The dollar again

Article Abstract:

The US dollar dropped to under 100 Japanese yen in Sep 1995, after a previous rise. Inflationary pressure is easing, according to Alan Greenspan in his briefing to the Senate committee on banking. He also sees an agreement on the US budget, but Morgan Stanley is more pessimistic over such an agreement and the notion of a soft landing for the US economy. Inflation is likely to rise which means that interest rates will be raised, argues Morgan Stanley, so bonds and equities could be vulnerable by the end of 1995.

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Wall Street: a long cycle

Article Abstract:

US share prices have risen in 1995 and the rise has been aided by the bond market. Inflation has been under control, despite a drop in unemployment. Interest rates look set to fall, and technology stocks have performed well. Mutual funds have attracted cash from bank deposits. Much of the rise in share prices in 1995 has been linked to low levels of inflation and the belief that this will continue. A rise in inflation may occur if there has simply been a delay in prices rising after unemployment falls.

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Wall Street: value fears

Article Abstract:

US interest rates may be raised in 1996 and this could hit equities. Previous interest rate rise have also seen rises in share prices on three occasions, but shares may be overvalued in 1996 which means that they are more vulnerable. The performance of share prices is linked to levels of investment by fund managers. There has been over $100 billion moving into equity mutual funds in 1996, and managers are wary of moving into bonds and cash on a large scale.

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