This was a real old fashioned butt-kicking, with the Dow down 207, finishing at the low for the day. These are the lowest levels in three months, as investors fretted about the continued fall in oil prices, the difficult Russian economy, and even more Asian problems. Asia was the biggest fear, with even one of the Hong Kong government biggies telling Japan to get their financial house in order. With the falling price of the yen nearing 150 to the dollar, the neighboring countries may feel pressed to devaluate, to maintain competitive parity in the export market. This would be seen as deflationary for the world market, and is bad news for stock markets.

Today I received a letter from the Rogers Corporation (ROG), a stock I used to own; it's not one of the 150 stocks I track, but I do keep my left eye on it, as it is a solid although smaller company. They advised me that they projected sales and earnings for the second quarter and probably the third quarter would be below expectations. In the first four months of the year they seemed to be modestly affected by the situation in Southeast Asia; however, during the month of May it became much clearer that conditions in the Asia Pacific area were impacting their customers adversely, particularly in wireless communications and computer markets.

This is instructive as a reminder, that any company of interest doesn't have to do business in Asia to be burned by what's happening there. It means that the Asian effect could be very pervasive, and probably is. Because it's early impact was minimal, the tendency was for investors to pretty much disregard it. Or as the pundits like to say, "the market only dances with the same girl once." Well it looks like this girl may give us a hell of a lot more dances than we bargained for. Although the market will probably make some attempt at a rally tomorrow, keep out. Remember, it's Stock Lent time. Hold on to your money, as more likely than not, you'll have plenty of time to buy the stocks you like at lower prices. Stay tuned.

The Market Pro - June 15, 1998