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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (22503)	8/11/2002 12:12:39 PM
From: Mark Adams	Read Replies (1) \| Respond to of 74559

DJ, Thanks for your thoughts. And thanks to KJC and Snowshoe. On FDI- that money isn't as easily repatriated (IMO) as foreign holdings of stocks and bonds. When I hear FDI, I think in terms of Honda or Toyota building a car mfg plant (as if we need more of those). How do they move that mfg plant back to Tokyo? They don't. At best, they find a buyer for it, and repatriate the sales proceeds. Yes, if global capital flows reverse out of the dollar (Asia Ex Japan has looked pretty nice YTD) it will create hardship in US paper assets. I read this am that the USD got a bid from the stuff going on in South America, ala Brazil and Uruguay. And I think I saw somewhere that we saw some capital repatriation during July. I tried to summarise Weldon- to get a concise view of his outlook. I don't know that I did a good job of it. Weldon note says that bullish on bonds, especially if WTI drops below $25. Either interest or inflation rate must move lower to support consumption. More flatening of the curve. That 10yrs TIPS yielding FedFunds + 134 basis, 10yr nonindexed TIPS+130 basis points. He says sentiment anti bonds, per cnbc poll. USD at risk if long rates don't come down. Housing prices could erode quickly, if the current boom slows. Prices already moderating, despite high sales activity. I don't think what he says is mutually exclusive with the ML data- though he does mention the 'strapped consumer' paradigm which ML partially refutes. The ECRI Future Inflation Gauge has also moved higher, suggesting a reversal of deflationary forces in 12-18 mths. I don't think the sudden call for interest rates, the Fed Funds in particular, falling to 1% are correct. The econ data was pretty ugly, and it appears stocks have correctly discounted a slower growth rate during 2H02. What 2003 will bring is now the question. Where is that crystal ball of mine? <g>