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Forget about a Fed rate cut as long as Greenspan thinks there's too much
exuberance in the stock market. Given that's been his outlook since Dec 96,
the Dow's still got a way to fall before he rides to the rescue.
Perhaps its a whisper of the much feared "great sucking sound" of Japanese
money fleeing the US equity market. Given the rise in the Nikkei, albeit on
light volume, it's certainly plausible. A yen-carry trade in US Treasuries
and equities financed by Japan's 1/2% call rate as been hugely profitable
for some time. Just imagine borrowing yen at 1/2% since July 95, tripling it
courtesy of the US Bull and then having the weak yen effectively double that
profit.
Though I don't believe we've seen it yet, I've firmly believe that a bottom
in the Nikkei will presage the decline of the Dow and the subsequent
Japanese Bull market will be matched by a Bear in the US. History seems to
back this up too, as Japan is one of the few world markets that has almost
perfect negative correlation with the US.
cheers,
Rick
-----Original Message-----
From: Al Taglavore <altag@xxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Wednesday, September 02, 1998 3:46 AM
Subject: Re: USD/Yen
>Jean-Michel Daniele wrote:
>>
>> Why the USD is weakening so fast is the fundamentals of the US market
>> are good.
>> Is it time to buy some call on the USD/YEN exchange rate.
>>
>> Any comment is very welcomed,
>>
>> J.-M. Daniele
>Because they are buying Yen and selling Dollars. Has nothing to do with
>fundamentals...it is an auction....take the profits in the dollar: it
>has had a good run.
>
>Al Taglavore
>
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