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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 (4746)	1/11/2004 9:17:29 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

Very well then, I'll take credit for it. I submit that in effect, that's (in a generic sense) what the Fed bases inflation numbers on: prices at Wal Mart SKUs. Bernanke uses the term, "end prices for final consumers". I mean what else in our economy is actually seeing stable prices besides WMT SKUs (and I have doubts about quality on that one)? I'm sure the readers here aren't the idiots Bernanke assumes, and can judge for themselves? As for me I've been observing a lot lately. Yesterday I went out to breakfast, and they had a new higher prices menu. I went to a movie, and I swear they increased prices a buck. I got gas, and prices were up eight cents from a few weeks ago. I'd swear food prices at the grocery were going up, but that one is not scientific. My home gas bill is running higher than last year, despite lower usage. I order CDs from Amazon (yes, I pay for music, and don't steal it), and I keep seeing $15-16 each now, and used to always seem to be $14. The quality of alot of stuff, especially Chinese made seems to be declining for the same price. I read the Bernanke speech, and can't ever recall reading or hearing more fuzzy thinking in my life. I totally agree with Noland about these individuals, they are either idiots, or frauds. I think they are a dangerous blend of both, but the character the Wizard of Oz describes it best for me. Bernanke's intellectual processing and modeling is preposterous. For example although he states, "commodity price indexes have had a large jump in the past several months", he chooses to use a twelve month change for crude materials, that still shows a 17.1 percent increase. He calls that healthy and normal. Has he looked at the last four months? It's going parabolic. And if he wants more "healthy" commodity gains, wait until Brazil misses rain for two more weeks. Message 19677598 My point, is that this inflationary outburst is highly dynamic, and doesn't afford the use of old twelve month comparisons, especially when money is priced at one percent. I mean Jesus, just bend over and drive it home. Right now it's at trainwreck stage, with even weekly changes rather shocking. He should also know full well, that the intermediate materials index lags the crude materials. But he spins it, by using a twelve month rate of change on that one too, which shows a 1.8 percent increase. Yet the ISM index shows prices paid increases from 55 in August to 66 in December. The conference call by Alcoa about this matter (if you can afford to wait that long) on the 22nd should not be missed by anyone following the intermediate goods sector. The inflationary breakout in all these input measures really kicked in starting August-September, and all kinds of evidence supports that. And prices ARE increasingly rapidly in intermediate goods, all you have to do is track steel prices meps.co.uk or aluminum prices. futures.tradingcharts.com And transportation costs for hauling goods is in outer space. quote.bloomberg.com That's a cost. So if the Fed is really using a twelve-month comparison as their model (I'll bet money he spins (lies really) it again by using an old quarter such as the 3rd, and leaves out all 4Q data?), it should come as no surprise to anyone if those models go parabolic in the next several months. That's why I'm shorting Eurodollars (about half E1 and half E2, (basically an E 1 1/2) next week, if they trade at Friday's level. It will be my Bernanke fallout trade. I can easily visualize EDs trading up 150-200 bps by mid-year, given how far behind the curve the Fed is. And for those who assume the Fed clearly signals a monetary reversal. Big mistake, they didn't in 94 and even 99 was a surprise to the market. The ED pricing changed dramatically (not incrementally) afterwards when they did too.