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Asia Kabushiki Shinbun- November 25, 1997

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Kabushiki Shinbun

November 25, 1997

Neo-Market Revolution – “Special Edition”

An interview with Mr. Armstrong, Chairman, Princeton Economic Institute Inc. of the U.S.

Q. How do you see the troubled international financial situation?

A. The next year, 1998, becomes a major turning point. Asian stock prices including Japan’s will hit their bottoms in 1998. Korea is under the worst outlook and will see serious economic changeover. The roots of the problem lie in Europe. One-third of the world is kept uncertain towards the unification and this has caused capital outflow to the U.S.A.

Q. Do you mean that this causes the strong Dollar trend to continue further?

A. Mr. Sakakibara and Mr. Summers give various comments but create confusion since they do not watch overall development. They watch only trade issues between Japan and the U.S.A. The roots of the problem lie in Europe. Europe is to form a union but no legislation and no structure have been decided. Europeans are concluding contracts under U.S. legislation because the legislation for the unified Europe is uncertain. This is a big problem fundamentally. We see at least 145.00 in the Dollar/Yen possible and even 160.00. President Reagan conducted tax reform including 50% cut in corporate tax, but it is just now that people evaluate his policy positively. Currently, the U.S.A. increasing tax revenue has turned the federal budget into surplus to lead towards a direction where national debts will decrease for the first time in the world. By early redemption of outstanding treasury bonds, the fiscal balance between revenue and expenditure will shift to surplus by the second quarter of the next year. This is the idea of Mr. Greenspan, in this regard, what Japan has to set itself to work is taxation issues.


Weak Yen of even 160 against the U.S. Dollar is possible

Japanese Investors Should Invest in the U.S.A.

The N.Y. Dow – 10,000 or More Possible in July Next Year

Q. As to the prospect for the N.Y. stocks please?

A. The New York stocks will consolidate as long as this year’s high in July will hold. An ideal pattern is to bee a bottom at 6,500. July next year is a turning point where a directional change will take place. In case we see a development with a high at 10,000 to 12,000 in the Dow in July next year, 40% correction could follow thereafter. In case we see a consolidation phase, it is very bullish for a long-term to move to a new high in 2003. Asian markets including Japanese will hit a bottom in the first half of next year. There might be a few exceptions, but generally a bottom will be in place early next year. However, worldwide critical development is possible as well. It is the case that all the funds converge on the U.S. stock market. In this case, the scenario is that the New York Dow will reach 10,000 – 12,000 in July next year.

The Roots of the Problem Lie in Europe

Q. What will be desirable behavior for Japanese investors?

A. They should invest in the U.S. but not Europe. We see the U.S. Dollar will keep its appreciation against the Deutsche mark, more than against the Japanese yen. Japanese investment in Europe will cause foreign exchange losses since the Japanese yen will get stronger against the European currencies.

Q. We consider the current market situation as a revolutionary period for next developments.

A. I think a revolution in the world economy is taking place.

Let’s try to watch Princeton’s Homepage!!

Princeton Economic Institute, Inc. has set its Internet home page where we can see at a glance whether markets worldwide are bullish or bearish. The address is It is a good chance right now as it will become a pay service as from January next year for minimum annual charge of U.S. Dollar 100,000 (equivalent to Japanese yen 12,500,000).