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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (54114)	4/22/2002 8:52:16 AM
From: t2	Respond to of 99280

07:02 ET Short interest climbs to record level The Wall Street Journal reports that the level of short selling rose to a record on the NYSE this month, driven by hedge-fund selling. Short interest increased by 3% to 6.84 bln shares. The stocks experiencing the largest increases in shares shorted were (in order) LU, NT, HWP, PFE, GE, KO, CA, CNC, XOM, GPS, MO, LOR, HD, PEP. -------------- Wonder if this creates the condition for a short term bounce.

To: Justa Werkenstiff who wrote (54114)	4/22/2002 9:18:55 PM
From: nsumir81	Read Replies (1) \| Respond to of 99280

ON THE DOLLAR..FROM Barrons "Current Yield" by Jennfier Ablan, MW12-13, 4/22/02 I am typing the first section here that dealt with short-term interest rates and the dollar. "Are investors losing confidence in Alan Greenspan? After the Federal Reserve chairman hinted Wednesday that the central bank is in no hurry to raise short-term interest rates, Treasury yieldsedged higher instead of easing, as might be expected, given that monetary tightening is being deferred. But "bond vigilantes" evidently fear that delaying short-term rate increases raises the risk of higher inflation, so they pushed up long-term yields to compensate. After Greenspan's testimony before Congress, the 30-year Treasury yield rose to 5.73 % from 5.65 % the previous day. The 30-year ended the week at 5.68 %, up from 5.15 % the previous Friday. Meanwhile, the yield on the two-year note, the maturity most sensitive to Fed moves, eased to 3.31 % from 3.36 % a week earlier. Greenspan implied that he is no rush to start hiking the Fed's 1 3/4 % target for the overnight federal-funds rate because of doubts that final demand will be strong enough to sustain a recovery this year. "If you think that by artificially holding down the short end that that's going to result in higher inflation, then you sell the long end," says Paul Kasriel, director of economic research at Northern Trust. Rising energy and service prices, higher home and auto-insurance rates along with health-care costs point to higher inflation. Kasriel stresses, however, that it’s not only one market that’s “corroborating with that story.” In a recent report, he points out that, “three different markets are exhibiting inflationary jitters.” The spread between 10-year Treasury yields and comparable TIPS yields-a proxy for inflation expectations-has widened by a half-percentage point since the beginning of the year. The price of gold, which typically “comes alive when the seeds of inflation are in the air,’ is up more than $ 20 since the beginning of the year. Lastly, the dollar has come under pressure. “When global investors begin to sense that they are going to be paid back in dollars with less purchasing power, they begin to move out of dollar investments,” he says. Adds Tom Sowanick, director of global fixed-income research at Merrill Lynch, ‘The steepening of the curve post-Greenspan’s testimony and the weakening of the dollar versus both the yen and the euro may be suggesting that Greenspan many be taking too long before he takes fed funds back to neutral.” Foreign private investors found the dollar to be attractive enough last year to purachse $ 889 billion in U.S. financial assets, he points out. Global investors’ heavy buying of American corporate debt and equity securities has helped to fund the U.S. current account deficit, which now is running at close to 5 % of GDP. The dollar declined nearly 2 % versus the yen last week, and the euro is sitting at a 3-month high. “A much weaker dollar could open the exit doors,” warns Sowanick. At a minimum, reduced demand for U.S. assets would translate into higher interest rates and lower asset prices. A weaker dollar also would further increase inflation risks as the prices of imported goods rise, which would give domestic producers more room to raise prices.