The bull side reads like this: Xrx traded at 116 1/2 and has since fallen off the steep slope and is now a bargain at 90 7/8. The stock is off 30 percent from it's high - buy, buy, buy! The bear side reads like this: Xrx at 90 7/8, with earnings of 0.45$US per share has a P/E of 206.94 - sell, sell, sell!
The bears have a point, but they've had a point for years now, these P/E numbers are just a big joke, but that hasn't made money for the bears. The bulls have a point, but it's getting shakey as that earnings number drops lower and lower, and that P/E gets higher and higher as a result. Who will win the day ? Hard to say. This thing has been driven by sentiment for a very long time - that's why everyone, absolutely everyone, wants to know what the individual investor plans to do. The bull is dead when regular folks on the street decide they're tired of playing the game and take their chips off the table. I've heard that some professional traders are watching for bullish moves in Gold as a sell signal.
SHEEL KOHLI in London
The sharp deterioration in the global economic
environment, in particular the worsening
outlook for the United States economy, has
forced one of the most influential analysts in
the foreign exchange markets into an
"embarrassing" U-turn.
Goldman Sachs chief global foreign exchange
strategist Jim O'Neill said he now took a much
more bullish stance on the yen, restoring the
house's usual outlook which was ditched just
four weeks ago.
The surprise change - which comes as the
Bank of Japan yesterday voted through a
surprise cut in overnight interest rates,
thereby boosting the US dollar - was revealed
in the group's Weekly Analyst publication.
Goldman now predicts that the US economy is
headed for a slowdown, saying it had
downgraded by one percentage point its real
growth estimate for the period from the fourth
quarter of next year to the fourth quarter of
2000, to 1.7 per cent from 2.7 per cent.
It said it also cut its year-to-year consumer
price index forecast by 0.25 percentage point
to 2 to 2.25 per cent, and said that it now
expected an easing in interest rates of up to
100 basis points next year.
The changes meant that Mr O'Neill has been
compelled to change his dollar-yen forecast
back to his original estimates.
"We apologise to readers as we do not like to
change our forecasts very often as we're sure
you appreciate, and it is only four weeks since
we last revised," the Weekly Analyst said.
Having turned bearish on the yen four weeks
ago, predicting the dollar-yen rate would be
at 155 yen in three months, 143 in six months
and 127 in a year, Mr O'Neill now believes the
yen will be much higher at 135 in three
months, 132 in six months, and 127 in a year.
The yen was at 136.58 to the dollar in New
York in late morning yesterday, slipping from
its Tuesday close of 132.25, after the
Japanese central bank cut rates.
Asked why he changed his view in the first
place, Mr O'Neill said: "Because I was stupid .
. . I feel annoyed with myself and a bit
embarrassed, and vindicated."
He said the prime motivation for the change
was because of the banks' change of outlook
on the US economy.
The fresh change puts Goldman in stark
contrast with other analysts.
( SCMP )
...would you know anything of the NZ-listed RBD?
Offbeat Price Indexes Whisper The I-Word, and Consumers Agree
By LUCINDA HARPER Staff Reporter of THE WALL STREET JOURNAL
By the most widely used measures, inflation is benign and prices are subdued or even falling. But it's the less-publicized indexes that are giving inflation-hawks a little pause.
Just take a look at consumer prices. According to the Bureau of Labor Statistics, which compiles the closely watched consumer-price index, inflation was running at just 1.7% during the 12 months ended in July.
But the Cleveland Federal Reserve, which compiles a consumer-price index of its own, says its so-called median CPI was up 2.8% over year-earlier levels in July.
No one, of course, suggests that the median CPI is signaling that inflation is about to spiral out of control. Indeed, by just about every measure, prices are extremely well-behaved, especially for an economy clipping along on its seventh year of growth. On Wall Street, plunging commodity prices have prompted more worry about deflation, steadily falling prices, than inflation.
And it is clear from recent comments by Federal Reserve Chairman Alan Greenspan that the Fed no longer sees an outbreak of inflation as its primary near-term worry, partly because the deteriorating global economy makes it less likely that the U.S. economy will overheat.
But some economists aren't convinced. They note that the less-publicized price indicators, the kind economists start looking at when they get an inkling that things are too good to last, suggest that the costs of items are accelerating more quickly than the Bureau of Labor Statistics' CPI would indicate and taking a bigger bite out of consumers' pocketbooks.
