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

To: mishedlo who wrote (1908)	3/12/2004 6:41:09 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 116555

I thought you would like that article! Best to you!

To: mishedlo who wrote (1908)	3/12/2004 7:31:23 PM
From: gregor_us	Respond to of 116555

When A Deflationary Spiral Takes Hold on a Debt-Ridden economy, that has already attempted to (massively) inflate its way out of malaise--that is the situation I am still trying to guage--for how it will affect the dollar, and yields. (I saw the earlier article you posted on deflation--and the dollar.) JWCB and I went back and forth on this a little. One avenue of inquiry probes a path of Wham-Bang (Deflationary money supply contraction--Inflationary aftermath) and then there is of course Bang-Wham (the reverse). The idea however which does not, in fact, answer this question but which captivates me the most--is that as things get Hairy and Scary here in the months ahead--all the Usual Suspects--BOJ, Fed, Washington--will accellerate their efforts in a panic. More dollar buying, more US Treasury buying, maybe some Fed Rate cuts, etc. Washington wants Dollar destruction--as long as we get jobs in return. And they ultimately want Bond Yield Destruction--again, as long as we get jobs in return. What does the Deflation Monster want? Heh Heh. THAT monster wants tighter money and much, much lower bond yields--and probably a stronger dollar to boot. Cheers, LP

To: mishedlo who wrote (1908)	3/12/2004 7:53:37 PM
From: gregor_us	Read Replies (7) \| Respond to of 116555

As In Most Markets, There is an Over-Focus on Price. For example, "bonds are expensive." And additionally, alot of this view is reinforced by The Masters, like Gross, who have watched yields their whole lives--and just figure they can't go lower. Everyone can imagine treasury yields going to 20%--but for some reason, no one can get their head around them going to zero %. So there's little discussion of Value, when talking about bonds. And little discussion of the economy. Reminds my alot of the Nasdaq Watchers. "Nasdaq 5000." Or, "Nasdaq 1000." Meanwhile, no discussion of earnings, or the outlook... So I agree and it's hard not to: the crowd thinks it's "impoosible" for yields to go alot lower. We know what this means.