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

To: russwinter who wrote (6615)	1/31/2004 2:37:11 PM
From: mishedlo	Respond to of 110194

It asks the question, "If the output gap drives prices then why are prices rising when capacity utilization is unchanged? wachovia.com It merely states prices are rising? What prices? Prices at the producer level or the consumer level? The PPI did tick up, but if costs can not be passed on, so what? Where is the inflation? We have a profit squeeze on producers because there is excess capacity relative to demand. I accept the argument that some of that "excess capacity" is useless. It seem to me that is just more debt that needs to be written off that is more worthless than we thought. The writeoff of that debt will be a deflationary thing not an inflationary one. So we have totally useless capacity here and prices can not be raised because although the PPI is going up, there is so much capacity (somewhere else) compared to final demand that prices can not be raised. I see no meaningful inflation in that scenario. Mish

To: russwinter who wrote (6615)	1/31/2004 6:02:57 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

inflation in some inputs is undeniable. dont' need to argue that -- and as I said Hoisington appears to be a one track outfit -- i.e. bonds, bonds, bonds <g> Still, I don't think you can dismiss the output gap as fiction -- or claim that all the capacity being counted as idle is obsolete. The first pt, I need to read to understand -- if it somehow posits that low inventory or jit mfring should result in higher prices than would be implied by excess capacity, then I say it is a short-run effect which will be corrected. I heard a piece last night on the multi-fiber agreement regarding textile products -- apparently the phasing out of the agreement will allow larger numbers of players into the market. I would expect prices for apparel will drop as a result. That will be one to follow.

To: russwinter who wrote (6615)	1/31/2004 6:18:10 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

well, I read it -- besides the comment I made -- I'd say this about the GDP number: BS!! so much one-off stuff in there (see fiscal stimulus, military spending) and then there is the way the government calculates But from a 50k foot level -- the whole premise is based on recovery -- are you buying into that?? I'd be interested in hearing what capacity you no longer believe is relevant to the calculation and is obsolete -- One calculation, I bet they have correct is for autos. You can't convince me that real capacity utilization there is is greater. Also, re Aluminum -- there is clearly a large excess of capacity that is not obsolete, but excess. Likewise in the industries underlying building -- I don't believe we are bumping supply constraints at all -- but if we were, do you really think building and construction at these levels are sustainable? So what would you expect going forward? Housing and autos are a pretty big part or the economy ... Now as far as office equipment goes -- PCs. semis and comm equipment. Do you think we are hitting supply constraints there?? here is where you might have a legit pt concerning obsolescence, but I wonder if it really matters -- contraction is contraction -- prices of that sort of equipment is going down, not up.

To: russwinter who wrote (6615)	1/31/2004 6:18:36 PM
From: Jim Willie CB	Read Replies (3) \| Respond to of 110194

this USDollar rally is 90% done, hitting against its 50MA at level 87.17 now highs Friday of 87.86 one bounce two weeks ago at 88.0 stockcharts.com[h,a]daclyyay[dc][pb50!d20,2!f][vc60][iUb14!Uh15,5,5]&pref=G the DXY is the anti-euro index, measuring the meaningless hot potato tossed across the Atlantic, of fiat currencies taking turns getting overpriced and wrecking havoc in domestic economies while trade gaps grow with Asia I pay more attention to the JYEN, which is very rugged it is not falling backward at all / jim

To: russwinter who wrote (6615)	1/31/2004 6:41:22 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Russ I am sure there are a dozen things in here for you to comment on. Have at it. Preferably from both sides if you can. Both sides are presented if you look hard enough. prudentbear.com BTW I am most curious in this snip: For the week, two-year Treasury yields jumped 10 basis points to 1.77%, and five-year yields rose 9 basis points to 3.15%. Curiously, 10-year yields gained only 6 basis points to 4.13%. Long-bond yields were only 2 basis points higher at 4.97%. =================================================================== Comments on that anyone? I had it snipped even before the article mentioned it a second time later on. Mish