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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Art Bechhoefer who wrote (15127)	7/4/2002 2:54:02 AM
From: Jim Willie CB	Read Replies (1) \| Respond to of 36161

if/when US import inflation arrives, dollar flight accelerates this is the element you underestimate imho you still think in static terms rather than transitional terms the falling dollar has hurt US stocks in recent months next comes the transitional effect on US bonds esp when import price inflation is felt in May alone import price inflation was annualized at 8.5% this is the essence of the VICIOUS CYCLE you overlook falling bond principal values will see some foreign selling the dollar loss plus bond value loss will be the 2nd punch what has been seen with foreign stock selling will be followed by foreign bond selling it will be seen in both the shortend and longend and will expose the Fed & Greenspurn as weak and behind I expect to see a spread between FedFundsRate and 3mo TBills have you considered that Shortend TBills are peaking in value? their chart resembles the S&P in early 2000 the return of price inflation brings the rollover But if interest rates do go up 100 basis points in the next six months, then more foreign inveestors will be interested in buying into the high yields. Despite what you think about the country going to hell in a handbasket, many large investors overseas still regard the U.S. as a safe haven--particularly Treasuries. our safe haven is fast becoming a KILLING FIELD I suppose you dont expect the EURO to rise above $1.00 that happens this autumn / jim