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Politics : Idea Of The Day
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To: IQBAL LATIF who wrote (9458)9/12/1997 9:30:00 AM
From: Mark   of 50167
 
Thinking Fuel:

From Friday WSJ: "Analysts are primarily looking for evidence that the inventory building seen in h1 is being replaced by rising consumer demand. If consumer spending is gaining strongly, that could increase the chance fed may raise interest rates...The median forcast of economists is that retail sales rose 0.7% in August...Those analysts forcast a gain of 0.5% for sails excluding autos....The median estimate of economists is that the PPI rose 0.3%, or 0.1% excluding food and energy but the report isn't expected to have as much impact on bond trading as retail sales."

Also, re: Bonds, more global supply: "Venezuela's Global bond issue is a big hit - investors snap up $4B of the 30-yr bonds exceeding expectations - more than double the projected amount in what underwriters say is the largest global-bond deal ever. The yield was just 3.25 points above the 30-yr US T-bond - also a record. Weakness in the mark and the large emerging market debt issues took some of the day's focus away from treasurys."

re: PacRim: "Japanese economy contracted at a startling annual rate of 11.2% in April-June quarter raising new fears about the staying power of Japan's recovery. The fall wipes out roughly all the growth Japan had achieved in the previous three quarters....raises the possibility that Jap could fall into a technical recession if GDP shrinks for a second consecutive quarter...Plunge would have been much worse but for Japan's surging exports...".

I just don't know. Inventories were supposed to have declined to a reasonable level (1.4xsales???), CPI & PPI should be fine, inflation is ok, Abby Cohen says multinational's currency problems are overstated, dollar is gaining as foriegn bank's reserve choice; Asian economy stinks for some reason; Fed won't increase rates until maybe November (imho) - this market really has the jitters. Supposedly bonds need to be down for prior 12 months (historically) for crashes to happen. Can't help but think this is one of those self fulfilling prophecies - too many people look at the 29/87/97 chart comparissions and start behaving like it should be happening.

No recommendations here, just fuel for thought.

Mark
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