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

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 7:16:11 AM
From: TH	Read Replies (1) \| Respond to of 116555

Haim, I do not recall any comparison between retail and CPI. I think its safe to assume that CPI got a washing in the hedonic spin cycle. Another month or two and I think we are going to have a strong trend in CPI; even after the magic is applied. I think most here would agree that you are correct regarding the retail sales data. Farmers have to be prudent, and maybe as a group they are the canaries for inflation; at least in certain segments. I would not yet predict the consumer is starting to slow, as it appears the American consumer has little fear of additional debt. Why stop now? A few signs the consumer may be starting to slow like Wal-Mart yesterday and Pier One (minor) today. The "Easter was early" excuse will get some mileage. Maybe the consumer confidence number today will be interesting. Was the strong housing number just a last gasp to lock before rates rise, or just more manic behavior? I don't know. Good Trading TH

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 9:29:01 AM
From: russwinter	Read Replies (1) \| Respond to of 116555

The numbers in retail sales that really stick out over the last three months are gasoline and food. I don't think it's because people have bigger appetites either, it's just good old fashioned inflation, really supportive of my subsistence crisis theory. Food and beverages: +1.9% Jan-March Gasoline: +5.8% Jan-March btmna.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 9:44:31 AM
From: mishedlo	Respond to of 116555

Actually I copied your post over to the FOOL and there were a few comments on it. Basically the comments are simply as follows: spending is not what it seems to be, furthermore I am sure it was accelearated by tax refund checks. M

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 9:50:11 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Forex - Euro supported against dollar on diminishing ECB rate cut hopes Tuesday, April 27, 2004 9:41:20 AM afxpress.com LONDON (AFX) - The euro was supported against the dollar as expectations of a rate cut by the European Central Bank diminished further following yesterday's unexpected recovery in German business confidence in April "The strong German Ifo index has eclipsed ECB rate cut expectations for the time being and while near-term pressure on the euro from this angle should relent, this is unlikely to carry it much higher against the dollar," said Michael Klawitter, currency strategist at WestLB Ifo's main index rose to 96.3 in April from 95.4 in March against expectations of a decline to 95.3, raising hopes that Germany may not require a monetary stimulus after all. However, Klawitter said revisions to the economic growth forecast by Germany's six leading research institutes should as a reminder than another ECB rate cut, probably in June, is not off the cards, This afternoon's testimony by the ECB's president Jean-Claude Trichet to the European Parliament's economic and monetary affairs committee will be closely monitored for any comments about the state of the German recovery, and whether lower borrowing costs will be needed to give it a lift By contrast, confidence surrounding the US economy is more solid following a raft of positive data, particularly surrounding the outlook for jobs That has led the markets to increasingly price in a US rate hike from the current 46-year lows of 1.00 pct, by late summer Yesterday, the euro pushed down to a new five-month low of 1.1764 usd on expectations that the rate differentials will narrow, with the Fed raising rates and the ECB cutting them from their current 2.00 pct However, Steve Pearson, chief currency strategist at HBOS, noted that the easiest dollar gains may have already been made as sentiment switched suddenly to a possible US rate hike "As such it is questionable how much further support the dollar can garner from this source absent another monster payroll print," he said It was the US employment report at the start of this month that turned rate sentiment in the US around. The 308,000 monthly improvement raised hopes that the US economic recovery was finally translating itself into solid jobs growth The US economic highlight today is the Conference Board's monthly survey into consumer confidence, which is expected to increase slightly to 88.7 in April from 88.3 in March In addition, market participants will also monitor speeches from Federal Reserve chairman Alan Greenspan and Fed governor Susan Schmidt Bies Sterling also remained buoyed by rate hike expectations following hawkish comments at the weekend from Paul Tucker, a member of the Bank of England's rate-setting monetary policy committee The markets had put a question mark over the May rate decision after it emerged that the MPC voted 8-1 in favour of holding rates at 4.00 pct at the April meeting and first quarter GDP growth disappointed at 0.6 pct fxstreet.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:21:48 AM
From: mishedlo	Respond to of 116555

