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

To: mishedlo who wrote (4361)	4/14/2004 6:48:38 PM
From: Crimson Ghost	Respond to of 116555

The Fed will never hike again mantra is almost a religion with you. I am and have always been been an agnostic. Never say never I always say.

To: mishedlo who wrote (4361)	4/14/2004 8:41:39 PM
From: russwinter	Read Replies (2) \| Respond to of 116555

<On this latest pullback this month in metals etc (assuming it sticks), what do you think CPI/PPI will look like next month?> Gosh, we get a two-three week pause on this "USD rally" after a 50% run-up, and you are ready to declare inflation whipped? joc.com With metal inventories running down relentlessly toward zero, and oblivion, you are unlikely to have to wait long for the next even more dramatic surge. I bought July copper futures today for the first time at 126.90. <March consumer spending was up because of two reasons IMO. 1) tax refunds 2) another huge round of refis off that last treasury rally. > I agree with this, and perhaps April will see the last effects. I would add a huge #3; inflation, especially subsistence inflation is killing consumers, and I predict this is about to become a big political, election issue. This market is reactive with very little effective discounting going on. That's why I feel it will be buried by the steady diet of inflation news that is now going to rain down on the cogniscenti. If the economic numbers likely start slipping in the April-June period, the USD will start it's swoon again, followed by even more pent up commodity and input goods inflation. <If that falls to 120,000 or so and the CPI is tame, I doubt we see a bias change from the FED. > Inflation isn't tame and won't be, and that's what you've been missing all along. So the question du jour is what happens if the job number is 120,000, and inflation numbers keep coming in at 0.5%, with even an 0.7% in there somewhere. If the MoP doesn't raise then, they risk a panic in the longer end. In fact, that's on the table right now, after today's CPI number. <Greenspan and Broaddus both speak this Friday> I'm sure that's why the bond market managed to survive (for now) what should have been an eye opener headline inflation number. Yes, they can always count on more moral hazard BS from the Ministry of Propaganda. But listening to MoP moral hazard has been pretty costly of late. You are still willing to do that? And thank goodness for the Pinocchio effect, because every time the MoP talks we get another commodity run-up. <The futures have priced in 3/4 of a point hike between now and December> Fed funds futures have priced in 60-65 bps, it's the May, and June 30 dates that especially still looks light to me. trendmacro.com But, it's largely irrelevant (unless they get real aggressive, and get rid of the negative real interest rate), as the big issue now is a panic caused by the inflationary Train Wreck phase that's really going to get underway between now and July. Will participants hold bonds of any kind when they realize how badly inflation will ravage them, and that the Fed does little about it other than talk? And here's one particular bond that's really set up for some gigantic problems from all this: futuresource.com