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    Story published this morning (17/07/02) by OZ EQUITIES, quoting Dr Metz, CIBC Oppenheimer's chief investment strategist, and a member of Barron's Round Table community.

    By Jenny Prabhu

    CIBC Oppenheimer chief investment strategist Dr Michael Metz said this morning he expected a very powerful rally to start within the next day or two that will go on for a while before the market begins to fall back again.

    Dr Metz said, "What you have here is the kind of extreme volatility you get at turning points (but) I don't think you have got a new bull market."

    He said the market at present is dominated by individuals who are terrified and hedge fund money of some half trillion dollars that can be leveraged into several trillion.

    The hedge funds are looking to play the market and the rally will be very sharp and very strong.

    He added, "Then that will be it for the rest of the summer. My feeling is what you have now is a higher risk premium and lower price earning ratios. My own feeling is that the support from the economy that came from the consumer is weakening. There will be a slow down in growth for the next few years. Net net we are at the bottom".

    Dr Metz said that while the Euro has reached parity with the US dollar very quickly, there will continue to be a real bull market in the Euro and a bear market in the US dollar. "The direction of the Euro will be up for the next year or two".

    He also believes the $A will go higher the economist said a lot of capital will be moving towards the politically safer areas in Asia and Australia will be a beneficiary.

    Dr Metz added, "One thing to note which I find a little disturbing is huge increases (in prices) in some of the soft commodities such as cocoa and grains. We can very well see inflation in the food sector". This is in addition to the current inflation in the housing and other sectors.

    Dr Metz confirmed that he expects an inflation scare later in the year in the US.

    Investor preferences are going to shift, including some representation in gold, with inflation to help the gold price, along with the shift in asset allocations, the economist said.
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