European Stars and Stripes (Newspaper) - November 23, 1991, Darmstadt, Hesse                                Saturday november 23, 1991the stars and stripes a Page 19moneyjnattgrsilspeculative fever concerns analyst investors find can t miss ventures hard to resist by Chet Currier associated press new York a As they Monitor the health of the financial markets right now some Wall Street analysts see worrisome signs of speculative fever. In both Stock and Bond trading they Point to evidence of an enthusiasm for hot stories and supposed a a can to miss deals that betrays a potentially dangerous degree of complacency. Stock analysts concern focuses especially on a Boom in medical technology stocks that have Little in current earnings but purportedly limitless prospects for the future. A medical and biotechnology stocks have taken on a parabolic nature to their trends a said Joseph Fesh Bach technical analyst at Shearson Lehman Brothers in a current commentary. A a number of stocks in these groups that have done extremely Well Over the past 18 months Are now starting to Rise in some individual issues at a rate of five to nine Points a Day a Feshbach said. A expectations Are running High and the stories Are very bullish. A although it is impossible to pinpoint when this ascent will terminate we do have a historical understanding a that when a trend has been in Force for a Long time and starts to move at such an incredible ascent the blow off stage is in  added Stan Weinstein in his advisory letter the professional tape Reader a history shows that such speculative bubbles go on for a while but they done to last forever and they usually end  Weinstein pointed to his a speculation Index that compares trading volume in the Over the counter Market with that of the new York Stock Exchange. A trader views a Monitor on the floor just before the end of tuesdays closing at the new York Stock Exchange. A this gauge is on the High and dangerous Side a he said. Some observers meanwhile worry about possible mischief in the making in the Bond Market belying its image As a gathering Point for conservative investors. At a recent conference investment advisor James stack said he was struck by the ideas being pitched at yield conscious investors in such areas As junk Bonds foreign Bonds and commodity based Bonds. A a we re Only surprised that no one tossed an Ostrich or a Penguin in the air to Sec if it too could Fly a said stack editor of the incs tech Market analyst advisory service. Quot if you re jumping into a supposedly a Safe investment that a yielding Over 9 percent there a a catch. There is either an increased credit risk or among International investments there a a currency risk that a w you re not being told  to James Grant editor of Grants interest rate observer supposedly sophisticated professionals May be playing the most dangerous Bond Market game of All in an Endeavor known As a Riding the yield  in a simplified example this strategy could be followed by buying Large amounts of a two year Treasury notes yielding say 6 percent mostly with Money borrowed in the Short term Money Market for say 5vs percent. A the Trade will remain profitable for As Long As the notes yield More than the Cost of carrying them Quot Grant said. Transactions like this Are now being pitched As a free  but what happens Grant asked if something comes along to tilt interest rate relationships in a different direction a something like a sudden burst of strength in the Economy or an upsurge in inflation or a sell off of the Dollar in foreign Exchange he said the Market is vulnerable to an upheaval should the return on these ploys suddenly turn negative. Wherever a the coast to coast fad in interest rate gambling leads he said a on form interest rate fads done to  considers Bond tied to Price Index new York apr the Bond markets biggest Demon inflation May be exorcised by a new Type of government Bond being considered in Washington. A House subcommittee is preparing a proposal for the Treasury department that suggests splitting government Bond issues into two categories. One would be the Standard Bond now used to borrow Money from the Public to pay for government operations. The other also would be used to fund the government but its interest and principal payments would be tied to the consumer Price Index. The value of a Bond with a fixed return erodes Over time As inflation creeps higher or if Market interest rates Rise. With longer term Bonds there is a greater Chance inflation will build and investors will demand higher yields. A Bond with returns that automatically Rise with inflation would remove much of the markets unpredictability. The new Bonds would provide a measure of the markets inflation expectations and a guide to real interest rates. Rep. Doug Barnard a Georgia Democrat and chairman of the Commerce subcommittee of the House committee on government operations is exploring the idea. His staff is preparing to ask Treasury officials for their opinion. A barometer of inflation expectations and real interest rates would be a valuable tool for policy makers As they try to encourage growth in the Economy without accelerating Price increases. In a recent letter to Barnard Alan Greenspan chairman of the Federal Reserve Board said he Wasny to sure the Bond would help determine economic policy. A we have to evaluate whether the costs of obtaining the information would be Worth the benefits Quot said Greenspan whose Board influences Short term interest rates and guides the country a monetary policy. A by this Standard my colleagues and i have some doubts that the information we could realistically Hope to glean. Would outweigh the potentially major costs of implementing the  an aide on Barnardo a subcommittee said that Greenspan a letter has not slowed the Effort and that there was some positive feedback for the subcommittee. In his letter Greenspan said the Bonds ability to show inflation sentiment and real interest rates would be tainted by differing demand for indexed and non indexed Bonds. However Greenspan said the indexed Bond would give a rough approximation of inflation expect ions. A an accurate Market based measure of inflation expectations would Aid immeasurably in understanding economic developments and in steering policy. Even an imperfect measure could be useful provided it were treated with the appropriate degree of scepticism a Greenspan said. But the fed chairman warned that a new Breed of Treasury Bond could increase the governments borrowing costs. Buyers and Sellers have an easier time getting together in the Treasury Market than any Market in the world. Part of the reason is that Treasury Bonds Are All close substitutes for each other Greenspan said. A any novel instrument initially would be less liquid and ultimately May Lead to some fragmentation of trading in government securities perhaps raising Overall funding costs a Greenspan  get Opportunity to Check out school san Francisco a Bounce a Check go to school. That a one option available to those in Santa Clara county who write rubber checks. A a it a sort of a one time offer that the District attorney is extending to these people and the idea of the program is to intervene and Stop the behaviour a said Don Mealing executive director of american corrective counselling services. The 4�?T/2-year-old company runs Check bouncing schools for Orange and Merced counties in California and some communities in Nevada. It will be starting a program in Santa Clara county next month. A everybody is a Winner on this a said Rick Lofvendahl of the Santa Clara county District attorneys office. Merchants get their Money Back police departments Are freed from time consuming investigations taxpayers done to have to pay for the program and the Check bouncer wins because a statistics so far show the classes really work a Lofvendahl said. Here show it works merchants refer bad Check writers to the prosecutor after demanding payment in writing and waiting 10 Days for a response. Offenders who done to respond get the Chance to go to school instead of facing prosecution said Lofvendahl who will oversee the Santa Clara county program. Graduates wont have a record Mealing said. About 5,000 people have graduated from the company a Check bouncing school. In Orange county 3,500 people have completed the program this year making More than $350,000 in restitution Mealing said. The Daylong school is aimed at Small time offenders not professional swindlers and teaches participants in Small groups. The school costs $50 plus $25 for each bad Check. Violators also must make restitution. If a person is Flat out of Money the company will work out instalment payments Mealing said. He noted that in some cases court fees and fines would amount to More than the Cost of the classes. At the Start of the Day students Are asked Why they wrote bad checks and Counselor try to identify their behaviour patterns. To break through excuses the class includes exercises such As role playing where one person acts out the part of the person stuck with the bum Check. Other subjects cover balancing a Check Book and budgeting. A they come to the program usually very hostile and very sure of their position As being not one of criminal intent and yet by the end of the Day our program is very Good at removing the rationalizations Quot Mealing said