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

To: Knighty Tin who wrote (9957)	7/28/2004 4:08:20 PM
From: mishedlo	Respond to of 116555

Heinz on gold and the upcoming recession Date: Wed Jul 28 2004 12:52 trotsky (pre-empting NBER....) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i'm contending that the second secular deflationary bear market era recession in the US, this time a 'consumer recession' , has very likely already begun. of course the fundamental economic data confirming this suspicion will only appear at a point in time when the information has already become useless for investors - those ignoring the charts that is. the starting point of recessions often coincides roughly with intermediate term lows in the gold price. the reason is that he market begins to discount the likelihood of a relaxation in monetary policy and the resulting steepening of the yield curve. in a nutshell, the PoG begins to discount FUTURE reflation efforts by the Fed and the government, both of whom can be firmly counted upon to implement socialist, Keynesian 'stimulus' measures in order to prevent the ailing patient ( i.e., the economy ) from healing on account of the short term pain such a healing process entails. price rallies in this discounting period are usually halting, choppy affairs, because there remains a large contingent of market participants that is unaware of the shift taking place and still believes the trends espoused by most mainstream market comentators remain in force ( i.e., 'sustainable economic growth' as proposed by Greenspan, and flowing from that, higher rates, rising dollar exchange rate, and so on ) . this contingent judges the market moves that are part of the discounting process to be aberrations, and tries to act counter to the new trends, which produces the choppiness. however, the gold sector is unique insofar as the gold stocks will ignore choppiness of a gold rally in this scenario, and begin to outperform the PoG over intermediate time frames ( i.e., weeks and months ) . in essence, the late '00 to mid '02 rally in the sector was such a 'discounting of future reflation' rally, while the March - Dec. '03 rally was the 'recognition' wave, i.e. the 'reflation has become a reality' rally. the major difference between these two types of moves in the sector is that in case A ( discounting ) it will run counter to the broader stock market, while in case B ( recognition ) they will move up together.

To: Knighty Tin who wrote (9957)	7/28/2004 4:31:47 PM
From: mishedlo	Respond to of 116555

Beige Book sees slower growth rate in some regions Wednesday, July 28, 2004 6:27:11 PM WASHINGTON (AFX) -- U.S. economic growth continued through mid-July, but many regions reported growth at a slower pace, the Federal Reserve reported Wednesday Retail sales were reported to have eased, and auto sales were "generally weak" throughout the country, the Beige Book report on current economic conditions said "Federal Reserve districts reported that economic activity continued to expand in June and early July, although several districts reported that the rate of growth moderated," the Beige Book summary said Reports of rising prices at the producer level were "common," the report said. But there was no evidence that these higher costs were leading to higher retail prices "Typical reports from manufacturers suggested they have been unable to charge higher prices to fully offset increases in their input prices," the report concluded Labor-market conditions continued to improve. Employment agencies reported strong demand for workers in many regions Wage increases were moderate although benefit costs continue to spiral higher, the Fed said Factory activity continued to increase across the country, but "there were pockets of weakness" and gains were smaller than they were earlier this year The residential construction industry remained strong, while nonresidential building was weak, the report said. Agricultural conditions were mixed, as unusually wet weather hurt some crops ========================================================== In a related story Greenspan reported the book color will be changed from beige to pink. Greenspan believes that people are in denial about the strength of this recovery as well as the lowness of inflation and sees the color change as one of the most importing things the FED can do this year. "Inflation and deflation are both in retreat and we have achieved the perfect soft landing. Please send pink valentines to the FED this year in honor of the fine job we have done". Mish

To: Knighty Tin who wrote (9957)	7/28/2004 4:35:16 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Valuation Rocket Readies for Takeoff By James J. Cramer 7/1/2004 8:41 AM EDT If I were at my hedge fund, today I would have come in and fired everyone who did not recommend that we own Broadcom (BRCM:Nasdaq) , Qualcomm (QCOM:Nasdaq) , eBay (EBAY:Nasdaq) , Research In Motion (RIMM:Nasdaq) and Yahoo! (YHOO:Nasdaq). *** So, my advice to all of you performance geeks out there is to strap on some BERQY and get ready to roll. These stocks have blasted through the ionosphere. Next stop? Mars.