Pricier Perms
And many are starting to notice. Mary Hall, a real-estate broker in King of Prussia, Pa., sees higher prices everywhere. She is paying $120 for a perm and color at a hair salon, up from about $85 a year ago. Makeup has gone up, underwear is more expensive, and the restaurants she frequents have gotten pricier. "There have been some big price increases," Ms. Hall says.
And you can see that in the Cleveland Fed's median CPI. Economist Michael Bryan, who heads the research team that produces the index, says his index and the bureau's CPI used to track very closely. He believes big declines in the price of oil and other commodities have skewed the bureau's index on the low side.
To avoid that problem, Mr. Bryan's group eliminates products that have unusually high price changes in a given month ( lately, tobacco, fruit and personal services on the upside and fuel, children's clothes and jewelry on the downside ) . Mr. Bryan then calculates an index based on the price changes of products and services left in the middle, or median.
Lone Vote for Higher Rates
The growing gap between the bureau's index and the median CPI may help to explain why Cleveland Fed President Jerry Jordan was the lone voter for higher interest rates in July, when the 11 members of the Federal Open Market Committee met. Mr. Jordan was among those who felt the Fed needed to raise interest rates to snuff out incipient signs of inflation, according to a summary of the deliberations. Instead, the Fed left the target for the federal-funds rate, at which banks lend to each other overnight, at 5.5%. It is unknown whether Mr. Jordan has since changed his stance.
Still, other hard-core inflation-watchers are beginning to pay attention to the gap. Subscribers to the Cleveland Fed's monthly inflation report are growing and there are thousands of hits on its Web site.
Scott Brown, chief economist at Raymond James & Associates, a St. Petersburg, Fla., brokerage house, says the Cleveland Fed's inflation measure, by throwing out the outliers, provides a truer picture of the inflationary environment. "There can be a lot of volatility from month to month in the government's figures, even when you throw out food and energy," he says.
Alex Patelis, an economist for Goldman Sachs in New York, has been watching the median CPI closely in recent months as well. He believes the median CPI of today is the likely inflation rate of a year from now. "The median is an anchor of where inflation will be in the medium term. We should pay more attention to it," he says.
Another reason why the government's CPI may understate inflation is that it is heavily weighted toward the goods sector, where much of the slowdown in prices in the past several years has occurred, even though
services represent roughly two-thirds of consumer spending. So while prices for rarely purchased big-ticket items such as computers have taken a tumble, the costs of auto repair, child care and school tuition are rising rapidly.
Productivity gains and low commodity prices have allowed manufacturers to reduce, or at least hold down, prices for their goods. But productivity gains have been elusive in the service sector. Donald Ratajczak, director
of the economic forecasting center at Georgia State University, says the Labor Department's estimates on service inflation do "seem to be out of whack, because you hear people complaining a lot about airline-ticket
prices and housing prices."
'Price Deflator'
Some analysts say plunging computer prices may be masking a more serious problem with overall inflation. Consider, for example, the government's "price deflator," a very broad inflation gauge that measures prices paid by consumers, businesses and the government. When computer prices are included, the price deflator was up less than 1% during the second quarter of 1998 when compared with a year earlier. But without computer prices, the deflator shot up more than 3%.
David Seiders, chief economist for the National Association of Home Builders in Washington, is keeping an eye on a house-price index released quarterly by the Office of Federal Housing Enterprise Oversight. That
index reports a 5.2% jump in housing prices in the second quarter compared with a year earlier. The increase isn't picked up in the government's CPI, which calculates shelter costs based on rents. The shelter component of the CPI was up just 2.4% in the secondquarter from a year earlier.
Another sign of some pricing pressure is in the National Automobile Dealers Association's measure of average new-car retail prices. It shot up to $23,450 in the first six months of the year from $22,250 during the same period in 1997, a 5.4% rise.
The Statistics Bureau's CPI isn't totally off, of course. It has picked up some hints of pricing pressure. Aside from the huge acceleration in vegetables and fruit, child care, legal services, hospital services, vehicle maintenance, tobacco and prescription drugs also have experienced large price gains.
"This is something people are beginning to look at and think about," says Kathryn Kobe, economist for Joel Popkin & Co. in Washington. "When Asia settles down, inflation is going to be looked at a lot more closely."
URL for this Article: subscription required
http://interactive.wsj.com/archive/retrieve.cgi?id=SB905381199309413000.djm
1 ) The worlds reserve currency will be trashed by Slimey Willie's exit.
2 ) Japan the #2 economy is bankrupt and printing money.
3 ) European banks are being trashed by Russian exposure.
