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

To: el_gaviero who wrote (9559)	3/6/2004 10:37:37 AM
From: mishedlo	Read Replies (4) \| Respond to of 110194

"Unless you were in copper, it was not only useless but damn WRONG!" Sorry, Mish, I'm just an ole country boy --- you'll have to explain --- don't understand this point that you're trying to make. Apologies offered for a too fast explanation. Here is the complete version. Those using the PPI or the price of copper and steel as a signal of inflation and bet against eurodollars, treasuries, against the spoos (heavily financial), got brutally punished on Friday. If you want to watch something to set the general trend for things, I suggested jobs not the PPI. I have been saying this for months now and it has been much of my sometimes frustrating debate with Russ. Jobs totally sucked yesterday as I expected. Bush, Snow, and the labor secretary all reversed on jobs a couple weeks ago, Greenspan flat out said not to rely on the household survey (and indeed it reeked yesterday as well), his warning to FNM was NOT that interest rates would RISE but that they would go DOWN. All of that is consistant with his "suggestion" of variable rate mortgages. The warning to FNM was that FNM lost BILLIONS last summer as a result of LOWER interest rates(FNM was hedged the WRONG way and is so again) and FNM is going to lose their ass again. I posted all this on my board and much of it here as well. Why the stock rises in face of Billions of $ in losses is a sign of assinine analysts that have no clue as to what is happening under the scenes at FNM. At any rate...... The EASY call was that treasuries YIELDS were going DOWN. EVERYONE HATES TREASURIES. There is not a single asset class more hated than treasuries IMO. When is EVERYONE right? All the clues were there and it was an easy bet for those watching what REALLY MATTERS (jobs) vs what people WANT TO MATTER (PPI). Anyone who placed big futures bets on the PPI got killed on Friday. They would have gotten killed IMO even if the PPI figures had been released. It's silly to think the PPI is any kind of secret. The bond market(treasury market) knows what is going on with the PPI whether or not the govt reports it or not. It is silly to think otherwise. Very few people got this latest jobs report correct. I thought it would suck but I was staggered by how bad it sucked. 21,000 jobs added in total and EXACTLY 21,000 govt category jobs added, with last two months revised lower and the participation rate lowered to boot! We lost 300,000 jobs if not more over the last couple months! Now, what will be interesting with the PPI is to see if it has topped. I suspect that it has or is close. China is attempting to slow its economy big time. This takes time to work thru the system, but a slowdown in China and a pullback in consumer spending and/or housing will reverse that PPI. A reversal in the PPI will be significant, much more so than it rising month after month. This "crack-up boom" is unsustainable whether or not interest rates rise. Period. A reversal in the PPI or even if it just flattens here would be supportive for even LOWER treasuries, but it all started with the one thing that matter most: JOBS! Mish