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

To: orkrious who wrote (7398)	6/2/2004 10:13:33 AM
From: mishedlo	Respond to of 116555

Forex and market comments fxstreet.com

To: orkrious who wrote (7398)	6/2/2004 10:24:35 AM
From: mishedlo	Respond to of 116555

U.S. weekly retail chain store sales off 0.5% Wednesday, June 2, 2004 12:01:49 PM WASHINGTON (AFX) -- Sales at U.S. retail chains fell 0.5 percent for the second straight week last week, according to the International Council of Shopping Centers and UBS. The ICSC/UBS index is up 5 percent year-over-year. "Though it appears that increasing gasoline prices, the issue of war, and the current geopolitical environment [are] weighing on the minds of consumers, the overall impact continues to be limited since the year-over-year sales pace remains very respectable," said Michael Niemira, ICSC's chief economist and director of research. Niemira expects May same-store sales rose about 5 percent year-over-year. The chains report monthly sales on Thursday

To: orkrious who wrote (7398)	6/2/2004 10:27:51 AM
From: mishedlo	Respond to of 116555

U.S. mortgage applications fall 1.2% Wednesday, June 2, 2004 11:21:21 AM WASHINGTON (AFX) -- The number of applications for mortgages in the United States declined 1.2 percent last week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Applications for purchase loans rose 2.2 percent while applications for refinanced loans fell 6.6 percent. Refinancings fell to 34.3 percent of loans from a 36.2 percent share. The average rate on a 30-yaer fixed loan dropped to 6.24 percent from 6.26 percent.

To: orkrious who wrote (7398)	6/2/2004 10:28:34 AM
From: mishedlo	Respond to of 116555

US house price inflation slows sharply By Christopher Swann in Washington FT.com site; Jun 01, 2004 Federal housing regulators on Tuesday welcomed an abrupt slowdown in house price inflation, saying it reduced the danger of outright falls in property values. House prices rose by just 0.96 per cent in the first quarter of the year - an annualised rate of 3.84 per cent, according to figures from the Office of Federal Housing Enterprise Oversight. This was a marked slowdown on the last three months of 2003, when house prices rose by 3.71 per cent on the quarter alone. But despite the slowdown, prices are still 7.7 per cent higher than a the same period in 2003. "The moderation in the growth of house prices is welcome because continued price jumps like those of the fourth quarter would raise the potential for declines later on," said Patrick Lawler, OFHEO's chief economist. House prices have been rising by between 7.5 and 8 per cent annually the the past four years. Some economists have become worried that this record breaking run has taken house prices in many areas to unsustainable levels. Since records began after the Second World war, there has never been a year of falling house prices. But many economists expect that even if there is no nationwide fall in prices, property values may slide in certain property hotspots. In California, the price of a home stands at 8.3 times the annual income of its residents. In Hawaii the ratio has risen to over ten. This compares to just 2.4 times income in Wisconsin and 2.2 times in Kentucky. Aside from California and Hawaii, economists are concerned by valuations on the north east corridor between Boston and Washington DC. House prices in Florida are also considered overvalued. The recent rise in mortgage rates has long been expected to slow house price rises. In March buyers could find a 30-year fixed rate mortgage with an interest rate of 5.45 per cent. Now the rate is closer to 6.25 per cent. Mark Zandi, chief economist at Economy.com, however, was sceptical that the housing market had cooled as much as the figures yesterday suggested. "Prices have slowed so much partly because the proportion of refinancings rose over the quarter as homeowners took advantage of a slide in mortgage rates over the quarter," he said. "When a mortgage is refinanced the valuation of the property is usually done automatically and often understates the market value of the house slightly." But he added that the housing market was set to slow considerably as interest rate rise damped demand - especially from first time buyers who have been finding it harder to get on the housing ladder. * Growth in the US manufacturing sector accelerated in in May, according to the Institute of Supply Management. The ISM index rose from 62.4 to 62.8 - well above the 50 level separating expansion from contraction and the seventh consecutive reading above 60. The employment component of the index rose to 61.9, raising hopes that job creation in the sector has picked up. The employment component was at its highest level since 1973. "Month to month the index has not been a good predictor of employment," said Nigel Gault, head of US research at Global Insight, the consultancy. "But it should eventually feed through into stronger employment growth in the manufacturing sector." In the text of the report, some companies said they were adding permanent members of staff to the payroll as well as temporary workers. The jobs figures for May are released on Friday and are expected to show strong gains in employment. The ISM figures also showed a bottlenecks may be developing as companies struggle to meet fast-growing demand. The suppliers delivery index - which measures the speed at which orders are being met - rose to 69.4 - its highest level since April 1979. search.ft.com

To: orkrious who wrote (7398)	6/2/2004 10:35:58 AM
From: mishedlo	Respond to of 116555

STEPHEN KING: US ECONOMY NEEDS REHAB FOR DEBT ADDICTION 'We could be entering a very odd phase. We really cannot be sure what will happen when interest rates go up' Stephen King is managing director of economics at HSBC news.independent.co.uk ?BR>The Federal Reserve will tread very carefully when raising interest rates. Think of the FOMC members as the Billy Goats Gruff. They can see the verdant pastures on the other side of the river but know very well that in their way stands a very unpleasant troll that has taken the form of excessively high debts. The Billy Goats Gruff, of course, didn't provide their troll with additional food before crossing the bridge. The FOMC, unfortunately, did: the debt troll is now a lot bigger than he was at the height of the late-1990s boom. This, in turn, suggests we could be entering a very odd phase in the development of the US economy. Cyclically, the arguments in favour of higher interest rates appear to make a lot of sense. Structurally, though, the higher debt levels today suggest we really cannot be sure what will happen when interest rates go up. And because of that, it's just as plausible to argue that initial rate rises could be followed by hurried rate cuts as the troll awakens from his slumbers.