4 ) Latin America is getting ready to go down the tubes.
5 ) Stock markets around the world are crashing.
6 ) There are mountains of gold shorts from CB leasing program
7 ) Gold recently broke lows going back almost twenty years
Be aggressive!! Buy gold! Buy gold stocks! Buy gold futures!
Buy gold now!!!
All: I think the constant revelations on the WJC situation will continue to batter the markets for some time. Intermediate/long term Bearish for the markets and the US dollar, and bullish for gold.
Perhaps today's gold rally is due to short covering, but I think the tide has shifted, IMHO.
Will be interesting to see when the US equities bottom as Oldman thinks they will. Might be some time from now, as I don't think the magnitude of the trouble WJC is in has sunk in yet.
If WJC resigns, it will be because of extreme public pressure, not because of any Congressonal act. And -- even that may not remove the pall over the US -- as the investigations will gather momentum for while even after he resigns.
Interesting times -- probably a US equity bear market rather than a crash, as long as the World's financial system remains intact, IMHO. If the US dollar continues to drop, we should expect the commodity indices to solidly bottom, with the obvious bullish effect on gold bullion.
In Man's association with Man, there are only TWO Basic alternatives:
TRADE and THE DIVISION OF LABOR !!!!!
YES.....stuff like love is an exchange..... a VALUE exchange :- ) ]]]
Oct - Dec '96: US$$ index at +- 88 points, Gold +-$330
Aug '98: US$$ index at +- 102 points ( an INCREASE of 16% ) , Gold at $277, a DECREASE of 16% ) .
Sept 10, '98: US$$ Index at +- 97 Points ( decrease of 5% from its high ) . Gold at $292, ( an INCREASE of 5% from its low ) .
The US $$ can potentially go as low as 82 points in the next 6 Mos. ( a 20% DECREASE ) , so potentially Gold will go to +- $340 over the same time.
Now factor into the Gold price the following:
Demand higher than in 1996
Production down by 20%
SHORTS must Cover.
Gold price in 6 Mos? $375, $390, $425.....
The Canadian Dollar dropped 16% over the same timeframe ( .75 down to .63 ) and has now corrected by 5% to .66.
How about this? Perhaps we are misjudging the Japanese because all of their wealth is not in Yen. The Japanese own companies all over the world, and as Aragorn III says, they are the 'bank' ( at least we think they are -- worldwide ) . It is hard to believe that the US/European 'banks' now hold the world's wealth, since we have been net debtors for so long. And, at least in the US, any review of corporate profits vs corporate debt indicates very quickly that we haven't even begun to pay off that 20 trillion of so of US non-government debt. That doesn't include the other 20 trillion of Federal debt plus entitlements.
So something about our concept of Japan is amiss -- perhaps what we are missing is that Japan is really at the center of a SEAsian EMU equivalent -- so their wealth is spread out over many currencies and countries, not just the Uen and Japan. I think what we need to do to understand Japan is to understand their entire economic system they work in -- not just Japan itself. Japan plus their local trading partners. And -- the US and Europe on the outside, looking in.
I guess one question we could ask is -- how could the Japanese jump start all of those ( newly ) very low-cost factories all over SouthEast Asia, so that they can sell us goods at 1/3-1/4 of the price of what they were a year or so ago? The Japanese also think very long term -- and have 100 year plans. We Westerners are lucky if we know what we will do in one year or so.
What really nags at me though in all of this, is that whatever Japan is up to, they would benefit by cutting the cost of their bureaucracy, and reducing taxes. They need all sorts of incentives so that individuals or corporations will capitalize Japanese or SEAsian factories so that they can jump start their expanded SEAsian economy . Aragorn III's comment along these lines is very helpful. The SEAsian bank is worried -- and Japan is ( essentially ) that bank.
Another thing is very clear -- they have no intention of losing corporate control to European, Chinese or American firms -- no matter what happens. They will do everything in their power to prevent foreign corporate buyouts.
In a Florida speech, President Clinton said, "I let my family down. I let this country down. I'm trying to make it right. I'm determined to never let anything like that happen again." Does this apology satisfy you?
Yes
1886
30.2%
No
43663
69.8%
Total votes:
62527
President Clinton said he hopes people will feel good when their children say they want to grow up to be president. Is he a good role model for America's children?
Yes
8906
14.4%
No
53078
85.6%
Total votes:
61984
Do you think that the House of Representatives should proceed with impeachment proceedings against President Clinton?
