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<snip>
Every country's currency has been crapping, except America, yet today the
USD is dropping. Why is that?
<end snip>
Russian interests aren't panning out for American companies. Recent turmoil
there could cause some companies to loose big in Russia. Markets like to
discount the future and I'm sure more than 1 investor thought that Russia
would prove a bonanza for American companies. So that light is fading.
Next is the continuing erosion in Asia. No one touched the Yen today
because the economy is so bad. Then there's Latin America which is still
reeling and the US has a large stake. None of these economies the US has
attempted to support are turning around as expected. That's got to concern
some players. The problems in Russia exacerbated the problem beyond the
breaking point.
The US dollar fell in response to the S+P and severe stock devaluation.
Everybody knows that the S+P is king. Take bonds for example. A few days
ago, one person on this list accurately wrote that when the dollar falls,
bonds will fall. In a normal situation that's the case but that's not
what's driving the everything now. The S+P is. It controls everything and
lately it's been controlling US in almost an inverse fashion. The past two
days has seen DX follow the S+P. Who would want to own the currency when
the stock market is falling out of bed? Currency traders needing a safe
haven for their cash, turned to the only countries that appeared safe -- SF,
DM, and BP. Where else could they turn? I don't watch it but the Franc
probably did well too. SF, DM and BP were trading inverse to DX, almost
1:1. The BP had like the largest or third largest 1 day advance in its
history. Wild.
The markets are simply a giant ferris wheel for the world's cash. It flows
from one sector or country to another and then eventually back.
With US corporate earnings being pinched, the US dollar looked a whole lot
less attractive.
PS: Where do you think the British Pound is headed?
PSS: How about the realtionship bewteen Gold and Bonds? The market is
tanking and you would think that Gold would benefit. It can't, however,
since Bonds are being catapulted to new highs admist frenzied flight to
quality buying. It's no coincidence that Gold made new lows when bonds made
new highs. Will gold lead the CRB like it usually does? What do you think?
-----Original Message-----
From: Michael Paauwe [mailto:mpaauwe@xxxxxxxxxx]
Sent: Friday, August 28, 1998 9:06 PM
To: Omega-list@xxxxxxxxxx
Subject: Re: Russia - Problem - what problem?
At 11:16 AM 8/27/98 -0700, you wrote:
>Before you do anything else, first blink, make sure you are awake, then
open
>your eyes and then check the stock ticker. How about your favorite
internet
>stock? Darling Cisco is off 3.5% today so far and darling Amazon is off 6%
>so far. It will take only a YEAR to earn that back in a T Bond, so why
>worry, right? Like I say, if your not long AND you're not short, don't be
distracted for
>more than a nano second.
____________________________________________________________________________
_____
Copyright Reuters 1998: Today, a day later...
PALO ALTO, Calif., Aug 28 (Reuters) - Internet stocks have never followed
the laws of the rest of the market but Friday they showed they at least
follow the laws of gravity.
One day after the market collapsed in its worst trading day of the year,
stocks of online directories, search engines, travel agents and retailers
caught up -- or rather, down.
On Nasdaq, where most of the Internet stocks trade, the list of the biggest
declining issues read
like a Who's Who of Cyberspace.
Online bookseller Amazon.com Inc. (AMZN - news) fell $13.11 to close at
$105.89; Yahoo!
Inc.(YHOO - news), the most popular Internet directory, lost $8 to $83.06;
search engine Inktomi
Corp. (INKT - news) was down $11.72 to $60.06; and Web programmer
Broadcast.com
Inc.(BCST - news) fell $6.63 to $44.38.
____________________________________________________________________________
_
It's worth studying the impact of shrinking inflated PE ratios in a real
time market sentiment shift, especially when they are actually one time
bubble market 'air ratios'. What makes this most impressive is that it
happened today, a full two days after the sharp market selloff started.
Is this a classic example of 'market inefficiency', handily corrected? One
that was just waiting to be plucked. And plucked it was today. Imagine a
one day low risk stock trade for a 16% gain, with no margin. I say low risk
because it wasn't like swimming against the tide when the front page of
every newspaper was reeling about worldwide market meltdowns.
Some of these, I won't name names, closed on 'upticks' the day before, based
on marketmaker end of day 'high close' price manipulations. The perfect
setup for an efficient market. I wonder if 'market surveillance' was
watching.
Great trade in the SF today. Looks like the SF is demonstrating some of the
old 'scared money' that used to run into gold. It's countertrend, even
intraday, to the S&P. Been that way for months, at least. Rallies on down
days. That's one of the differences in this market. Gold is tanking instead
of rallying. Deflation has changed the market landscape. Even the gold
producers were selling by 'the truckload' this week. I sold Placer at
33.00CDN. Today it's 15CDN and change.
The US dollar started DOWN in earnest this past two days. Notice the strange
strength in the JY. Was it the banks manipulating again or a fundamental
shift in the intermediate term world wide sentiment on the US dollar?
Every country's currency has been crapping, except America, yet today the
USD is dropping. Why is that?
Michael Paauwe
mpaauwe@xxxxxxxxxx
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