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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (4465)	1/6/2004 10:38:17 AM
From: Silver Super Bull	Read Replies (3) \| Respond to of 110194

Darfot, Good points. But my question RE: "it is not a good sign for inflationists that end prices are deflationary" is how sustainable is raging input prices (costs) and steady/declining finished goods prices? I would tend to think not very sustainable. I don't think sellers have large enough margins to absorb the higher costs of these inputs. DB

To: Wyätt Gwyön who wrote (4465)	1/6/2004 12:01:19 PM
From: mishedlo	Respond to of 110194

he would pass the lie detector test as long as he kept his mind focused on the YoY price change of 156,000 WalMart SKUs. that's a very broad basket of goods showing deflation. it is not a good sign for inflationists that end prices are deflationary, and that real income growth is nonexistent for the longest period ever in a recovery. rising prices without rising incomes will eventually be hit by falling demand. and the WalMart SKUs are already falling, so demand might crash. this is on Greenspan's mind w/r/t the housing bubble. the places where inflation undeniably exists--housing, commodities, could see a rapid reversal. if this were to happen, the WMT SKUs could be considered a leading indicator of deflation. of course, the obverse could be true as well. Exactly. The FED is actually correct IMO. Demand from China is the driving force behind commodities, but that commodity rise is NOT translated into rising proces on finished goods for consumers. It is a very weird thing actually. Huge inflation in some areas but deflation in others. Given the state of jobs, I believe the FED stance is actually correct. Before anyone pukes, let me say that the FED totally blew it. Interest rates should not be this low and they wasted too many bullets. However, what is done is done, and I really do not see the FED hiking as it will kill housing, a housing bubble they created but the FED is between a rock and a hard place with no way out IMO, and it is their own stupid doing. M