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

To: russwinter who wrote (11426)	4/6/2004 3:47:15 PM
From: ild	Read Replies (1) \| Respond to of 110194

Inflation watch: latimes.com 22 Freeway's Latest Setback: High Bids Hopes are dashed yet again for a smooth process of improving an O.C. route that has had no major work since opening in the 1960s. ... Officials for the Orange County Transportation Authority said Monday that bids from Kiewit Pacific and Granite Construction well exceed an official estimate of $185 million to overhaul the main part of the 22 Freeway, from Brookhurst Street in Garden Grove to Main Street in Orange. ... OCTA officials say the high bids might stem from inflation in the construction industry. The industry has been beset recently by dramatic cost increases for fuel, steel and lumber. The price of steel, which reinforces pavement and bridges, rose at least 20% in the first quarter this year. Because of increasing demand for construction in the United States and abroad, some forecasts show that construction costs overall will rise more than 25% in the U.S. this year.

To: russwinter who wrote (11426)	4/6/2004 11:18:06 PM
From: ild	Read Replies (2) \| Respond to of 110194

Chart and text from today's ContraryInvestor: idorfman.com Despite the rather subdued headline PPI number for February, the core intermediate price index experienced its largest one month gain in nine years. In spite of the messages from an apparently deaf, dumb and blind Fed, growing inflationary pressures are in plain sight. And to us, it is crystal clear that the Greenspan Fed is actively choosing to ignore what it has not ignored at all over the past decade. As you'll see below, literally every time the ISM prices paid component has spiked over the last decade, it has led to a rather quick Funds rate increase response by the Fed. Every time except during the current experience, that is. ISM prices paid spikes as we have now realized have in the past led to at least a near term 200 basis point increase in the Fed Funds rate. As you can clearly see, in 1994 it was a 300 basis point rise. If the current recovery is anything near normal, then why are Fed actions completely abnormal relative to time honored indicators of inflationary pressure? The question becomes louder with each passing economic statistic. Why does the Fed continue to price the Funds rate for a crisis environment?