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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 (6823)	2/3/2004 11:36:03 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Are you talking about the balls to make a call that stocks are insanely priced, or the assininity to call for 4 rates hikes by the election. If Goldman said that, the latter is about as stupid as anything Cramer ever said. I agree with downgrades on EVERYTHING and think Cramer is an idiot. M

To: russwinter who wrote (6823)	2/3/2004 2:21:08 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Tue Feb 03 2004 14:03 trotsky (the dollar and deflation) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i'm a dollar bear too, but would like to point out that a falling external value of the currency is absolutely no guarantee that inflation will result. for example, the Japanese Yen fell by about 50% between 1995 and 1998 vs. the dollar and the major European currencies - and Japan recorded CPI deflation in almost every single month of that Yen bear market period. the fallig dollar does not guarantee that prices for manufactured goods will rise, since foreign manufacturers will most likely simply cut their prices to account for its fall - remember, no-one has in fact any pricing power, since there are vast industrial overcapacities on a global basis. commodity prices in dollar terms are rising, but again, this means only higher input costs for US based manufacturers, which can't be passed on. there is a number of ways to deal with such higher input costs, one of which is to simply move manufacturing capacity to a country with a stronger currency. note also that since foreign manufacturers input costs are NOT rising ( the rising dollar price of raw materials is ameliorated by their stronger currencies ) , they have leeway to cut end user prices to counter the weak dollar. lastly, we have a bunch of fiat currencies trying to competitively devalue against each other - it's not a one way street. the inflationists also underestimate the power of liquidity preference and the need to create INCOME in our demographically challenged industrialized nations. both become more acute as the denouement of the debtberg approaches and the greying of the population proceeds apace. Date: Tue Feb 03 2004 13:39 trotsky (kapex) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved well, i agree with you that an Orwellian police state is being implemented...and i even sympathize with the idea that it may have something to do with controlling the likely social unrest in case of a bigger-than-expected economic collapse ( which could be the result of a number of things, inter alia the Hubbert oil peak ) . but i don't follow your inflation logic - i should now IGNORE the M's? why, because they've been falling recently, and therefore don't support the inflation argument anymore? note that the this thing about offshore accounts being used to introduce money sub rosa is nothing but supposition - there is zero proof of that, and in fact i think it's rather far-fetched. the money creation and transmission mechanisms currently in place are well known - and a central bank can offer as much money as it likes, even at zero interest rates - if no willing borrowers show up, no inflation can be created. this is precisely the 'problem' bedeviling the BoJ for the past 15 years. you overestimate the ability of the central planners to 'control' everything. the market is still more powerful than any and all of them, and always will be. Date: Tue Feb 03 2004 13:23 trotsky (@PoG) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved near today's intraday highs in the April contract, heavy trading volume indicates a big seller showed up. unfortunately it's unknowable at this stage whether this was a further liquidation of speculative long positions, or a fresh short position put on either by speculators or commercial hedgers. if it was long liquidation i wouldn't see it as negative, since that would improve the CoT report. an addition to the commercial short position would be negative, but that seems actually unlikely - my feeling is that they're actually happy they got a price break they can use to cover. Date: Tue Feb 03 2004 12:00 trotsky (frustrated, 11:20) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved absolutely - i'm more convinced than ever that the coming recession will be deflationary. note that average US salaries have been falling sharply for three years running now - yet another sign that deflationary forces are gathering pace. inflation in this fiat system can only be produced by expanding the debtberg further - and i contend that this has become nearly impossible due to its size. as can be inferred from falling wages, labor now not only has NO pricing power, but in fact has 'negative pricing power', i.e. is forced to accept lower incomes. it's a vicious spiral, and imo nothing much can be done to stop it. Date: Tue Feb 03 2004 11:48 trotsky (stock market and the ISM) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved note that contrary to the misconceptions popularized on TV financial mainstream shows, the ISM ( formerly NAPM ) indices actually serve as a contrary indicator for the stock market - i.e., extremely low readings in ISM data usually coincide with medium term lows in the stock market and vice versa. in this context, the recent ISM spike and subsequent downturn from that spike reading is very ominous. note that the stock market very reliably discounts the future readings of this index - and with all sectors of the US economy nursing the result of the biggest credit binge in history ( the result of course are the worst corporate and household balance sheets EVER, not to mention the dire state of government finances ) , future demand for the goods now overproduced according to recent ISM data will likely fail to materialize. there is no 'pent-up demand' in this economy, since the borrowing and spending binge never stopped during the downturn courtesy of the evil geniuses at the Fed. i've always contended that the debt build-up should one day reach a natural limit, regardless of interest rates. of course we're told by all the voodoo economists that we shouldn't worry, since worrying about the debt pile has never been productive before ( leaving 1929-1938 conveniently aside ) - but that's a spurious argument, since it is exactly the same argument that was employed to justify buying stocks at Nasdaq 5,000 at a 300 p/e. 'they haven't gone down before, and that means they never will'. same with the debtberg - it has never mattered, so why should it now? everybody will be taken by surprise, since i suspect it will be like throwing a light switch - all of a sudden, spending will simply stop. note that the imlications go beyond the stock market - this will also dent commodities and help bonds. a recent survey stated that fund managers controlling nearly $900 billion have reduced their bond market exposure from 36% of assets to only 22% ( presumably, the funds were deployed in the incredibly expensive stock market ) . if that is the case, then why has the bond market not collapsed as everybody said it would? this is the writing on the wall - it tells us that a huge amount of money is ready to flee back into the bond market as soon as the 'reflation' episode and with it the false boom and the associated bubbles end. Date: Tue Feb 03 2004 11:09 trotsky (stock market) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the stock market bulls are in a call-buying delirium today - it looks more dangerous by the minute. they've been amassing call options for several weeks now, but today's action ( so far ) still stands out as yet another extreme in the qu 1. of '00 mold. similarly, recent inflows into mutual funds compare only with what happened in early '00. insiders however keep selling in record amounts, which imo is the strongest proof we have that this rally is doomed...it also confirms that the economic data trumpeted by the government are seriously flawed, since insiders wouldn't be selling so much if they thought business prospects were good.