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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (10474)	12/15/2002 11:07:19 AM
From: Jim Willie CB	Respond to of 89467

easing deflation pressures, but starts Vicious Circle the press/media is TOTALLY TOTALLY asleep at the wheel on this as dollar falls, foreigners exit stocks but this time, we will see BOTH stocks & bonds decline in spring, only stocks fell but now, bonds have begun to break down somewhat so this winter, even bonds will fall we are about to enter a very dangerous time, very dangerous Puplava calls it the Panic Period here is the John Murphy takeaway: WHY THINGS ARE DIFFERENT THIS TIME... Throughout the three-year bear market, many of the traditional rules of bear market behavior have been broken. This bear has lasted longer and fallen harder than anything seen in the post-war era. It's the first time we've seen three consecutive down years since the 1930s. We continue to believe "deflation" is the culprit. Even the Fed mentioned the threat of deflation in their November minutes -- which had a lot to do with lowering rates a half point. Whether the U.S. is in a deflation is open to debate. There's little doubt, however, that Asian deflation exists. And that may be where the answer lies. Since all global markets are linked, it's hard to imagine that we're not being infected by some Asian deflation. That's why this week's breakdown in the dollar -- and upside breakout in gold -- is so intriguing. It may actually be hinting that a falling dollar is counter-acting deflationary pressures. Maybe that's what the Fed had in mind all along. We're concerned, however, that a breakdown in the dollar could have a negative impact on stocks. The final two charts compare the Dollar Index (through Thursday evening) with the S&P Index (through Friday's close). Prior to July, both had been dropping together. The July bottom in dollar (and five-months of dollar stability) helped launch the stock market rally. A new low in the dollar could cause the stock market rally to falter as well. / jim