To: Knighty Tin who wrote (9957)	7/28/2004 9:06:54 PM
From: mishedlo	Respond to of 116555

New Zealand's Central Bank Raises Interest Rate to 6% (Update5) July 29 (Bloomberg) -- New Zealand's central bank raised its benchmark interest rate a quarter point for the fourth time this year and signaled another increase to control inflation. Reserve Bank of New Zealand Governor Alan Bollard raised the overnight lending target rate for banks to 6 percent -- the highest among countries with Standard & Poor's top debt rating, and 4.75 percentage points higher than the Federal Reserve rate. Bollard has increased borrowing costs from 5 percent at the start of the year. ``Further tightening of monetary policy looks likely to be necessary,'' Bollard said in a statement released in Wellington. ``Economic strength may be maintained for longer than we anticipated in June and it could add to price pressures.'' Bollard is battling to keep inflation below a 3 percent limit set by the government. He has warned that inflation may reach 3.3 percent by March next year as growing global demand for New Zealand exports combines with booming domestic spending to drive economic growth, which reached 5 percent in the first quarter, the fastest pace in a four years. The New Zealand dollar rose as high as 63.18 U.S. from 62.89 cents immediately before the central bank's statement. It bought 62.99 cents at 11:42 a.m. in Wellington. The yield on a two-year government bond maturing February 2006 rose 8 basis points to 6.11 percent. A basis point is 0.01 percentage point. `Another Increase' The local dollar has risen 5 percent against its U.S. counterpart the past 10 weeks as foreign investors are attracted to interest rates higher than the 5.25 percent benchmark rate in Australia, 4.5 percent in the U.K. and 1.25 percent in the U.S. New Zealand has the highest benchmark interest rate of any country with a local currency AAA credit rating from Standard & Poor's. All 13 economists surveyed by Bloomberg News forecast today's increase. ``The central bank seems to be fairly intent on another rate increase,'' said Ulf Schoefisch, chief economist at Deutsche Bank AG in Auckland. ``They are very concerned about the pace of growth.'' Bollard next reviews interest rates on Sept. 9. Ten of 12 economists surveyed by Bloomberg News after today's statement expect another quarter-point increase to 6.25 percent. Two say the rate will remains at 6 percent. Four economists said the rate may rise to 6.5 percent by December. Bollard, who last month said the pace of economic growth will slow to 2 percent by the first quarter of 2005, said today the economy remains buoyant, which is ``placing considerable strain on resource capacity and hence leading to inflation pressures.'' Exports Rising ``There has been positive news on the export front,'' Bollard said. ``Commodity prices have been rising and export incomes are improving despite the strength and volatility in the New Zealand dollar.'' Finance Minister Michael Cullen this week said New Zealand exporters are doing better, buoyed by rising commodity prices, and that may boost the economy. The government in May forecast annual economic growth will slow to 2.3 percent by the first quarter of 2005 from 5 percent a year earlier. Prices for New Zealand's commodity exports rose 26 percent in June from a year earlier, according to an index compiled by Australia & New Zealand Banking Group Ltd. That boosts the incomes of exporters, such as Fonterra Cooperative Group Ltd. and Carter Holt Harvey Ltd., whose sales account for 30 percent of New Zealand's $77 billion economy. Fonterra, the world's biggest dairy exporter, last week said it paid farmers about NZ$5.1 billion ($3.3 billion) for their milk in the year ended May 31 after higher prices boosted sales of milk powder, butter and cheese. Dairy prices rose 26 percent in June from a year ago, according to the ANZ Bank index. Domestic Spending Fonterra's payment boosts the income of farmers, who have responded by spending more, said John Newland, chief executive of Farmland Trading, a cooperative retailer that sells farm equipment, tools and other rural supplies. ``There has been a significant positive change in farm spending the past six months,'' he said. Exports in June rose 20 percent from a year ago, according to a government report this week. In the year to June 30, exports rose 1.9 percent. ``We're seeing exports showing a little bit of growth,'' Geoff Vazey, chief executive of Ports of Auckland Ltd., the nation's biggest port, said in an interview. ``Parameters in most of the world are pretty good for growth.'' New Zealand consumer prices, which rose 2.4 percent in the year ended June 30, are being bolstered by more expensive gasoline and other commodities, and by demand for cars, houses and other goods that exceeds the capacity of the economy. Housing Boom ``The domestic economy remains strong,'' Bollard said. ``Labor markets remain tight and productive resources are stretched.'' The unemployment rate was 4.3 percent in the first quarter, the lowest in 16 years. Bollard also wants to slow a housing market that has been the biggest contributor to inflation for eight straight quarters. House prices jumped 16 percent in June from a year earlier. ``There are signs of a slowing in some domestic sectors,'' Bollard said. Retail sales fell in April and rose just 0.1 percent in May. Home-building approvals rose 11 percent in the year ended May 31 from a year earlier after about 24,000 migrants arrived in New Zealand. Imports rose 24 percent in June from a year earlier to the highest since October 2002.