Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: redfish who wrote (6344)	5/14/2004 9:56:42 AM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Bond acting very well. Yes On the cusp of a panic collapse this AM. There is a reason for a rally here though. Consumer spending dropping and inventories at all time high. Think of the implications of that. Finally we might get uncoupling of stock and bond market where both go in same direction. Mish

To: redfish who wrote (6344)	5/14/2004 10:11:00 AM
From: mishedlo	Respond to of 116555

Rates spike to eight-month high Homebuyers flock to adjustables as fixed-loans jump The 30-year loan hit 6.34 percent, up from 6.12 percent a week earlier. That's the highest national average rate seen since 6.44 percent on Sept. 4, 2003. It also marked the eighth consecutive week that the rate has risen. The national average on the 15-year loan, a popular refinancing choice, also shot up, to 5.72 percent from 5.47 percent. And one-year, Treasury-indexed, adjustable-rate loans, after showing only modest increases for seven weeks, took a turn higher, climbing to 3.90 percent from 3.76 percent a week ago. All three loans required the payment of an average 0.7 points to achieve the rate. A point is one percent of the loan amount, charged as prepaid interest. "Last month's huge surge in employment figures reaffirmed market expectations that the Fed will move [to raise interest rates] sooner now rather than later," said Frank Nothaft, vice president and chief economist for Freddie Mac (FRE: news, chart, profile). "This put pressure on the bond market, and as yields grew, so did mortgage rates." He noted that April's U.S. producer price index, measuring inflation at the wholesale level, came out earlier Thursday "higher than had been expected, due primarily to the continuing rise in energy prices." See full story. And on Friday, the consumer price index for April will underscore how "the focus of concern shifts away from the lack of job growth and toward inflation as a deciding factor for the Fed in determining the timing of future action," Nothaft said. ARMs popular; purchase mortgages stay healthy The recent jump in rates has sent mortgage shoppers into adjustable-rate loans as they seek to hold on to the benefits of low rates. The national average on the one-year, Treasury-indexed ARM has moved up only slightly while fixed rates have risen nearly one full percentage point. The Mortgage Bankers Association said the percentage of mortgage applicants asking for an ARM hit nearly 35 percent in the week ended May 7 -- the highest level in 10 years. Overall, mortgage applications fell 5 percent last week, although applications for home-purchase loans were up 2.4 percent for the week. Refinancing activity took another tumble, falling 13.2 percent. Refinancings accounted for just under 40 percent of the mortgage market, the MBA said. The average interest rate for 30-year fixed-rate mortgages in the MBA survey increased to 6.32 percent from 6.10 percent from one week earlier, with points increasing to 1.44 from 1.38 (including the origination fee) for 80 percent loan-to-value ratio loans. The MBA survey covers about half the U.S. residential lending market. cbs.marketwatch.com

To: redfish who wrote (6344)	5/14/2004 10:21:50 AM
From: mishedlo	Respond to of 116555

industrial production federalreserve.gov Industrial production moved up 0.8 percent in April after having ticked down 0.1 percent in March. At 115.4 percent of its 1997 average, output in April was 4.8 percent higher than its level in April 2003. Manufacturing output increased 0.7 percent, its eighth consecutive monthly increase. Output at utilities rose 1.5 percent after having declined in the previous two months, and output at mines moved up 0.8 percent. Capacity utilization for total industry increased to 76.9 percent, a rate 0.5 percentage point above that of its first-quarter average but still more than 4 percentage points below its 1972-2003 average.

To: redfish who wrote (6344)	5/14/2004 10:36:20 AM
From: mishedlo	Respond to of 116555

Taking a closer look at the inflation numbers: [post from Rodger on the FOOL] stats.bls.gov Inflation from April 2003 to April 2004 is reported as 2.1% Food gets a total of 3.5%. Food at home = 3.9%. Hi-Carb foods: Cereals and Bakery Products = 1.8% Fruits and Vegetables = 2.5% Sugars and Sweets = 0.6% Low-Carb foods: Meats, Poultry, Fish and Eggs = 8.4% Dairy and Related = 4.8% Fats and Oils = 6.3% At least in Northern California, people are eating out a lot less. They are also eating more low-carb foods. It seems as though the official numbers understate inflation for consumers. Housing gets a total of 2.2%. Rent of primary residence = 2.6% Lodging away from home = 9.1% Owners' equivalent rent = 2.2% Tenent and household insurance = 1.8% OK, so home ownership expense is supposed to be based on how much owners can charge for rent. So why are the two rent measures up more than equivalent rent? Insurance companies are giving less coverage for more money. (Hardly anybody is willing to pay for earthquake insurance in California now because the costs are extreme.) Then there are two very significant costs that aren't included at all: Property tax, has been going up with rising home prices (perhaps 10% on average?). Interest expense on ARMs will be rising going forward. Transportation gets a total of 0.9% Used cars and Trucks = -11.5% Gasoline (all types) = +11.1% Public Transportation = 3.2% Used cars and trucks are weighted almost as highly as Gasoline and totally wipe out the impact of rising fuel costs. Since a used car sale just essentially represents the transfer from one consumer to another, it doesn't seem like it should count at all. So now we can see a little better why our daily expenses seem to cost so much more, even though inflation is supposedly under control. Perhaps part of the problem is that inflation is used by Fed policy makers to determine how monetary policy is impacting the economy rather than how it is impacting consumers. Because of this it may better measure the effects of the money supply on supply and demand in the market. Nevertheless, the CPI numbers do a pretty bad job of measuring the increase in the cost of living for average consumers.

To: redfish who wrote (6344)	5/14/2004 10:46:33 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Over 1M total QQQ puts at 34 and 35 I seriously doubt they let all of those finish ITM M

To: redfish who wrote (6344)	5/14/2004 11:10:14 AM
From: yard_man	Respond to of 116555

matter of "buy" the news -- they sold in expectation?? or perhaps they are stoking expecations to make people think they are raising short rates and it is working?? take your pick Or maybe some black boxes are simply reallocating away from stocks to bonds

To: redfish who wrote (6344)	5/14/2004 11:41:40 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Shorting Unavailable For Bond ETFs [That's pretty heavy sentiment - mish] ETFs are highly liquid instruments and are generally available for shorting in any market condition. Normally, funds with high assets and large volume are available for borrowing and short selling. Bond ETFs, despite having these characteristics, are currently unavailable for shorting. Currently there are five bond ETFs: iShares Lehman 20+ Year Treasury Bond (AMEX:TLT - News), iShares Goldman Sachs InvestTop Corporate Bond (AMEX:LQD - News), and iShares Lehman 7-10 Year Treasury (AMEX:IEF - News), the Lehman TIPS Bond Fund (AMEX:TIP - News), or the Lehman 1-3 Year Treasury Bond Fund (AMEX:SHY - News). A survey of three brokerages, US Clearing, Scottrade, and Interactive Brokers, confirmed on May 7th that none of the funds were available for shorting. Read the rest here: biz.yahoo.com