You speculate:
>Isn't it about time for the next sheep shearing on Wall Street or will
>it wait until after the Yugoslavian Affair is over. Or are we going to
>see a little sheep dip before the shearing?
If Kenichi Ohmae is right (and I've always suspected it), a significant chunk of the pricing on Wall St is safe harbour money from the 150-odd countries who have been doing it very tough of late. If over-extended economies reach the point of no alternative (ie the IMF stops drip-feeding them to avoid it), they could effectively take back this money, and then we might have a kick starter (if Japan doesn't show any signs of life, it could call big dough ion for yet another assault on those recalcitrant domestic savers - and if Japan suddenly bursts into life, it'd suddenly have better things to do with its money - funny stuff, economics). That rather sounds like 'lose/lose' for Wall St, dunnit?
He also reckons the US has been printing much more money than it should to fund its hideous foreign trade deficit - as foreigners do a lot of their savings in greenbacks, all this dangerous moolah is being absorbed at the moment. But if an alternative international currency crowns, that could see a heap of surplus-to-requirement dollars floating around. And a high CAD and a low unemployment rate in such circumstances would suggest an interest rate hike, no?
Suddenly those debt-financed speculations and lifestyles (1999 tastes a lot like 1987 over here - porsches and swaggering armanis everywhere) could come home to roost - what with soaring credit card ceilings (and concomitant negative balances: see this latest from Corp-Focus: "Families have sunk deeper into debt. Household debt as a percentage of personal income rose from 58 percent in 1973 to an estimated 85 percent in 1997. Total credit card debt soared from $243 billion in 1990 to $560 billion in 1997. Credit card limits have risen to the point that the average person can charge more than eight times what they already owe. As of 1997, almost 60 percent of American households carried credit card balances -- balances that average more than $7,000, costing these households more than $1,000 per year in interest and fees*).
If the time comes for a hike, Greenspan may have to take the odds to a few million domestic Ponzi units, eh? And if they're there in numbers, we'd have a clean-out that could bankrupt enough people to hit the finance sector.
Being me, I expect all this to unfold within months. If there is a bubble (and I can't understand how there might not be one), it should be pricked earlier rather than later, as big Wall Streeters are still talking of 30000 points by 2005 (no reference ever made to profitability projections - money and production have been definitively split in Wall St discourse now) - everyone'll have a piece of it by then, and the whole economy could go for a burton.
Jordan will tell you stock scarcity is still the determining variable. While we have more money chasing less stock, we have grounds for sanguine expectations, he says. He's been impressively right so far, but that does rather point at how important it is for foreigners to keep their money on Wall St and to denominate their nesteggs in greenbacks, eh? That state of affairs could alter quite quickly, I'd imagine.
Anyway, if that doesn't do it by November - mebbe the day traders on NASDAQ will start the avalanche rolling when the prospect of Y2K begins to lift the fog of greed for 'em.
I'm with you, anyway.
Cheers, Rob.