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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: HandsOn who wrote (43597)	5/29/2001 3:40:17 PM
From: LTK007	Respond to of 56535

actually regards a global bank like RBS_pc (or _ph or _pa etc.) i actually don't know--RBS owns Citizens Bank of New England and is agressively expanding into U.S.--i do know this,if i saw inflation coming here,i would sell.Or if the pound started to rise sharply relative to the dollar--but i don't see that happening.Also if i saw interest rates were to possibly shoot way up.I am not an expert here Hands,this is new territory for me.Max p.s.

To: HandsOn who wrote (43597)	5/30/2001 4:33:10 AM
From: LTK007	Respond to of 56535

Hands,regards preferreds in general i gather this is one thing i really must watch(article follows my comments).Thus far,as i study this matter,i am O.K. if our interst rates returned in steps to say 7.5%,but i would then have to be thinking of selling. But at the moment i can see only one event that would lead to rampant inflation,and that is an Arab Embargo on oil to the U.S.,as i suspect right now everybody any where is loading every tanker they can find with oil from non-opec countries,as the price of crude makes it ,for now,a profitable endeavor. remember the crisis in oil in 74(or was it 75?) was long lines at the pump as there was an acute lack of oil due to the embargo and why we still maintain an emergency reserve. the article <<IRWIN KELLNER It's baaack! Inflation, that is; but is the Fed giving it its due? By Dr. Irwin Kellner, CBS.MarketWatch.com Last Update: 10:16 AM ET May 22, 2001 NEW YORK (CBS.MW) -- Inflation fears may limit the Federal Reserve's freedom to push interest rates much lower even though the economic signals remain mixed. This is not surprising. For in spite of the slowdown in economic activity, many measures of inflation have been rising, as are inflation expectations. Take commodities prices, for starters. While the Commodity Research Bureau's daily index of industrial raw materials prices is still close to a 13-year low, food commodities have jumped 6 percent in the past 30 days and are now at a three-year high. Since food is something most of us buy every day, a continued rise in prices will make people aware that prices in general are rising. The same holds true for gasoline, the most-frequently purchased consumer item after food. And I don't have to tell you what has happened to gasoline prices. Moving up the process, prices at the wholesale, or producer, level are climbing faster. In the past 12 months, the producer price index has risen 3.7 percent. Less than three years ago, in the summer of 1998, producer prices were falling 1 percent, on a year-over-year basis. For their part, consumer prices in the most recent 12 months are up 3.3 percent; three years ago the 12-month rise was less than half as much. Then there is the money supply. All measures except for M1 are rising rapidly. In particular, the widely followed M2 is up by 8 percent over the past year and by 12 percent at an annualized rate in the past 13 weeks alone. After subtracting inflation, the real Federal funds rate is little more than half a point, and that is extremely accommodative by past standards. As you might have expected, these developments have not gone unnoticed by the bond markets. The yield curve, which shows the relationship between short- and long-term interest rates, turned positive around year's end after having been negative during the last half of 2000. The spread between short- and long-term rates is wider now than it has been in over six years as the bond crowd has begun to anticipate not just a revival in economic activity but a reawakening of inflation, too. To top it off, gold prices are on the move after a protracted slumber. Last Friday, spot gold jumped sharply, closing at a nine-month high. The advance continued Monday, with the precious metal reaching its highest price in nearly a year. More than the bond market vigilantes, the gold bugs are extremely sensitive to inflation and the expectation of inflation, so you would think that the Fed would take heed. As a matter of fact, the central bank has done just the opposite. Obviously aware of these developments, the Fed's statement accompanying last week's decision to lower rates mentioned inflation for the first time in months by dismissing it (read Federal Open Market Committee's May 15 statement). If you think this attitude will assuage the markets' concerns over inflation, I've got a bridge I'd like to sell you. Dr. Irwin Kellner is chief economist for CBS.MarketWatch.com and is the Weller professor of economics at Hofstra University. >> end quote