top-of-cycle stuff

DANIEL.DAVIES at flemings.com DANIEL.DAVIES at flemings.com
Wed May 26 09:26:54 PDT 1999


Reading the runes, I'd now like to sign up for membership of the bear club wrt world interest rates and equity markets.

I've always thought (and told clients) that we should only say that the current situation is a bubble when we see sizeable commercial property development activity. Commercial property is the canonical crazy-easy-money investment, because it can only be got off the ground with vast amounts of cheap bank credit. Viz: Canary Wharf, the Scandinavian banking crisis, Tokyo, Citibank's second period of economic insolvency during the 80s, Malaysia etc. It's what people get into when bond and equity yields are so depressed that literally nothing else will provide and acceptable income.

Now, all on one day I've been informed of:

An Italian bank spinning off its real estate interests into a quoted subsidiary

Credit Suisse Asset Management starting a real estate investment company

And a guy in Sao Paolo announcing that Brazil is going to have the tallest skyscraper in the world.

Bubble, bubble, who's in trouble. If foundations ever get dug for that tower, in particular, I'll be selling all of my equities, of which I have none.

regards

dd

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