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

To: yard_man who wrote (8363)	2/20/2004 10:48:50 AM
From: russwinter	Respond to of 110194

Reuters UPDATE - Mexico's central bank tightens monetary policy Friday February 20, 10:14 am ET MEXICO CITY, Feb 20 (Reuters) - Mexico's central bank tightened monetary policy on Friday for the first time in nearly a year, showing it will not tolerate inflation beyond its target range despite warnings the move could squelch a budding economic recovery. As expected by many in Mexico's financial markets, the central bank said it increased its money market "short" to 29 million pesos per day from 25 million pesos. The "short" keeps liquidity in the secondary market lower than its needs, which tends to force up rates, dampen spending and quell inflation. It is the central bank's main tool for keeping inflation in check. "Considering the recent deterioration in inflation outlooks that seemed to start to affect salary negotiations, the central bank board has decided to increase the short to 29 million pesos daily from February 20," the central bank said in its statement. Tighter monetary policy was anticipated after annualized inflation in January hit 4.20 percent, above the central bank's target range of between 2 and 4 percent which it has vowed to monitor on a month-by-month basis Mexico's economy has recently shown signs of breaking out of a three-year slump, although economists worry higher rates could strengthen the peso's value and thus make Mexico's exports more expensive abroad. That would be bad news for a country that has had trouble competing with the cheap labor of China and Central American countries. Mexico lost market share last year in the United States, where it sends about 90 percent of its exports. Thousands of Mexican "maquiladora" factories, which import raw materials and then export them duty free back across the U.S. border, are expected to be the main engine for economic growth projected by the government at over 3 percent this year. Analysts said inflation in January was primarily due to seasonal factors rather than economic growth, but the bank still sought to send a message it would keep strict discipline in line with last year's inflation, a 35-year low of 3.98 percent. Mexico's government hopes that stability in key indicators like inflation will spur confidence and investment in Latin America's No. 2 economy, which is now one of the region's most stable economies after decades of turmoil. The short had not been modified since March 2003 and already was at a level considered restrictive by traders. The peso strengthened this week ahead of the central bank's bimonthly review of monetary policy. Higher interest rates draw more investors to the higher yields of Mexican securities, pushing up the local currency's value.

To: yard_man who wrote (8363)	2/20/2004 11:53:52 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

hang in there today -- expiry can be rough deal for all the markets. I gotta run ... Hang onto what. I ahve no gold or silver futures. Sold them all yesterday. Sold My WHT at 3.04 -3.06 Sold the rest of my miners yesterday and scaled out before that I do have long term plays on eurodollars and euribors and LSS and they are taking a hit today but every day can not go up. Mish

To: yard_man who wrote (8363)	2/20/2004 12:09:53 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Fri Feb 20 2004 11:58 trotsky (Zman) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the 70's were an inflationary era - iow, rising interest rates couldn't keep pace with the even sharper rise in inflation, thus real interest rates were negative most of the time. on the two occasions when real rates DID go strongly positive, gold made a big correction ( 75-76 ) the first time, and the bull market ended the second time ( 79-80 ) . another major difference is gold lending, which wasn't developed to the extent it is now in the 70's. gold has become much MORE sensitive to interest rates, and specifically, interest rate spreads betwen lease rates and LIBOR, due to the huge pool available for lending. and the rules of the game are different in a deflationary era. Date: Fri Feb 20 2004 11:39 trotsky (PPI&CPI) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved contrary to conventional wisdom, higher inflation data are bad for gold - because they're bad for the interest rate outlook, and ultra-low interest rates are the main driver of the gold price. however, i wouldn't worry too much about that - this month's jump on acount of energy prices is unlikely to be meaningful, since factories are unable to pass commodity cost input increases on. note that commodity inputs are only a tiny slice of total manufacturing input costs - that major slice are labor costs, and those are coming down rapidly. iow, companies can actually afford to eat the raw materials price increases. and even in the unlikely case that commodity prices rise so much that affordability becomes questionable, they could STILL not pass them on since vast industrial overcapacities ensure price pressures on end products won't disappear. if the handful of hawks at the Fed were to gain the upper hand and box through a rate increase, the collapse of the US private sector debt bubble would be hastened, and with it, the arrival of outright deflation in aggregate prices. Date: Fri Feb 20 2004 11:18 trotsky (Hambone) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i really doubt that a correction in the stock market automatically equates to a lower dollar - after all, they've been trading in almost perfect negative correlation for quite some time now ( in fact, the negative SnP/dollar correlation has been even MORE pronounced than the gold/dollar correlation over the past year ) . iow, if you really think the stock market's going to dump here, then you'd have to be short term bullish on the dollar. as to the charts you put up - well, they do seem to confirm that the recent bearish divergences we talked about are beginning to take their toll - but if you are saying those are bearish charts, you'd be implicitly saying the same thing about HUI/XAU, because right now, they don't look any better. if a really bad downturn in the stock market were imminent ( possible, but more likely is imo a correction, followed by another rally, and THEN the big downturn ) , that would certainly not be good for gold stocks, so be careful what you wish for. Date: Fri Feb 20 2004 10:50 trotsky (Earl@lootage) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved Saddam was a choir-boy compared to shrub inc. in lootage terms. Iraq is the biggest tax payer money and resource grab racket in quite some time. it amuses me to no end to see US tax payers actually cheer on the hoods that are busy picking their pockets. their conditioning is really at the pinnacle of perfection...Pavlov would be proud.