Yes
39902
65.2%
No
21300
34.8%
Total votes:
61202
Many Democrats have criticized the president's behavior. Do you think it is right for Democrats to criticize the president at this time, or should they stand by their man?
Yes, the right thing to do is to stand up and criticize the president's behavior
48244
78.4%
No, Democrats should stand behind their president in his hour of difficulty
13316
21.6%
Total votes:
61560
Do you approve of President Clinton?
Yes
15040
24.3%
No
46842
75.7%
Total votes:
61882
Do you approve of the job President Clinton is doing?
Yes
24937
40.3%
No
36960
59.7%
Total votes:
61897
I am Male
39414
63.7%
Female
22480
36.3%
Total votes:
61894
I am a Democrat
14313
23.2%
a Republican
23059
37.3%
unaffiliated with either major party
24438
39.5%
Total votes:
61810
The relevant charts and commentary have been updated at the Privateer website.
To discern the effect of higher interest rates on Gold, you have to ask yourself why interest rates are rising, assuming that they are. We are talking about market rates here, not official rates that are manipulated at whim by Central Bankers.
Market rates can rise because of an increased demand for lendable funds. Or - they can rise because of what Austrian Economists call a "risk premium". A risk premium is a component of the rate of interest which rises when the risk of holding the currency in which the debt is denominated is seen to have increased.
When interest rates rise because of an increase in the risk premium, that is invariably very bullish for Gold. The classic example is the late 1970s.
So far, the stampede towards any perceived place of financial safety is having just the opposite effect on U.S. market rates. Today, 30 year yields dropped almost 10 basis points while 10 year yields fell almost 20. But the Dollar itself is still falling.
I think it is fairly clear that if and when Treasury bond yields start to rise, it will be because of an increase in the perceived risk premium. And that, unequivocably, will be good for gold.
You got to love that Globex game... Take it down 20 handles yesterday then take it up 20 handles... :- ) ) Is this what they mean by volatility? :- ) ) Like a piece of wire bent too many times, let's see how long the bulls can take this before breaking... On another front, the most sensible piece of talk on the boob tube was on the NBR tonight. Their guest said something like, ' Forget about what was in your 401K, that's history. It is what it is as of today. Remember your LONG TERM plan...' That's the first tacit admission of the real market situation.
GO GOLD, GO OIL! :- )
Go to the top entry where it says Dow/Nikkei
The "Irrational Exuberence" thing is there also.
sorry I can't figure how to make it active -oh, well!
http://www.the-privateer.com/greenspan.html
Auric -
Your 18:56 should be required reading by all. No newsletter, no course, no guru, could ever match but a fraction of what may be found here at Kitco. I have learned more of Y2K from this site than all other sources combined. Nary a day passes by when some gem does not appear in these pages, and we are all the better for it.
Yes
By Alden Bentley
NEW YORK, Sept 9 ( Reuters ) - A credit crunch is brewing in
the volatile currency markets as U.S. banks cut trading lines to
fund managers, forcing them out of leveraged investments and sapping more liquidity from
the
market, market experts said.
This could lead to unusually thin and unpredictable foreign exchange trade -- as many of
these big hitters are reined in or banished from the market entirely -- just when conditions
typically return to normal as summer vacations come to an end.
Growing ever more conservative as some of the savviest U.S. hedge funds post giant
losses in turbulent world markets, U.S. commercial and investment banks are seen paring
collateralized credit limits to speculators and even healthy financial firms.
``This could snowball into a bigger credit crunch problem,'' said David Gilmore, a partner
at Foreign Exchange Analytics, a Connecticut consulting firm.
``I suspect some of the big asset managers are in trouble as well. I see credit being
reduced to asset
managers, hedge funds and probably mutual funds,'' he said, adding that the squeeze
could extend to
some interbank trading lines.
Some money managers have withstood and even profited from the violent debt and equity
shakeouts
in emerging economies in Asia, Russia and Latin America, and the subsequent fallout in
Europe and
on Wall Street. But many were far less lucky.
Banks are closely examining the credit leeway they grant risk-hungry speculators,
especially after
high-profile and well-respected funds like George Soros's Quantum Fund and
Connecticut-based
Long-Term Capital disclosed billions of dollars in losses this year.
``They're obviously paying a lot of attention to the losses that some of these major hedge
funds have
been taking,'' said Virginia Parker, president of Parker Global Strategies LLC, a trading
manager
and investment consultant.
