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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (18921)	9/23/2004 10:45:14 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Coke increased prices and sales dropped. Surprise surprise surprise. No doubt Coke drinkers will switch to generic brands too. General Mills bitching but has barely raised prices. Now that corn and oats are falling, are they still bitching? LEN made its profit on land sales not home sales. Interesting. What does that say for home price sustainability at these levels? IMO you bolded the wrong sentence. Here try this one: If Coke is experiencing lower volumes due to higher prices, the ability for other companies to raise prices will be challenging. Check this out: Colgate said that increased marketing spending and higher raw material costs will cause earnings to be more than 10% below analysts’ forecasts. Additionally, the company forecasts that higher raw material costs will remain high, but will not continue to accelerate higher. The personal products company also said that it plans to increase advertising spending in order to gain market share. Do you see price increase mentioned in that paragraph? I do not. Does colgate feel it can pass on price hikes? On the topic of lackluster auto sales, GM and Ford announced that it will offer zero-percent six-year loans to help clear out 2004 model year inventory. Pricing power? Ha ha ha ha! Mish

To: russwinter who wrote (18921)	9/23/2004 10:47:26 AM
From: ild	Read Replies (2) \| Respond to of 110194

Yesterday I sent this question to CI: <<<Is there a way to track the mortgage backed market? Have spreads widened significantly today?>>> Just got a reply: To be honest, there are many ways to look at what's happening w/MBS vehicles and the broader fixed income market. Unfortunately, very little info is in the public venue, so to speak (w/o a bloomberg, etc.). Believe it or not, there has been no spread widening in the stuff we watch AT ALL!!!. For now, the market is blowing off FNM completely. We're watching swap spreads and there has been no widening at all. They are tighter than ever. Clearly, it has more to do with the rally in 10 year UST's than anything else. A couple of other comments. The curve flattening is not good for the carry trade cowboys longer term. Short paper at 1.75 and the ten year at 3.97 is squeezing this trade. We have to believe pressure is building somewhere. But, as always, where will it show, if at all? Or will more paper simply be thrown at the game? Maybe, and we mean just maybe, perceptual change is occurring in slow motion. FNM problem now a headline. More mainstream folks are acknowledging the bigger picture problems. When you have the head of one of the most powerful investment banks writing a book on the macro problems (Pete Peterson - Running On Empty), drip by drip the public is being treated to reality on the front page as opposed to having to descend into the bearish underground to get the facts. It's a tough call at this point as to whether the market reacts to things like FNM incrementally or in one big herd movement. Like flipping a light switch. For now, the FNM news hasn't even caused a ripple. And maybe it's because in investor memories the problems with its sister FRE didn't cause the world to stop. Why should FNM be any different? The complacency is something else. At this point, we're sure nothing surprises you. All the best, CI