WALL STREET, NEXT WEEK
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WALL STREET, NEXT WEEK: SEPTEMBER 20, 2004
FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER

1. SEPTEMBER MARKETS
2. UP STARS/DOWN STARS
3. ASTRONUT
4. QUOTES
5. ON THE WEB
6. LETTERS
7. AFUND LETTERS

1. FOMC AND BONDS
When Interest Rates Go Up, Markets Go Down. Also in a rising interest rate environment, the pressures on heavy borrowers increase. So, will the Fed close at 1.75, 2 or 2.25 on December 30th. Most now believe 2% - The Fed Will Lift Key Rate in September, November, starting with a quarter-point increase on Sept. 21, according to 21 of the 22 largest bond-trading firms.
I am not so sure. I believe that either the Fed will NOT raise next week, or will imply no great rush to jump past 2%.  Either way, US Bonds will take a small hit, unless there is more terrorism.  I recommend a rotation of 5-15% of your US Bond portfolio into TIPS before the US Presidential election on November 2. If you believe Bush wins again, then A 20% switch to Real Return Bonds (TIPS) before the end of 2004 is most likely desirable.

HYDE PARK SOAPBOX: BANANA DOLLAR PROSPERITY
U.S. 2nd-Qtr Current Account Deficit Widens to $166.2 Billion Rising international shipping rates and changes in foreign currency values will help some US industries. John Byrd III, president of the Association for Manufacturing Technology, maintains "In some areas, like textiles, we will never compete. But in areas that are technology driven, rather than labor driven, we can do very well."  We CAN, but is there enough wisdom and political WILL to do this?  Vote your conscience in November.

TRADERS:  One brief short able rallies ahead of October.
INVESTORS: Sell stocks you don’t want to hold until October. We are ready to buy ONLY special situation stocks, e.g. Stock of the Month Club picks.

KEYDATES:        SEPTEMBER 21, 22
DJIA:                   10,300 PIVOT
NASDAQ:           1910 PIVOT
GOLD:                 SECOND ACCUMULATE ON WEAKNESS
US Bonds:            Second TIPS rotation.

SIDEWAYS Market Marker Sentiment: Initial Worry, then Rally, ending Flat.
DON’T BUY AND HOLD: BE LIQUID WITH A BALANCED AND DIVERSIFIED PORTFOLIO!
12/31/2003 EOD:    DJIA 10453   NASDAQ 2003 SPX 1111.
FAIR VALUE:        DJIA  <9640, NASDAQ  <1750, GOLD = 410
DIJA:                       2 ~ FV 0 UV; Only 3 offer 4%+ Dividends.
While the internal Stock Market astrology, as in 2003, is mixed, the external risk potential is very high.

2. “Given a high probability of a Euro trading 125 or higher by 2005, we are looking both for US companies that would continue to benefit from a depreciating dollar as well as more international (non-US) companies. Naturally a Bush or Kerry victory will change the picture both short term and intermediate term. At this time, most stocks are overvalued by our measures, so we are no rush to invest long term unless/until markets correct downwards first.  Also please note, as the European and Asian stocks that are represented are primarily not concentrated in our 2005 favorite sectors, we reduced our holdings in our AFUND Global from 12 to 10, and also reduced their portfolio weight from as high as 25% to 15% until H2 H1 2005.”
This week WSNW subscribers can read more of our latest update of our S: AFUND GLOBAL10 post.

3. Taiwan's AU Optronics (AUO), the world's third-largest maker of displays, said it will delay construction of a new plant, a sure sign of weak demand in the LCD industry. "Indeed, we are examining the schedule and we don't have a new schedule now," said an AU spokeswoman. This delay is due to the fact that consumers are not buying expensive flat-screen televisions in the volumes anticipated by manufacturers investing billions of dollars in new factories. The good news? Taiwan Town Devotes Doll Museum to Barbie: US toy maker Mattel (MAT) outsourced Barbie-making jobs to Taishan in 1967. Although the plant closed, it remembers fondly its past at the new Doll Museum - or shrine - devoted to Barbie. "Bah bi wa wa" wasn't just a glob of plastic pressed into a mold. It shaped the identity of the female workers and became an important piece of the town's history. Barbie dolls are even credited with matchmaking. "The women who worked at the Mattel factory had reputations for being beautiful and precious, just like Barbie dolls," visitors to the exhibit are told. "So young men used to gather near the Mattel factory, hoping that they could attract a 'Mattel lady."' While we think this augurs well both for the future of Taiwan and Mattel, currently we find both more than adequately valued. With the exception of Taiwan computer maker Acer, we are unlikely to buy either unless my wife is willing to change her preferred dress style from Prada to Barbie. In other words, don’t hold your breath.

4. "We are in the pre-announcement confession season and it's been a little rougher than what we've seen in the past quarters, and it's enough to cause a pause in the market at these levels."
Peter Boockvar, equity strategist, Miller Tabak
HW: A pause followed by a retesting of support, I would presume.

“Foreign banks have been willing to finance America's deficit, but this isn't sustainable and it's a big long-term threat to the economy.''
John Shin, economist, Lehman Brothers
HW: You betcha!

"What we have been seeing is we had a run up in the first half of the year in inflation and now we are seeing a plateau."
Kurt Karl, head of economic research, Swiss Re
HW: I wish my wife would find out where the Fed shops!

5. Global house prices
“America's ratio of house prices to rents is at a record high, 26% above its average over the 25 years to 2000 (see chart). To bring the market back to fair value, prices need to fall; alternatively, if rents continue to rise at their recent pace, prices will have to stagnate for as long as eight years.”

The 'recovery' is living on borrowed time
The Fed thinks the economy is growing on its own. I think people are using their homes as ATMs. What I don't know is when the bubble will burst.

Fed leaves little doubt: Rates will rise

6. READER:  Economy in a slump............Oil prices.............What happened to deflation ..........you were wrong about that, or is that latter in the cycle.
HW: We have both inflation and deflation with our “bifocal” economy. Some prices are dropping, while others continue to rise. Almost all are underreported and underweighted.

HERE WE TALK ABOUT AFUND CLIENTS

READER: Your annual 2004 IHI write-up was not clear in that IHI had until 12/31/05 to prove itself.  Guess it is just a matter of changing the year in your next IHI annual write-up.
RE: “THE IHI STORY 2004 2005 IS FINALLY TIME FOR IHI! I strongly believe 2004 2005 will finally be different. “
HW: IHI is a Very unusual microcap with an extremely strong natal horoscopes for both its president and Bermuda incorporation. Hence it continues to receive many opportunities to succeed.  In 2005, it has it own Hi-Rise projects, while currently in 2004 there are a number of other projects possible.  The beauty of investing in IHI is that it acts much like a “non-expiring” option. This is why I can continue to recommend gradual accumulation (averaging down) at current low pricing.
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Author: INVESTING BY THE STARS, THE STUDY OF ASTROLOGY,TRADING BY THE STARS (01)
May 13-15, 2005 Eleventh Astrology & Stock MarketConference   NYC
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