China to tighten monetary policy further; bumpy ride for Asia - Morgan Stanley Tuesday, April 27, 2004 9:49:29 AM afxpress.com HONG KONG (AFX-ASIA) - China is likely to take further action to tighten monetary policy, including raising interest rates, in an attempt to cool an economy which has overheated from excessive bank lending and runaway investment spending, Morgan Stanley's chief economist Stephen Roach said Asia, which has reaped huge benefits from China's growth, is especially vulnerable to a slowing Chinese economy due to their heavy reliance on exports and weak private consumption, he added "The People's Bank of China has moved twice in the last four weeks to embrace tighter monetary policy initiatives, and I think there will be more actions," Roach told reporters during a trip to Hong Kong "They could remove the ceiling on lending rates, which could mean interest rate adjustments," he added Roach said a slowing of the Chinese economy is necessary and inevitable, as the global economy is now "lopsided" and centred on China and the United States, where consumers are over-spending "The Chinese leadership now senses a new urgency in bringing its economy under control," Roach said, adding that "the landing will be soft, and will feel bumpy along the way or all the way" The People's Bank of China raised the reserve requirements for banks in late March and again in early April, after GDP growth escalated to 9.7 pct in the first quarter boosted by a 43 pct surge in fixed investment spending and a sharp rebound in bank lending after a temporary slowdown in late 2003 Roach said he expects Beijing to succeed in slowing economic growth to 7 pct by the end of this year "Asia and the rest of the global economy need to take notice of what is about to happen in China. Yet in my travels through the region over the past several weeks, I don't sense that realization has hit home," he added Japan, which is now brimming with confidence, could turn fragile once the Chinese economy starts to slow, given that China accounted for about 30 pct of Japan's 4.5 annualized GDP growth in the second half of 2003, Roach noted Asia's export-oriented economies will also suffer as China slows "The main problem is that the Asian consumer is largely a myth," he said The biggest Asian economies - Japan, China, India and Korea - together make up 82 pct of pan-regional GDP, but they suffer from chronic weakness in private consumption, he said The ASEAN (Association of Southeast Asian Nations) economies such as Thailand and Indonesia have stronger consumer sectors, but they account for only 7 pct of pan-Asian GDP, he said "Nor does the Chinese consumer qualify as a new Asian powerhouse," he added "With job losses from ongoing reforms of state-owned enterprises still estimated at 7-9 mln annually, and with China's work force lacking the safety net of social security, private-sector pensions, and retraining programs, the Chinese consumer remains pre-disposed toward saving" India could be Asia's "special case", as Roach calls it "an economy that seems likely to emerge largely unscathed in a China-adjustment scenario" "The bad news is that there is a distinct possibility of a tough period of adjustment for all of us, especially for an unbalanced US economy and a China-centric Asia," he added "The good news is that there is hope in global rebalancing" fxstreet.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:27:22 AM
From: mishedlo	Respond to of 116555

U.S. weekly chain-store sales down 0.5% Tuesday, April 27, 2004 1:05:33 PM WASHINGTON (AFX) -- U.S. chain-store sales fell 0.5 percent last week from the previous week, according to the weekly index released Tuesday by the International Council of Shopping Centers and UBS. Sales were up 7.1 percent year-over-year. "The real story is that aside from all the reporting noise associated with the shift in Easter dates, the underlying trend pace of sales is still quite solid," said ICSC chief economist Mike Niemira, who expects April same-store sales will rise about 5 percent year-over-year.

