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

To: NOW who wrote (10176)	8/4/2004 4:13:28 PM
From: Perspective	Read Replies (4) \| Respond to of 116555

Took first 1/3 position today. Given the way all the momo stuff is falling apart, I figure it's worth a preemptive strike. That's what got me 1/3 into APOL a couple weeks ago; now looking for second 1/3 there... BC

To: NOW who wrote (10176)	8/4/2004 5:25:55 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Bear Stearns argues no housing bubble.... Note: The following is in reply to a PM I received stating that Bear Stearns says there is no housing bubble and that we are in the early stages of expansion.... Mish Reply: I do not think we are in the early stages of an expansion. I think we are in the 8th inning of an expansion and down by 5 runs. The US never stopped expanding IMO. Ok for one quarter big deal. I also think Greenspan gets one more hike in and he is done. I do not think the market can take any more. 2 more 25 bps if he is lucky. Europe is a disaster and the only growth engine in the world is the US. That is not sustainable. Too much debt, too little stimulus left, and rising energy prices and health care costs are taking a toll. You are correct about one thing, however. The homebuilders are not building too much on spec. I got into an argument with someone on my board over it. However that lack of supply based on just in time, does not mean supply is not coming. In some cities and Orange county CA, houses went from 30 day supply to 3.5 month supply. That is a huge change. There is probably a lot of property tied up with the intention of building houses that just do not get built. Depending on homebuilder leverage to land, homebuilders may or may not be in deep sh*t. It may vary homebuilder to homebuilder. However, we do not need to see homebuilders crash or even housing prices to collapse to cause our economy to collapse. This whole deck of cards is 100% dependent on keeping the US consumer spending, and keeping housing going. Paul Kasriel at Northern Trust did an interesting column on Housing Collateral damage. He is 100% correct. Look at all the mortgage jobs, real estate jobs, trade jobs, trucking jobs, concrete pouring jobs, asphalt jobs, lumber mill jobs, home depot jobs, curtain making jobs, carpeting jobs, etc etc etc that are all dependent on housing. House PRICES are not necessarily the most important factor. In fact, I believe housing related jobs and the income they provide are far more important than home prices themselves. It only takes a hombuilding slump to knock out a huge huge chunk of the US economy. Perhaps everone is looking the wrong way or for the wrong thing. Perhaps home prices just do a slow sink and not a collapse. It's the loss in housing and housing jobs that is carrying this economy. The home refi boom is over. If prices just stay stagnant it is not coming back. If they decline it will kill home equity loans as well. Roughly 70% of people here own a house now. How many more are left when you consider huge numbers of people in cities like LA, Chicago, NY, Boston etc just do not want to own or are just plain not candidates to own. Who else is left to buy, in the face of rising interest rates? Where are the marginal buyers coming from now? Do you think we keep expanding if homebuilding slumps? I think it is IMPOSSIBLE if homebuilding slumps. Now personally, I think some areas housing prices will crash, but more than likely you are correct about prices slowing coming down. People are missing the big picture IMO looking for this housing crash, it is a HOUSING JOB CRASH not a housing price crash that everyone should be fearing the most. Some areas of the country will probably get both. The home refi bubble collapsed and that is taking its toll on consumer spending. Those tailwinds are gone and now we have the headwinds of 1-2 more rate hikes, corporate tax credits ending, job grown barely keeping up with population growth (if it really is at all), real declining wages, and rising energy prices, and a stock market that seems to have topped out. How much longer can a house building boom last? What are the implications when it stalls. The stock prices of homebuilders is not relevant except as an indicator of some kind. The prices of homes is relevant, but not as important as the jobs themselves. Is house building in the early stages, the 8th inning as I suggested, or is it really the bottom of the 9th? Mish

To: NOW who wrote (10176)	8/4/2004 9:02:03 PM
From: mishedlo	Respond to of 116555

Numbers to watch: Released on 8/5/04 For wk 7/31 2004 Jobless Claims Consensus Forecast for 7/31/04: 340,000 (-5,000) Range: 335,000 to 360,000 mam.econoday.com Released on 8/6/04 For Jul 2004 Nonfarm payrolls Consensus Forecast for July 04: 233,000 Range: 190,000 to 325,000 Unemployment rate Consensus Forecast for July 04: 5.6 percent Range: 5.5 to 5.6 percent Average workweek Consensus Forecast for July 04: 33.8 hours Range: 33.6 to 33.9 hours Average hourly earnings Consensus Forecast for July 04: 0.3 percent Range: 0.2 to 0.4 percent mam.econoday.com

