Grizzly's Growlings Back Issues Monday Morning Market Musings 08/17/98
Asia and Der SchlickmeisterFor now the fourth straight week, Asian stocks are down sharply in Monday morning trading. (Prices as of 1:00 AM EDT Monday.) Today’s trading is especially significant.
The Nikkei 225 in Tokyo is down more than 400 points (2.65%) to 14,725, closing in on a 12 year low. Round number milestones like 15,000 are usually perceived as support or resistance levels. The real support for the Nikkei has been the 14,500-15,100 range. Three times over the last 12 months, the index bounced off this range and made decent rally attempts. Today’s drop (so far) brings it to the middle of that range. It’s unlikely it will hold this time.
At a minimum, a mini-crash is in force in Shanghai, down another 7.39% so far Monday morning. Since peaking in early June at 1423, the index has plunged 24% to a new 1998 low of 1081.
In other Asian markets, Taiwan is down 1.33%, Sydney All Ordinaries is down 1.23%, Singapore is off 1.74% and Malaysia is of 1.34%. (Hong Kong is closed for a holiday.)
Japan and China, the region's largest economies, are in a death spiral, each feeding upon the other’s downdraft. The rest of Asia, as well as the rest of the world, including the US, is being sucked in, albeit at different rates. The world economy is just too integrated and interdependent for any to escape the vortex. Our size and strength may allow us to put up a more gallant effort, but we will not escape out the back door. "When the cops raid the brothel, they take the bad girls and the good girls."
Wall Street may be too distracted Monday morning to pay much attention to today’s selloff in Asian. Indeed, all eyes will be on Pennsylvania Avenue, not Wall Street. Expect trading to dry up as the media frenzy heats up and hypes up President Clinton’s testimony before Kenneth Starr’s grand jury at 1:00 PM EDT.
Most talking heads and White Housers are expecting Der Schlickmeister to address the nation sometime after giving his testimony. Clinton has been huddling with his legions of lawyers and advisors over the weekend to come up with a "strategy." The only strategy that can put an end to the whole "affair" and salvage the Clinton Presidency is "the truth, the whole truth, and nothing but the truth." Should be a fascinating "moment of truth" for the country.
Wall Street has dropped solidly for the past four weeks. At least a short-term bounce is to be expected. Another sharp selloff won’t be far behind. But given the "unpresidented" political environment, the bounce may not even be noticeable.
As we move into September and October, the historically worst performing months of the year, the US markets remain on FULL CRASH ALERT. Stay tuned.
Grizzly
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