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: benwood who wrote (7528)	6/4/2004 4:13:27 PM
From: loantech	Read Replies (3) \| Respond to of 116555

Oh well I just fell for it and we bought a Maytag washer a few months back. LOL. My thinking is 25 years ago most appliances lasted 15-20 years. Now the prices are not that much higher 15 years later but they only last 10 years. Go fish! <g>

To: benwood who wrote (7528)	6/4/2004 6:20:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

SonnyPage on Loan Quality He is a realator in Atlanta.... I had a closing late this morning. On this one, I represented the seller, so Brian, my preferred mortgage lender, was not there with me. When I made it back to the office around one he still had not eaten, so we headed downstairs to the Thai Thai for our daily fix of spicey Thai food. The Thai Thai is also where we seem to do our brainstorming; one realtor and one lender trying to put together our pieces of the gigsaw puzzle that is our economy. Somehow we got on the subject of loan quality. My question to Brian was, how would you compare the quality of your applicants today to, say, this time last year. His response was, maybe a little worse, but not that much. I asked, what percent of your loans would you say are really borderline? His reply, twenty percent or so. Then he thought and said, you know, the real difference I think is with loan quality of maybe three years ago or so, before 911, before the slowdown, there's quite a lot of difference. Brian gave a great example. He is working with a buyer sent to him by another agent in our office. This buyer can't qualify for a "swing loan", that is, buy house "B" without selling house "A" first. He has no equity in his current home and plenty of credit card debt; he clearly has negative net worth. Yet he can qualify for a loan under today's guidelines as long as he closes on House "A" before closing on house "B". Brian's final comment was, there is absolutely no way he would have qualified at all three years ago. Requirements have really been dumbed down. So follow me on this. Short rates go up, where many loans are, and virtually all borderline loans. The immediate effect is a significant number of today's potential buyers effectively vanish, they can no longer qualify. They can sell what they have, but can no longer buy. You have an instantaneous glut on the market, sellers drop prices to compete for fewer buyers. Those sellers under water become more so, default, prices drop more, more defaults. This could develop quickly if and when it gets started.The federal reserve, perhaps all of us, have a huge stake in keeping this particular balloon inflated. It does not necessarily need to keep inflating, just God forbid if someone lets the air out. I can envision absolutely no scenario of us having any hope of growing our economy and staying out of recession with a collapsing real estate market and the devastating collapse of consumer confidence that would go with it. That open invitation to lunch at the Thai Thai still stands. I hope to see some of you down here on the north side of Atlanta one of these days. My best to you all. sonnypage

To: benwood who wrote (7528)	6/4/2004 6:50:54 PM
From: mishedlo	Respond to of 116555

Paul L. Kasriel, Housing: It’s Different This Time (As It Was For Stocks In 1999) northerntrust.com

To: benwood who wrote (7528)	6/4/2004 6:51:54 PM
From: mishedlo	Respond to of 116555

Gold/Silver COTS Gold seems OK to me. Silver is more problematic IMO. Small specs hold more long contracts than big specs. Yuch. cftc.gov

To: benwood who wrote (7528)	6/4/2004 8:05:22 PM
From: mishedlo	Respond to of 116555

