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To: Mike McFarland who wrote (279091)	3/7/2004 1:04:17 PM
From: Rarebird	Respond to of 436258

<And what about that PPI?> Prices are rising so fast that the economic statistics cannot be massaged sufficiently to disguise the fact. The Producer Price Index (PPI) which measures the rise in prices of basic commodities has gone missing. Now you know why the latest PPI figure which was due to be reported two weeks ago has STILL not been reported. It cannot be long before the US will be reporting REAL physical bottlenecks as raw materials become unavailable at any price.

To: Mike McFarland who wrote (279091)	3/7/2004 2:57:32 PM
From: mishedlo	Respond to of 436258

And what about that PPI? How strange to have this jobless recovery, but the only thing I see that has moved up is the price I pay for steak, gasoline, electricity. Property taxes are up a bit, because apparently my house is worth so much more now. So, when does that PPI number finally come out--and will the bond markets ignore it? Pretty interesting stuff. I did a search for stagflation here on SI, but did not really find many posts. Started a position in Rydex Juno...but so far, thinking I could get stopped out pretty quick in the next few weeks. Ouch, any chance the 30 year bond now drops to 4%, I think I should not have dabbled in that, which shorts the long bond--rates may not finally bottom out until later in the Spring. Will the PPI be ignored? Probably not but from what point? Who knows where the yield rallies from. My best guess is we are in a new lower range of 3.70 -4.05 or so on the $TNX. Do you have a reason to be worried? Yes. I could easily be wrong. FNM is hedged the wrong way. Betting on rates to rise. They were probably forced to buy zillions of treasuries at the lows on Friday. Now, if they rode it out, and did not buy and another round of refinancings starts up, they will be buying zillions from this already depressed yield. If rates inch back up, and there are no refinancings they may unload treasuries if they bought them down here. Either way FNM probably lost $1B easily on friday no matter which way we go. That was the Greenspn warning to FNM. Not that rates would go higher but that rates would go LOWER. That also explains the greenspan variable rate mortgage pitch. If people had adjustables, FNM would not need to hedge all the short term refinancings! Put the risk on the consumer, not FNM. FNM should have gotten clobbered on FRIDAY. I think it rose. Go figure. Rest assured they lost their ass on Friday. Mish