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:28:28 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. March existing home sales up 5.7% to 6.48 mln By Mike Maynard WASHINGTON (CBS.MW) -- Existing home sales rose 5.7 percent in March to 6.48 million units on a seasonally adjusted annual basis, the National Association of Realtors said. It's the second highest sales level ever. The rise in March sales was much stronger than the 6.18 million units expected. On a year-on-year basis, existing home sales were up 12.7 percent. "Low mortgage rates in March fueled sales," said David Lereah, NAR's chief economist. Sales rose a revised 2.2 percent in February to 6.13 million units, compared with the initial estimate of a 2.0 percent rise to 6.12 million. The median national sales price rose 7.4 percent from the previous year and stood at was $174,100 in March. Inventories of unsold homes rose 4.8 percent to 2.39 million, a 4.4-month supply at the currrent sales pace.

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:30:47 AM
From: mishedlo	Respond to of 116555

European govt bonds modestly higher after key German GDP forecast lowered Tuesday, April 27, 2004 12:41:32 PM LONDON (AFX) - European government bond prices were modestly higher, supported by a downgrade in a key forecast of German growth According to a report from the influential group of Germany's six leading economic institutes, the largest economy in the euro zone is now expected to grow by just 1.5 pct in 2004, compared with the previous estimate of 1.7 pct The news "proved supportive" for bonds in an otherwise quiet session, said Tobias Hartmann, analyst at Commerzbank. The 6 institutes went further to add that the pace of German economic growth will not increase much further in 2005, expanding by just another 1.5 pct The timing of the downgrade was important as it comes just as the data flow from the US - so long the dominant direction provider for the bond market - has started to slow, said Hartmann Separately, markets are not holding out much hope for a European Central Bank rate reduction in either May or June going by interest rate futures, analysts said The tone struck by ECB president Jean-Claude Trichet did not alter this view. Trichet told the European Parliament today that he still expects a gradual recovery of the euro zone economy despite recent mixed data while the oulook for price stability remains favourable In the UK, government bonds were also modestly higher amid a lack of individual news fxstreet.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:34:56 AM
From: mishedlo	Respond to of 116555

Saudi oil minister: Committed to $22-$28 oil price band WASHINGTON (CBS.MW) -- Saudi Arabian oil minister Ali al-Naimi on Tuesday said his country remains committed to OPEC's $22 to $28 a barrel oil price band and a $25 a barrel basket price. Speaking at a Center for Strategic and International Studies forum on global energy security, he said OPEC, however, has only a limited ability to keep prices in that range, especially when price rises are driven by rising demand. That's currently the case, he said. Rising prices have also been driven by worries about the stability of some producing countries, large hedge funds entering the commodity markets, and U.S. refinery bottlenecks, he said. The minister repeated that Saudi Arabia remains willing to invest in the construction of two new U.S. refineries. "Higher oil production does not guarantee that there is more gasoline available to you as consumers," he said.

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:39:44 AM
From: mishedlo	Respond to of 116555

