that? You can sell short the WEBS (World Equity Baskets) which trade like closed-end country funds on the stock market. Pick your country and sell it short. Or you can do the same with the closed-end country funds. I recommend especially the Latin American and minor Asian markets. I will not make any official recommendations as trading volume is fairly low and it could effect prices.

The U.S. dollar made a sharp turn to the downside from record highs three weeks ago. No one appears to have a good explanation. Shouldnt it be rising along with our rising interest rates? The fact is that the Japanese are probably repatriating substantial portions of their money in order to be ready for Y2K. They will need the money at home. As a result, the yen soars and the dollar plunges.

A weak dollar is very negative for our stock market. It causes foreign investors to sell U.S. stocks and bonds. This makes the U.S. markets even more vulnerable.

Regarding Y2K, I know that many people laugh at the idea and believe the stories in the media that everything is ready, and there will not be any disruptions. I believe this perception will be proven wrong. However, the real problem is the uncertainty, not the actuality. And that is what were seeing in the credit markets now. The big money is going to safety, just in case there is a problem and there are disruptions. When you have millions or billions of dollars, missing a small opportunity in the stock market is not as important as preserving the wealth you have. You protect it by going to safety in a time of tremendous uncertainty. The world has never had such a problem as Y2K.

Bert Dohmens

WELLINGTON LETTER

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-- Andy (2000EOD@prodigy.net), August 16, 1999

Answers

I think the market is safe, until People OPENLY talk on cnn and other networks, about y2k connections with the market. until Moneyline. tells some people to be concerned, they'll keep ignoring y2k.

Course, if there is no crash, That's quite allright with me :)

-- Super (Slfsl@yahoo.com), August 16, 1999.

does bob brinker know about this? have you explained your theory to him?

-- ed (thunderheader@hotmail.com), August 16, 1999.

I like Bob Brinkers style, last time I heard him though (several months ago) he thought y2k was a Brazillian Parrot.

-- Andy (2000EOD@prodigy.net), August 16, 1999.

Other notables recently commenting on Y2K include John McLaughlin [PBS, Mclaughlin Group] and Ralph Acampora [PBS, Wall Street Week]. McLaughlin referred to "the Y2K debacle" on this week's program. Acampora stated that he has gone from bullish to neutral on the market over the next three months due to the probable impact of Y2K.

While it is easy for many to dismiss John McLaughlin as a bombastic right-wing bully, the relevant facts here are that he is a "charter member" of the Washington grapevine, and he takes Y2K seriously enough to investigate.

Y2K Pioneer

-- Y2K Pioneer (Pioneer@aol.com), August 16, 1999.

A lot of economic threads today.

No matter how it happenes the point is that the market either:

1. Will Crash --- and its been discussed what that may mean.

2. Will continue --- we can all borrow from a credit card, say at 15%, invest in the market, get 20 to 40% annual return, and become rich, fat, even more arrogant, never do another lick of work or production, and live like kings.

-- Jon Johnson (narnia4@usa.net), August 16, 1999.

I listened to Bob Brinker on Saturday, and he was sounding VERY BEARISH to me! I was very surprised at some of this repsonses to people who called in. He was advising people to put their money into treasuries, and he also said if you think the market will keep going up, you are in for a rude awakening. My neighbor came over yesterday and that was the first thing out of his mouth "did you hear Bob Brinker yesterday?" In the past, Bob Brinker always made fun of the "bad news bears." I think that's what Bob is right now.

-- bad news bear (bad new bear@badnewsbearrr.com), August 16, 1999.

Jon--I read a recent article (can't remember where), where people are using those 5% teaser credit cards, borrowing the cash limit, reinvesting in the stock market. When the 6-month teaser rate is up, they transfer their balance to another 5% interest card. They are making more money on their return and can essentially go forever how long they can keep paying 5% interest on their money. Once they make a bundle, they cash in their stock, payoff the credit card and start all over again. Not a bad idea is it?

-- bad news bear (bad news bear@badnewsbearrr.com), August 16, 1999.

No, its not a bad idea at all, as long as it lasts.

-- Jon Johnson (narnia4@usa.net), August 16, 1999.

Hey Andy, I am curious. Do you know my real handle that I have used since last summer? If so let me know by telling me the third letter of my e-mail and the fourth letter of my name. I started using this handle only to remain annonomous on some of my postings.

-- Y2K Professional (Y2KProfessional@aol.com), August 16, 1999.

y2k professional - no, I don't think I do ...

-- Andy (2000EOD@prodigy.net), August 16, 1999.

Andy, I'll take a stab.

Third letter of E-mail: P

Fourth letter of name: U

PU

-- Randolph (dinosaur@williams-net.com), August 17, 1999.