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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: loantech who wrote (9)	2/15/2004 4:18:09 PM
From: mishedlo	Read Replies (1) of 116555

‘Deficits don’t matter’ -Vice President Dick Cheney. fxstreet.com After Gordon Gekko’ famous ‘Greed is good’ in the 1985 hit Wall Street, these words by Mr. Cheney will go into the history books. And then we had President Bush’ Chief Economist Gregory Mankiw who said that the loss of US jobs to overseas companies ‘was just a new way of doing international trade’. Where did President Bush find these guys? The Markets Bulls are frothing with optimism and think that the only way for the markets is to fly up to the moon. During the week there were rumours that China may revalue the RMB by 5%. We think the Chinese are not going to do anything with the currency peg as a weaker US Dollar is more beneficial for the Chinese as they can export cheaper goods abroad. Retail sales declined (0.3%) in January to $233.9bln, this was the first decline since September 2003. Retail Sales ex Autos rose 0.9%, the biggest rise in five months as consumers took advantage of post holiday season discounts. Initial jobless claims rose to a two month high of 363,000. The four week moving average rose to 350,500 and the insured unemployment rate declined to 2.4%. The number of people continuing to collect state jobless benefits declined 23000 to 3.083mln. The University of Michigan’ Consumer Sentiment Index declined to 93.1 in February from 103.8 in January as more people were unsettled with the slow pace of job creation. The Expectations index declined to 100.1 and the Current Conditions index declined to 100.4. The GDP of the 12 nations sharing the Euro slowed to 0.3% q-o-q in Q4 and for the year 2003, the economy expanded 0.6%. The strength in the Euro since September 2003 has hurt the Euro Zone and one of the ways to weaken the Euro is by cutting interest rates. Consumer spending is also weak at the moment with retail sales declining in Germany and unemployment ticking up. On Tuesday, New York Empire State Index for Feb is expected at 36 versus the previous 39.2. Industrial Production for January is expected at 0.5% versus the previous 0.1%. Capacity Utilization is expected at 76% versus the previous 75.8%. On Wednesday, Housing starts for January are expected at 2mln units versus the previous 2.088mln units. On Thursday, PPI for January is expected at 0.3% versus the previous 0.3%. Core PPI for January is expected unchanged. Initial Jobless Claims is expected at 370,000 versus the previous 363,000. The Conference Board' Leading Indicators for January are expected up 0.3% versus the previous 0.2%. Philadelphia Fed Index for February is expected at 35 versus the previous 38.8. On Friday, CPI for January is expected at 0.3% versus the previous 0.2%. Core CPI is expected unchanged.

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