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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (56096)3/17/2006 2:59:56 PM
From: mishedlo  Read Replies (4) of 110194
 
Passthru? What passthru?
In gasoline prices yes, and home heating bills yes, in manufactured goods no.

Manufactures simply have not been able to pass on those costs in spite of a soaring PPI.

As for plodding along, we can only plod along as long as long as housing stays strong. Housing is cracking now, but builders are still building. As long as builders are building demand for lumber and windows and paint and plumbing and PVC etc rtc will be strong. We have "plodded along" only BECAUSE of housing (and lowered credit standards to keep people buying houses etc).

If we do not get the recession then yes, stagflation will be the result. If we get the recession and I think it is overwhelmingly odds on we do, then the bottom falls out of the floor on jobs, on purchases, etc, etc, and bankruptcies and foreclosures go thru the roof. In that situation interest rates are extremely unlikely to rise.

In that situation one should expect new lows in yield.
I do.

Oil is mostly irrelevant. Actually it is inversely relevant. If oil soars in the face of a housing slump and job slump, ask yourself this "Should the FED hike into it"? Peak oil is peak oil as I have said a zillion times. It has little to do with inflation. Geopolitical concerns have nothing to do with inflation either. Anyway, the answer to that question alone should tell you why worries about oil passthu is nonsense.

If oil soars in the face of a housing slump and job slump, Should the FED hike into it? Why? What problem will it solve?

Care to answer those questions?

Mish
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