Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (282)	2/19/2004 6:41:46 PM
From: gregor_us	Read Replies (1) \| Respond to of 116555

Tippet, Could You Write More About How You View ...the commentary from Temple? As background, let's recall that what looked like a reversal in the horrible US Trade Deficit, when the January release occured, certainly had all the effects Temple is warning of now. All the trades that keyed off a Dollar-Bear Story got killed, hammered. The chatter I heard then was "the big money has been made in the dollar--it's over now--and all the ancillary trades along with it." But, those trade were put back on again in late January and into February. When the February release occurred, however, showing awful Trade Deficit numbers of course it looked like those trades would deliver big time--but then we entered the Jawbone Zone from the EuroZone. So, my question to you is: are you saying that Temple thinks he's speaking to the smart money--when in fact he's speaking to everyone, etc? Cheers.

To: yard_man who wrote (282)	2/19/2004 7:13:20 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

MARKET COMPLACENCY MAY SOON BE TESTED gold-eagle.com Aided by the breathtaking intervention of late by Japan, the U.S. Treasury market has also become boring in its predictability. Sure, we all know that long-term interest rates (the 10-year Treasury Note, for instance, at a smidgen above 4%) have absolutely no business being this low, what with soaring commodity prices, record U.S. budget and trade deficits, a declining dollar and all the rest. Yet they are; and abetted by Japan (which in January ALONE pumped some $70 billion into supporting Treasuries and keeping the yen's rise in check) and Greenspan's dovish comments in front of Congress last week, the picture has emerged that interest rates across the board will stay low for quite some time to come. Yep I agree 100%, treasuries have no business being here. Seriously, I do believe that. So FN what? What it means is that Greenspan wasted too many bullets too early. What we must deal with is: Where we are NOT where we should be. Hell stocks should not be here either IMO but here we are. The reality is here we are. Now what. Can we raise interest rates to 5% so we have room to cut the next downturn? I suppose, if you want to start a depression immediately. The reality is that the FED is in a Japan liquidity trap of its own making: It did not hike when it should have, it cut too early and too agressively and is now in a liquidity trap with no way out. Rate hikes will bankrupt many and easy al's banker friends do not want that. It's also election time boys and girls. If a stock market selloff starts, will the FED be hiking agressively into that? Fat chance. Will Japan suddenly stop buying treasuries when it is bitching about a low US$? Europe is bitching about a low US$ as well. Possibly we have seen intervention there already. Now we have two players supporting (or trying to) the US$. Don't overlook the FED either. If there are no buyers the FED itself will step in and monetize it. Bernanke threatened to do that to the long bond, did he not? Does anyone doubt this FED would not act on a promise to be easy? No one seems to get it. The FED will force Europe to cut (assuming a Europe recession does not do it first). Mish