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Ah, the famous imaginary PPT is back again. The one that has parts of the
government buying stock market futures. The group that monitors the markets
and may provide moral suasion for the banks and brokerages, or inform them
of lossening of the monetary reins may be a different story. But buying
futures, it ain't happenin.
That said, it does not mean the analysis is totally wrong. Junk bonds are
certainly a concern. However, though I do not have the figures, you can be
pretty confident that there are very few dot-coms with junk bonds
outstanding. There was never a need to, with equity financing so cheap. And,
once the bubble burst, nobody was willing to lend those guys a dime. That
does not mean that junk bonds might not bite. And, that does not mean that
the economy can ignore the write down in wealth either. Just questioning ye
olde PPT.
Steve
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Steven W. Poser, President
Poser Global Market Strategies Inc.
http://www.poserglobal.com
swp@xxxxxxxxxxxxxxx
Tel: 201-995-0845
Fax: 201-995-0846
-----Original Message-----
From: SLAWEKP@xxxxxxx [mailto:SLAWEKP@xxxxxxx]
Sent: Sunday, December 03, 2000 5:14 PM
To: realtraders@xxxxxxxxxxx
Subject: [RT] International forecaster
Subj: Bob Chapman - THE INTERNATIONAL FORECASTER
Date: 12/03/2000 4:13:07 PM Eastern Standard Time
From: LePatron@xxxxxxxxxxxxxxxxxxx
DECEMBER, 2000 (1)
Le Metropole Members,
Bob Chapman has served commentary from his
"THE INTERNATIONAL FORECASTER DECEMBER, 2000 (1)"
at The Toulouse-Lautrec Table.
"The big question is will the $670 billion US junk
bond market, which is more than 15% of all corporate
bonds, begin a run on the financial system? For two
months the market has been virtually illiquid. There
have been defaults and many companies are on the edge.
New financings are not to be found. The wild
speculative bubble we warned of in April has burst
in technology and dot com stocks. Many of these
companies depended on junk bonds for financing......"
"Junk bond defaults during the first nine months of
the year were $24.9 billion, at that rate they’ll set
a new record. As we reported before S&P estimates that,
the rate of default of all junk bonds outstanding
would reach 8.4% by the end of September 2001. That
is up from 5.4% at the end of the third quarter of
2000."
"Losses in the Nasdaq market are over 50% since the
high last March or 5,123 or $1.8 trillion, which is
equal to the GDP of Germany for a year."
"These are savings that have been wiped out. Over 55%
of US households are effected. The wealth effect is
dead and Goldilocks has been devoured by the big
bad wolf. As we pointed out in previous issues the
Plunge Protection Team has been in the market
propping it up at least four times in the last two
months....."
Followers of Bob Chapman are happy campers these days
as he advised them to get out of the stock market
near the top.
All the best,
Bill Murphy
Le Patron
www.LeMetropoleCafe.com
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