To: NOW who wrote (10176)	8/5/2004 1:21:03 AM
From: mishedlo	Respond to of 116555

A Word in the Ear of Oil Share Investors 321gold.com

To: NOW who wrote (10176)	8/5/2004 1:23:32 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Bloated stockpiles hit electronics market Message 20379832

To: NOW who wrote (10176)	8/5/2004 9:24:34 AM
From: mishedlo	Respond to of 116555

UK CML takes BoE rate hike in stride, does not see rise in repossessions Thursday, August 5, 2004 11:41:13 AM LONDON (AFX) - The Council of Mortgage Lenders took in its stride the Bank of England's quarter-point hike in interest rates, saying that it expects no deterioration in the number of people failing to meet mortgage payments. "We do not expect that the housing market will still be regarded as a significant inflationary pressure looking ahead into 2005. Nor do we expect that there will be a significant worsening in arrears and possessions figures in 2005 with the benign economic backdrop," said CML Director General Michael Coogan. But he continues to expect further rate rises and urged consumers to organise their finances to be able to cope with them.

To: NOW who wrote (10176)	8/5/2004 9:26:24 AM
From: mishedlo	Respond to of 116555

EEF urges BoE to hold fire on further rate increases Thursday, August 5, 2004 11:31:33 AM LONDON (AFX) - Engineering body EEF has urged the Bank of England to hold back from any more increases in interest rates in the near future following today's quarter-point rise to 4.75 pct "This will give the MPC time to assess the impact of its recent tightening and reduce the risk of upward pressure on sterling at a time when rising costs are eating into manufacturers' profit margins," said EEF director general Martin Temple "Three rises in four months should now be enough to keep the lid on inflation. Manufacturers will now expect a pause for breath to assess the impact of the recent rises at a time when they are faced with rising costs for energy and other raw materials," he added

To: NOW who wrote (10176)	8/5/2004 10:11:31 AM
From: mishedlo	Respond to of 116555

Newmont sees steady growth in China copper demand Message 20380274

To: NOW who wrote (10176)	8/5/2004 10:18:07 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

ECB rates unchanged Thursday, August 5, 2004 1:46:26 PM (updating with economist comments) FRANKFURT (AFX) - The European Central Bank said it left its leading interest rates unchanged at today's governing council meeting. The minimum bid rate on main refinancing operations remains at 2.00 pct. The deposit rate remains at 1.00 pct and the rate on the marginal lending facility at 3.00 pct. Whereas the ECB normally holds a news conference after its monthly interest rate decision, there was no news conference following today's meeting, which took place by teleconference The central bank just issued a brief statement on its interest rate decisions Economists will therefore closely scrutinise next Thursday's ECB monthly bulletin, which will convey the central bank's latest thinking on inflation pressures and the euro zone economy This analysis is normally given by ECB president Jean-Claude Trichet in his introductory statement to the monthly news conference, with the bulletin echoing this a week later "Without the press conference after the meeting, we are none the wiser to the outlook for euro zone rates than before today's announcement and we await next week's monthly bulletin to communicate any changes in thinking," said David Page of Investec The decision to leave rates unchanged today was expected, with all economists polled by AFX News and Agence France-Presse predicting that rates would be left on hold Economists said the ECB is in no rush to tighten monetary policy despite short-term inflation pressures, because inflation is likely to ease in the medium term as a result of moderate wage growth. Euro zone inflation is running at 2.4 pct compared with the ECB's goal of a rate below but close to 2 pct Carol Hainaut of Natexis Banques Populaires said the oil-related jump in inflation in the spring has not translated into any build up of longer-term inflation pressures "Price growth will slow down slightly in the next few months," she said Page said there is no evidence that the more recent further rise in oil prices, which has been compounded by a softening of the euro, has affected longer-term inflation expectations He said economic growth is likely to pick up and reach 2.0 pct for the year as a whole. If so, the ECB will need to raise rates before the end of the year, he said But Hainaut said 2004 growth is unlikely to be above 1.8 pct "In this context, an early tightening of monetary policy would be premature and would risk stifling a recovery which is still only just starting," she said Page said there are some concerns about consumer demand following a downward revision to May retail sales. EU statistics office Eurostat this week said retail sales rose 1.2 pct in June, but it revised its estimate for the decline in May retail sales to 1.9 pct from 1.3 pct Retail sales contracted 0.3 pct in the second quarter as a whole, so consumer spending is likely to have slowed significantly from its impressive first quarter rise of 0.6 pct, he said "If downside risks to consumption materialise across the second half of this year, possibly in response to higher oil prices, then the central bank may continue its holding pattern until into 2005," he said fxstreet.com