``Many of the larger banks have been taking fairly significant losses in their own
proprietary trading
operations,'' she said. ``Consequently we have heard rumblings ... that there will be a
retrenchment across the board which will further hurt liquidity.''
Long-Term Capital last week announced that almost half its net asset value had vaporized
so far this year. The fund attributed losses to a variety of strategies involving bonds,
stocks and derivatives in markets of industrial and developing economies, including
Russia.
IMHO, the US price of Gold was of no concern to Greenspan and the US Govt, as they were pursuing a very selfish monetary policy without Gold in mind. This policy was meant to attract foreign currency into the US sphere of influence. Better than a hot war, the currency war worked just fine for a time. Unfortunately, the 'BLACK HOLE' affect of the ever-increasing value of the US currency, and an increasing number of dependent people on that currency, got very badly out of control.
Severe consequences indeed as a result of a misguided and greedy policy; and Greenspan's legacy is increasingly tied to this debacle. Many economies are now in great trouble, ( all be it with much help from themselves ) ; and the average US investor is about to go through their own hell as $$ are slowly extracted from the black hole ( and its equity partner ) ; and the great US $$ course correction, or over correction to perhaps 60 or 70 points, takes place.
But as we are starting to see, and Greenspan will learn one more time, Gold is not a commodity, it is a monetary reality. He knows it, he believes ( or at least did ) in it, and in fact as demonstrated as per my previous attached post, that he watched that relationship very closely.
When the US $$ is back at 70 points ( 1995 levels ) , Gold will correct to about $375, except that all of the other factors now come into play:, increased demand, but less supply, and the short covering that has to be dealt with. So think of it. If that over correction forces Gold to $500 or $600, the point correction of the US $$ will be forced to about 50 to 60 points. GOLD becomes the standard, at last in US terms.
The worm is starting to turn. The Euro will add to the velocity of that turn.
Date: Thu Sep 10 1998 16:52
ORCA ( Gold Price has not changed! ) ID#231337:
Copyright 1998 ORCA/Kitco Inc. All rights reserved
It's the US $$ that has determined the price! Not new news! Here are some rough calcs that make the point.
Oct - Dec '96: US $$ index at +- 88 points, Gold +-$330
Aug '98: US $$ index at +- 102 points ( an INCREASE of 16% ) , Gold at $277, ( a DECREASE of 16% ) .
Sept 10, '98: US $$ Index at +- 97 Points ( decrease of 5% from its high ) . Gold at $292, ( an INCREASE of 5% from its low ) .
The US $$ can potentially go as low as 82 points in the next 6 Mos. ( a 20% DECREASE ) , so potentially Gold will go to +- $340 over the same time.
Now factor into the Gold price the following:
Demand higher than in 1996
Production down by 20%
SHORTS must cover.
Gold price in 6 Mos? $375, $390, $425.....
The Canadian Dollar dropped 16% over the same time frame ( .75 down to .63 ) and has now corrected by 5% to .66.
And -- Brazil went down 15% in one day today -- this is likely to have a bearish effect on the US markets -- if not tomorrow -- very soon. Given all the US investment in Brazil, this will eventually override the Intel and Microsoft news. Think of all those derivatives trades that went sour. And -- just how long will it be before the derivatives markets in Brazil melt down altogether, catching both winner and loser together in the liquidity collapse. Happened in South Korea.
http:
//dailynews.yahoo.com/headlines/wl/story.html?s=v/nm/19980910/wl/iran_1.html
Find out more about Kitco at info@kitco.com, or call 1-800-363-7053.
Copyright © 1996 Kitco Minerals & Metals Inc.
BJs and land deals in whitewater places,
Big Macs and french fries and girls with big faces,
Lots of nice cleavage that makes willie spring,
These are a few of my favorite things
Susan McDougal and Gennifer Flowers,
Horny young interns who while 'way the hours,
Profits from futures that Hillary brings,
These are a few of my favorite things
Beating the draft board and getting elected,
Naming to judgeships some hacks I've selected,
Conspiracy theories that blame the right wing,
These are a few of my favorite things
Golfing with Vernon and suborning perjury,
Falling down drunk that required knee surgery
Stars in the White House who come here to sing,
These are a few of my favorite things
Meeting with Boris and Helmut and Tony,
States of the Union with lots of baloney,
Winning debates and the joy of my flings,
These are a few of my favorite things
Chorus:
-------
When that Jones bites,
When Ken Starr stings,
When I'm feeling sad,
I simply remember my favorite things,
And then I don't feel so bad
---
Don't know who wrote it, wasn't me.
-EJ