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Strategies & Market Trends : Waiting for the big Kahuna

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To: GROUND ZERO™ who wrote (5066)	9/8/1997 2:43:00 PM
From: Henry Volquardsen	of 94695

GZ, I agree that the recent weakness in the dollar has been a major contributor to the bonds recent trading activity. However I disagree that bonds are trending lower. There was a week at the beginning of August when bonds traded sharply lower after a long bull run. Since that point the bonds have essentially moves sideways in a range between 112 and 114 which we are currently dead in the middle of. I've bought bonds several times over the last month and have made money. Right now the pattern looks like a consolidation. FWIW I trade currencies and bonds for a living (check my profile). I can and do change opinions frequently as befits the nature of my job. Currently I am moderately bullish short term and somewhat more bullish longer term. I am very interested to see what impact the recent economic difficulties in SE Asia will have on the global economy. On the face of it, the impact is deflationary. The European economies will also remain sluggish as they continue trying to cut budget deficits to meet EMU criteria. It is difficult to see where significant expansionary growth will come from. It was posted earlier to the effect that Wall Street is ignoring food and energy inflation, the "essentials". This is nonsense. The following are the inflation numbers year over year for food and energy as of end July: CPI food 2.5%, PPI food 0.0%, CPI energy -1.0% and PPI energy -1.5%. Energy prices are lower the real increase occurred in 96 when PPI enery was up 12.9% for the year. It is easy to take isolated anecdotal evidence about the cost of movie popcorn and extrapolate nightmare inflation but the Fed will look at national numbers. And before anyone brings it up yes I saw the recent blip in gasoline prices. Premium just hit $1.73 in Connecticut up .10 in two weeks. But I clearly remember it in the $1.70s a while ago so it must have declined at some point as well. Also if anyone wants anecdotal inflation stories, I have a friend who bought a co-op on Long Island for $88k in 1988 and just sold it for $67k.

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