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THE WINDY CITY TRADER
P.O. Box 1673, Chicago, Illinois
(December 2, 1997) FINANCIAL INSTRUMENTS: As the Asian problems abate, look for a drop back to 116 in March bonds. Remember, the peso folks, a dog one month, a star the next. The Asian situation will soon be a memory. There may be a flicker here and there but 2 weeks of calm in these markets have already seemed to settle the situation a bit. The S&P could test old highs at 992.25 if the present calm continues: The biggest beneficiary would be the U.S. Dollar. The Swiss Franc and D-mark only rallied due to our stock weakness, not because of their strength. A move back to 6700 (Swiss) and 5400 (D-mark) is possible during the next 4-6 weeks. The Yen should continue to suffer. The Japanese economy is in serious trouble, and there appears to be no quick fix. The only possible short-term bounce might be off of 7700 as this equates to a politically sensitive 130 to 1 area in the yen versus the dollar. If we break there...look out below.
Stephen Connell and William Frejlich
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