U.S. producer prices could look ugly Friday, June 4, 2004 11:09:52 PM WASHINGTON (AFX) -- A key economic indicator this coming week will put more pressure on the Federal Reserve to justify its reputation as the world's inflation-fighting superpower The May producer price index could be truly nasty, sounding an alarm that the Fed has gotten behind the curve and will need to rush to catch up The week also features two public appearances by Fed chairman Alan Greenspan, who will get plenty of opportunities to explain his views on inflation and Fed policy. At this point, the markets know all about the spike in oil prices in May; what investors want to know is whether Greenspan will raise rates by a quarter percent or a half Greenspan speaks Tuesday at 9:15 a.m. Eastern time via satellite to a monetary policy conference in London. On Thursday, he'll testify at the Senate Banking Committee on his nomination to serve a fifth term as Fed chairman With the Federal Open Market Committee meeting in three weeks, Greenspan's speeches will probably command more attention than the producer price index Producer prices increased 0.7 percent in April on higher food and energy prices. Economists surveyed by CBS MarketWatch are looking for more of the same in May. The average forecast of 19 economists calls for a gain of 0.6 percent. "The inflation data do look downright disturbing," said John Silvia, chief economist for Wachovia Food prices likely jumped 2.7 percent and energy prices 2 percent in May, said Citigroup economist Robert DiClemente, who is predicting that the price index rose by 1 percent last month Core prices, which exclude food and energy goods, probably rose 0.2 percent for the third month in a row, according to CBS MarketWatch's survey. While that seems pretty tame, core prices are now up 1.4 percent in the past year after being in negative territory for much of 2002 and 2003 It's the fastest growth in core prices since September 2001 Even more disturbing, prices of core intermediate goods -- items that need further processing before final sales -- have increased 4.3 percent in the past year. That's the fastest growth since late 1994, after the Fed began raising interest rates Kohn's call The increase in inflation so far this year has surprised Fed officials, Fed Gov. Donald Kohn said in a speech Friday. Still, he believes "the recent pickup in price increases probably does not represent the leading edge of steadily worsening inflation." Why is Kohn so sanguine? First, he argues that some of increases stem from the weakening dollar, which seems to have stabilized. The Labor Department will report on May import prices early Thursday morning Further, "it is not surprising," Kohn added, that global growth would boost demand -- and prices -- for commodities. The impact of such demand shocks "has been significant," he acknowledged, but aren't likely to lead to general inflation unless they worm their way into inflationary expectations Many economists are following Kohn's lead in suggesting that, with inflation still under control, the Fed can afford to raise rates at a "measured" pace. All the economists surveyed by MarketWatch predicted a series of quarter-point rate hikes this year; none is willing to bet yet that the Fed will take a more aggressive stance by hiking rates in half-point bites "Given ample slack in the U.S. economy, the pressure in the past few months was probably random rather than fundamental, and thus prices should increase only modestly in May," said Mike Moran, chief economist for Daiwa Securities America. It's consumer prices that the Fed worries about, anyway. So far, the increases in the consumer price index and in the personal consumption expenditure index have been more muted than in the producer price index But higher prices are being passed on to consumers. The core consumer price index is rising at a 3 percent rate this year, largely because of higher shelter prices "We continue to think that the pickup in inflation will be short-lived," said Ed McKelvey, an economist for Goldman Sachs. However, the risks of higher inflation "tilt to the high side for the balance of the year," McKelvey added. "The main reason is that considerable room still exists for price pass-through in the goods sector." Other data points Friday is the big day for the economic data. Besides the producer price index, the Commerce Department will release its estimate of April's trade gap on Friday morning. Economists expect a narrowing in the deficit to $45.1 billion from a record $46 billion Also, the University of Michigan will leak its preliminary consumer sentiment figure Friday at 9:45 a.m. Eastern. With energy prices stabilizing and better news on the job front, it's probable that consumer attitudes improved to 91 from May's 90.2 fxstreet.com

To: benwood who wrote (7528)	6/4/2004 8:07:07 PM
From: mishedlo	Respond to of 116555

Snow: gas prices to moderate 'from here on out' Friday, June 4, 2004 4:22:29 PM WASHINGTON (AFX) -- Treasury Secretary John Snow said Friday he expects gas prices to come down in the coming months as U.S. consumers decrease their demand and oil production is increased. Snow said high prices might cause U.S. drivers to "take vacations that aren't quite as far away," lowering demand in the summer driving season when "you normally see prices go up with stronger demand." That and increased oil production from the Organization of Petroleum Exporting Countries should cause gas prices to fall. "I think the combination of conservation and increased supplies will certainly moderate prices from here on out," Snow said in a television interview with Fox News