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

To: CalculatedRisk who wrote (12447)	9/28/2004 10:49:03 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

I find it amazing taht he and McCaully (sp) work at the same company. Their viewpoints are so divergent. Personally I think it is abusrd to not include some hedonic adjustments. If a product is better then why the F should you not pay more for it. The problems I have are this: 1) The adjustments are probably overstated 2) There should not be ANY adjustmenst to the GDP Of the two, the latter is by far and away the more serious issue. Hedonic adjustmenst look like we are growing when we are not. As far as GDP is concerned there is one and only one thing that matters IMO and that is price*volume. If MOT sold $1B in goods it is absurd to say they were worth $2B. As far as CPI is concerned if there really was an improvement then people are getting more for their money and the CPI should reflect it. I rest my case on this: Who here wants to drive a 1927 ford? Why should the cost of a Ford in 1927 be compared to the price of a Honda Accord today? The comparison is of course abusrd and to say that the price of a car has gone up 5000% or whatever it has, is of course absurd as well. Mish

To: CalculatedRisk who wrote (12447)	9/28/2004 11:06:36 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. GDP looks to be revised higher Tuesday, September 28, 2004 10:23:53 PM afxpress.com WASHINGTON (AFX) -- When it comes to economic data, the third time is rarely charming. Or market moving The Commerce Department will release its third estimate of second-quarter gross domestic product on Wednesday at 8:30 a.m. Eastern Economists expect a small upward revision to 3.1 percent annualized from 2.8 percent, according to a survey of 37 economists conducted by CBS MarketWatch About half of the expected upward revision will be due to higher inventory accumulation, said David Rosenberg, chief North American economist for Merrill Lynch, in a research report. Imports likely didn't subtract as much from growth as previously assumed. Investments in residences look to be revised higher as well The revisions probably won't change the big-picture view that consumer spending slowed sharply in the quarter, increasing just 1.6 percent, the weakest since the depths of the recession. Business investment accelerated in the second quarter to a 12.1 percent annual pace. Despite the improvement, investment flows are still below pre-recession levels. "We are still in a 'post-bubble' world," Rosenberg said. "The bust left massive excess capacity in the system, and with a 74 percent operating rate for the finished goods sector, that really has not changed much." The productive capacity of U.S. industry has grown just 1.4 percent in the past year. The economy still has massive reserves of unused capital and labor sitting idle. No wonder inflation is as tame as it is It's possible the key inflation indexes in the GDP will also be revised. A revision here could spur some movement in the financial markets "A downward revision to the second-quarter core [personal consumption expenditure] price index growth rate would be very bullish news [for bonds] on Wednesday," said Bill Sharp, an economist for J.P. Morgan. At this point, most economists are focused on the third-quarter numbers, rather than on the ancient tales told by the second-quarter data. The average estimate from the MarketWatch survey sees growth rebounding to a 3.8 percent annual rate in the quarter that ends on Thursday. "The expansion is hardly faltering," said Michael Moran, chief economist for Daiwa Securities America. "Figures in hand suggest that growth in the third quarter will total close to 4 percent." Although retail sales have been somewhat tepid, consumer spending is on track to increase at a 3 percent pace in the third quarter, he added.

To: CalculatedRisk who wrote (12447)	9/28/2004 11:50:52 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

China think thank says immediate interest rate hike unlikely - report Wednesday, September 29, 2004 2:01:53 AM afxpress.com BEIJING (AFX) - The possibility of the Chinese central bank immediately raising interest rates is remote, the China Daily said, citing a senior analyst with the State Information Center, a top Chinese government think tank Quoting Wang Yuanhong, a senior analyst with the think tank, the newspaper said that although the possibility of a rebound in fixed-asset investment remains, the recent slowdown observed in monetary and loan growth is sufficient reason for the central bank not to raise interest rates in the short term In reports earlier this week after its regular quarterly meeting, China's central bank said it would use monetary tools to adjust money supply and improve loan structure. But the bank did not say whether a decision had been made to raise interest rates. The financial markets have been expecting the central bank to raise interest rates by 25-50 basis points since the first half, to improve China's economic climate.

To: CalculatedRisk who wrote (12447)	9/29/2004 12:16:53 AM
From: mishedlo	Respond to of 116555

What's the next Japan? What's Japan next? From the Daily Reckoning The questions arose at the MoneyWeek Roundtable last night - a freewheeling monthly discussion of investment topics, attended by fund managers, investment strategists... and your editor. The subject was Japan. Japan is of special interest to us because we still feel "we're turning Japanese." Which answers the question: What's the next Japan? We are. Japan has been in a slump since 1989. The stock market topped out early in 1990 and went mostly down for the next 12 years. Recently, though, there are signs of improvement. ""The Japan story is the opposite of the U.S. story,"" James Ferguson explained. America is at the beginning of a major down cycle. Japan is at the end of one. ""Japan boomed when it was selling products to Americans and the yen was too cheap. All of that is over. The economy no longer depends on exports to the United States. The yen is fairly priced. And companies that got into trouble at the end of the boom years have sorted themselves out... one by one... over the last 15 years. ""Japan is now a deindustrializing story. We went through this in Britain two decades ago. It's difficult. It's painful. You lose factory jobs and make them up with jobs in new industries that depend much more heavily on intellectual capital. That's why we're all here. ""Japan can become the financial capital of Asia... and it is making money in things such as computer games, property, pop music, cartoons... ""There are some great companies in Japan that are throwing off a lot of cash. They're much, much cheaper than they were 20 years ago. There may be a cyclical downturn in Japanese stocks in the short run... but the long-term outlook is very good."" ""Yes, stocks didn't go up in Japan because the companies were fundamentally good,"" countered another member of the group. ""This latest rise was due almost entirely to buying by Americans. And Americans have no idea what they are doing. They are so simple minded about these things. As soon as they hit a rough patch... or someone tells them that Japan is not the recovery story they thought it was... they'll pull out and the market will go back down."" What's ahead for Japan? We don't know. But if we had to hold stocks, we’d rather hold ones written in Japanese than those in American English. The Japanese variety may or may not go up... but they've been going down for so long there must not be much more downside left. What's the next Japan? Japan was the Bubble Nation in 1989. America was the Bubble Nation in 1999. By 1994, Japan was the Comeback Nation. But it was a comeback that never came back. The Japanese recovery stalled... and then came the long, slow, soft slump that took Japanese stocks down 80% below the peak. Consumers stopped buying, businesses stopped expanding and only the government would spend money. In an effort to get the economy going, the Japanese central bank cut rates to zero and began a huge public works project: pouring 10 times more concrete per capita than the United States. America's central bank cut rates faster. And while the Japanese poured concrete, Americans blew it up. Rather than dam up rivers or put down rail lines, George W. Bush embarked on a huge military spending program. But there is no sign thus far that America will be any more successful at cheating fate than the Japanese were. Japan's debt expansion has been largely deflated. America's debt still expands, but it will not expand forever.