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

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 1:52:36 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Of course I think they will cut. In fact I think the big reason they are delaying is because Greenspan wants them to. I believe Haim said Germany is in or near recession. How's things in france? They are bitching about the US$ and if thsy sit on there asses it will be at 1.30. Haim, can we have the economy report for Europe please? Thanks M

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 1:53:28 PM
From: mishedlo	Respond to of 110194

mises.org Where Greenspan is wrong—foolishly, hubristically, perilously wrong—is in his assumption that the hegemony exercised today in the US by big government, legal vulturism, organized labor, corporatist militarism, and Marxist miseducation over entrepreneurship has left the economy with enough of this essential flexibility. The US may someday find itself unable to cope with the frictions and stresses of rapidly changing circumstances with which it inevitably will be confronted. Where he is also wrong is in using the fall of the dollar and the continuance of the negligently lax monetary policy which has contributed to this long-sought decline to force his errant remedies on other nations. Before anyone protests, keep in mind that most European and Asian economies have far less "flexibility" in the production of real wealth than the US, despite all its rulers' errors of policy and prescription. This makes Greenspan's sin all the more heinous.

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 1:57:58 PM
From: mishedlo	Respond to of 110194

You in ED any other month than Sep? They are +6 Everything later +8 or so IMO June is likely to flop around 98.75 +-3 or so while everything else slowly grinds higher M

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 2:04:55 PM
From: mishedlo	Respond to of 110194

MEDIA ADVISORY Department of the Treasury to Announce Joint Action with Saudi Arabia in the Financial War on Terror Treasury Secretary John Snow today will announce a joint United States action with Saudi Arabia in the financial war on terror. The announcement will be followed by a briefing by officials from the Department of the Treasury, Department of State and the Saudi Arabian government. Today’s joint action with Saudi Arabia is another important step in our ongoing war against terrorism and terrorist financing. The briefing will be an on the record, on camera briefing. WHAT: Announcement and Briefing WHEN: 11:00 AM EST WHERE: Department of the Treasury, Room 4121 WHO: Statement by Secretary John W. Snow, followed by statements and Q & A with:

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 2:07:32 PM
From: mishedlo	Respond to of 110194

Unanimity - John Succo - Minyanville Not anonymity In my perusal of the macro landscape that I perform at the beginning of each year, I always attempt to find a shared thread, a common denominator that strings together macro themes and financial markets’ prevailing consensus thinking. This is the age-old financial calculus of comparing perception against reality, and trying to figure out how to make a buck in the spaces that can exist between the two. Sometimes that distance between reality and perception is a small gap that gets arbitraged away in a relative instant. Sometimes that gap is yawning and persistent. And from my looking around, it seems that now is one of those times when yawning and persistent are potentially more apt adjectives than small and instant. Consider the following important financial market gauges: The US dollar Gold Equities Interest rates Inflation Commodities The prevailing consensus assumptions are remarkably unanimous toward the trends in each of these important markets, in some cases near or exceeding records of consensus unanimity that stretch back many years. Those assumptions are thus (with given reasons in parentheses): The US Dollar will continue to fall (US CAD, domestic GDP growth) Gold will continue to rise in dollar terms (US CAD, excessive monetary reflation) Equities will continue to advance smartly (US profits recovery, bond-to-stock allocation) Interest rates are set to rise (profits recovery, inflation, foreign capital flight) Inflation is set to rise substantially (excess reflation, US profits recovery) Commodity prices will get more expensive (China, US profits recovery) I need not detail the remarkable level of confidence that the Street has in each of these trends, whether one looks at consensus measures, commitment of traders data, Barron’s and Wall Street Journal roundtables, etc. There are few, in any, asset allocators, PMs, economists, or traders that believe the above trends won’t become more entrenched in 2004. One doesn’t have to be committed to the contrarian style of investing to feel awfully nervous when so much of the Street is standing on one side of the boat. You already know that “obvious” trends can persist longer than a rational mind might presume. But having said that, I think a mental exercise of trying to find that common denominator among these prevailing views is an exercise worth undertaking. As Brian and John have pointed out frequently, different financial markets often have times when they lack any real correlation: the price of gold, the price of important commodities, or stock prices can act in ways that have no clear macroeconomic relationship. Sometimes stocks go up with bonds, sometimes they go down when bonds go up. And finding a common thread among all six of the markets above is even more difficult and rare. Interestingly, there is, in fact, one thing that could make each of the well-understood assumptions in each of those markets wrong; one thing that would cause the greatest amount of money to be lost by the most number of participants. There is one thing that could make the price of gold go down, the US dollar go up, inflation go down, bonds go up, stocks go down, and commodities go down. Another recession in the US. You already know how that the world’s economy is US-centric, so as the US goes, so goes the world. A recession in the US would dampen demand for industrial commodities (China is buying commodities more to make export goods sold to US consumers than to create strategic stockpiles or to satisfy domestic goods demand), lowering their price. Declining world economic growth would impact foreign economies more than the US, so gold prices could fall and the US dollar could rise as any monetary crisis would be averted and the US$ would remain the global reserve currency. A US recession would also cause disinflation, cause bond prices to rise, and send US stocks falling on slower economic growth. None of these things have to happen, of course; these markets could follow diverse paths in 2004 not impacted by any common macro event. But the fact that one macro event, a US recession that literally no one (see the WSJ economists poll) is predicting, could make the prevailing consensus thinking wrong in each important financial market, is interesting indeed. And at least worth noting.

To: Louis V. Lambrecht who wrote (5814)	1/22/2004 2:46:37 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

It's the Bank of Japan that's driving this big bond rally, as they are going nuts on intervention now. They are really trapped, given that the lower they drive rates with these bond purchases, the more in turn the USD gets sold off, forcing even more intervention. To say bond buying intervention is counterproductive, and instead feeds the USD decline is an understatement. Another case of treating the patient by bleeding him with leeches. If they really wanted to turn the yen appreciation tide, they'd stop buying, and let US rates back up about 75 BPS.