Trichet says ECB control of inflation keeping market interest rates low BRUSSELS (AFX) - European Central Bank president Jean-Claude Trichet said market interest rates in the euro zone are low because of the ECB's success in keeping inflation expectations under control Confidence in the ECB's ability to control inflation keeps market interest rates low across the whole range of maturities, he said "We are delivering the best yield curve possible for Europe," he told the European Parliament economic and monetary affairs committee Surveys have repeatedly shown that financial markets expect future euro zone inflation to be between 1.7 and 1.9 pct, exactly in line with the ECB's target, Trichet said If markets were less confident about the ECB's ability to keep inflation under control, then long-term market rates in particular would rise, with negative consequences for the euro zone economy, he said Trichet said the ECB's forecast of a gradual recovery in the euro zone economy has been consistent for several months and was confirmed at the last governing council meeting on April 1, when the ECB left its key interest rate unchanged at 2.00 pct Asked about criticism that he and other council members had fuelled expectations of a rate cut at the April 1 meeting, Trichet said fewer than 20 pct of market experts and economists were expecting a rate cut at the meeting and the majority expected rates to be left unchanged "We are one of the most predictable central banks in the world," he said Trichet declined to comment on the impact of a possible rate increase in the US, but he said ministers and central bankers at last weekend's G7 meeting in Washington had agreed that the US and euro zone economies each have different "assets and liabilities" The US has a very flexible economy that is able to quickly make use of technological innovation, but it lacks savings, he said The euro zone meanwhile has ample savings and capital but still has a lot of work to do on structural reforms, he said He said there was also a consensus that the statement on exchange rates at the G7's February meeting continued to capture members' views and the same wording was therefore retained in last weekend's communique. Asked about the apparent inconsistency of requiring new EU members to join the ERM2 exchange rate system while the UK says it would not join ERM2 ahead of any euro entry, Trichet said two years' membership of ERM2 remains one of the Maastricht conditions for euro entry fxstreet.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 10:49:53 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. consumer confidence brightens on job outlook - Tuesday, April 27, 2004 3:33:43 PM afxpress.com WASHINGTON (AFX) -- U.S. consumer confidence improved for the first time in four months in April, aided by a brighter job outlook, the Conference Board reported Tuesday The consumer confidence index improved to 92.9 in April from 88.5 in March. The present situation index increased from 84.4 to 90.6, the highest reading since August 2002. Meanwhile, the expectations index reached 94.5 from 91.3. The number of Americans who say jobs are hard to get fell to its lowest level since November 2002 Wall Street economists had expected the March confidence index to remain steady at about 88.7, according to a survey conducted by CBS MarketWatch. "This latest improvement in consumer confidence was sparked by a more favorable assessment of current business and labor market conditions and increased consumer optimism about the next six months," said Lynn Franco, director of the board's consumer research center. "The job market, which has a major impact on confidence, appears to be gaining strength." The percentage of respondents who told the Conference Board that jobs are hard to get fell to 27.6 percent from 29.9 percent, while those who say jobs are plentiful rose to 15.8 percent from 14.7 percent The percentage who say business conditions are improving rose to 21.4 percent from 20.7 percent, while the percentage who say conditions are worsening fell to 22 percent from 23.1 percent The confidence index doesn't necessarily predict consumer behavior. Consumer spending accelerated even as confidence sagged in the winter. In a separate report, the National Association of Realtors said sales of existing homes rose 5.7 percent to an annual rate of 6.48 million in March, far ahead of the 6.18 million that had been expected. fxstreet.com

To: Haim R. Branisteanu who wrote (5096)	4/27/2004 11:16:45 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

321gold.com If interest rates break out on the upside, if the dollar continues to climb -- it's going to hit everything. It's going to cause an unwinding of the carry-trade. And it could trigger a move, even a rush -- to liquidity. It's going to set off a move to get out of all "things" and into cash. And cash is what the mass of Americans don't have. The real cash, the real liquidity, is owned and held by a very small percentage of Americans. What the great mass of Americans have is things: houses, cars, junk -- and lots of debt. Now here's the hard part for me and my subscribers. If what I see above comes into being, there's a good chance that we could see pressure on gold shares. Gold shares are really a "call" on a higher price for gold. Sure, gold is real money, sure gold will triumph in the end, but for now the investment world sees gold as a commodity, like aluminum or wheat. They don't see gold as the only real money. So we could see pressure on gold, but more probably on the gold shares. I don't know for certain that we'll see pressure on gold, but it could happen. We've certainly seen pressure recently -- although this could simply be corrective action. Personally, I'm going to hold my gold. Holding the metal doesn't worry me. I still have gold that I've carried from the '70s. Gold is the only real money. I don't care, inflation, deflation, boom or bust -- gold is money, and I can't say that about any paper currency. I'm holding all my gold. The gold stocks could be another story. The gold stocks depend on rising gold for rising profits. In a deflation, or even in an atmosphere where gold simply "doesn't go up," the gold stocks could do poorly. For that reason and all the reasons that I described above, I feel that subscribers must make a personal decision about their gold shares.