Two readings

Article Abstract:

US employment is likely to have risen in Nov 1997 and housing starts and inventories are increasing. Inflation could fall as a result of cheaper imports from Asia, and this should help equity and bond prices. There could also be a rise in the US current account deficit because Asia will take fewer US exports, and strong demand in the US will mean more imports. This could lead to a drop in the value of the US dollar which could increase inflation and lead to a rise in interest rates. The longer term view for stocks is less hopeful than their short term prospects.

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Wall Street: mutual mania

Article Abstract:

Sales of equity mutual funds in the US have risen strongly and this is seen as a major factor in pushing up share prices. Investors are not saving more of their income but are buying into mutual funds rather than savings elsewhere. Real estate prices are not rising and mutual funds are seen as another way to save for retirement. Low interest rates have also led savers to move funds into equities. Selling of mutual funds could exacerbate a drop in US share prices.

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The great escape

Article Abstract:

The impact of the US current account deficit on stock price trends is examined in detail.

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