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

To: patron_anejo_por_favor who wrote (13778)	10/20/2004 10:19:58 PM
From: mishedlo	Respond to of 116555

Big 3 Airlines Report Combined $906M Loss The race to zero is on. news.yahoo.com

To: patron_anejo_por_favor who wrote (13778)	10/20/2004 11:53:29 PM
From: mishedlo	Respond to of 116555

This really is just too much mish ========================================= US Treasury´s Snow reaffirms strong-dollar stance - report Thursday, October 21, 2004 1:14:46 AM afxpress.com US Treasury's Snow reaffirms strong-dollar stance - report HONG KONG (AFX) - US Treasury Secretary John Snow reaffirmed his government's support for a strong dollar as the US currency slid to an eight-month low, the Financial Times reported on its website Asked to comment on the currency while touring a school in Florida, Snow was quoted as saying: "You know our view on the dollar, we've articulated it many times. We support a strong dollar." The report said Snow's comments represent the first official remarks about the dollar's value in recent weeks, although Federal Reserve officials have been making unusual remarks on the currency, an area of economic policy they usually avoid Last week Robert McTeer, president of the Dallas Federal Reserve, said: "Over time there is only one way for the dollar to go lower."

To: patron_anejo_por_favor who wrote (13778)	10/20/2004 11:58:08 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

IMF warns China not to delay flexible currency policy Thursday, October 21, 2004 2:17:38 AM afxpress.com WASHINGTON (AFX) - The International Monetary Fund warned China that the cost of maintaining its fixed currency regime Is mounting and argued for a widening of the trading band on the yuan by 10 to 15 pct to stave off pressures on its economy "I think the cost of maintaining the exchange rate regime is going to be large and will grow over time -- which is why I think there is an argument for a quick move," IMF's China division chief Eswar Prasad said The yuan, which is fixed to the US dollar, is currently considered undervalued and the US, Japan, and the European Union have been hurting from the weight of cheap Chinese exports The IMF has been prodding China for some time to swiftly adopt a flexible currency regime -- like widening the band in which it allows the currency to trade against the dollar -- but Beijing says the time is not yet ripe Prasad, answering questions from experts at a conference in Washington on East Asian exchange rate issues, said it was more feasible for China to adopt flexibility in managing the yuan than launching a radical revaluation of the currency The yuan, also known as the renminbi and now pegged at 8.27 to the US dollar, is currently in a narrow band to the dollar enforced by the Peoples Bank of China But Prasad indicated that China has to pay the price for not heeding IMF advice to it about a year and half ago to widen the band by some 3-5 pct "I think under present circumstances that could be disastrous because the market might see that as clearly inappropriate and just as a first step. But I think the price of having waited this long -- the initial move is going to have to be much larger," he said Because of greater pressures to its economy, if China wanted to widen the band, it should do so by 10 to 15 pct, he said US President George W. Bush has been talking up the currency issue ahead of the Nov 2 election, charging that the yuan rate had kept China's exports artificially cheap, undermining US exports and stealing US jobs. Bush telephoned Chinese President Hu Jintao this month to underline his concerns and Hu vowed to "move forward firmly and steadily to a market-based, flexible exchange rate," according to the White House China's top finance and central bank officials were invited for the first time to attend this month's meeting of finance chiefs from the Group of Seven industrial powers at the sidelines of the IMF/World Bank annual meeting in Washington. G7 members again pressed for a freer yuan regime but the Chinese officials again offered no timetable, saying they would act "when conditions permit." A free-floating Chinese yuan, according to some analysts, could boost US exports and thereby help reduce the massive US current account deficit, which has contributed to imbalances in the global economy fxstreet.com

To: patron_anejo_por_favor who wrote (13778)	10/21/2004 12:06:46 AM
From: mishedlo	Respond to of 116555

Daily Reckoning Neither the Dow nor the dollar are doing George W. Bush any favors. With just days to go before the election... both are slipping. Presidents are not usually re-elected when the Dow goes down. But who knows... a lot can happen in two weeks. Nothing had happened for a long time. We were surprised, because we thought something would happen before now. But the longer nothing happens, the more people begin to think that nothing is not just a passing phase, but eternal. That is why the VIX is at multiyear lows - people are not buying put options to protect themselves; they see nothing to protect themselves from. The spread between corporate bonds and Treasury bonds has also narrowed to multiyear lows. Investors figure nothing will go wrong with the corporate bonds, so why ask for a premium? But nothing really is eternal - something always happens. And when it does happen, we are all surprised again, and money changes hands. Nobody makes money when markets do what everyone expects. You make money only when the markets do what you expect and surprises the person on the other side of the trade. You make a lot of money when markets do what you and a few others expect and nearly everyone else is surprised. We watch the dollar. The greenback surprised virtually everyone by not falling over the summer. Richard Duncan sent an e-mail yesterday explaining why. The world financial system has become so perverse that the dollar now rises along with the current account deficit! What a surprise. Everything we thought we knew about macroeconomics tells us that the dollar should fall as more money goes out than comes in. But Duncan points out that the key now is not the raw deficit figures, but the deficit as it relates to sales of U.S. debt instruments. Those overseas dollars are now recycled into U.S. debt (they are used to buy U.S. Treasury bonds and notes). If the amount of debt issued goes down - as it did in the spring and summer - the result is more money chasing fewer goods (debt). Debt (bonds) goes up in price... along with the currency in which they are calibrated (dollars). This is, of course, not a permanent situation. It works only as long as U.S. dollars are recycled into U.S. financial assets. Net capital flows to the United States are actually slowing down. They've fallen in each of the last six months through August. From July to August, the amount was cut in half. The Chinese, we hear, are switching to European assets... and to the euro. The day before yesterday, the euro seemed to rise out of its summer trading channel. The dollar fell below $1.25/euro. Yesterday, the trend continued. What happens next? We don't know. No one knows. But a lot of people are bound to be surprised.

To: patron_anejo_por_favor who wrote (13778)	10/21/2004 12:10:46 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Bill Bonner, back in London - on Florida Real Estate *** In Florida, colleague Steve Sjuggerud tells us that everyone talks about making money in real estate. "Quick quiz for you," he writes. "What year was it? Miami had 25,000 realtors, the price of a beach lot was $800,000 (in today's dollars), and a summer issue of The Miami Herald was over 500 pages. Believe it or not, it was the summer of 1925. "South Florida's real estate boom in the 1920s ended very badly. Some coastal real estate in Florida today bears a resemblance to the 1920s boom, and even to the tech stock boom of the late 1990s. "On my island here in Florida, whenever you ask well-off folks around here what they do, they all say the same thing: 'I'm in real estate.' The truth is nobody's talking stocks anymore. "If you're not 'in' real estate, you're supporting the real estate business around here... contractors, banks, architects, builders, etc. Outside of tourism, there is no other business here. Just like Miami in the 1920s. "South Florida's bubble in the 1920s ended quickly. In the fall of 1926, two hurricanes came. On September 18, 1926, 400 people died and many thousands were injured, as the hurricane ripped roofs off of houses and tossed elegant yachts into the streets of Miami. "Oceanfront lots probably didn't hit $800,000 in today's dollars in south Florida again until the 1980s... so it would have taken at least 60 years for someone who bought at the top to break even. "It 'feels' like Nasdaq 4,000 right now here on my island... we're not far away from the peak of Nasdaq 5,000... "

To: patron_anejo_por_favor who wrote (13778)	10/21/2004 12:15:54 AM
From: mishedlo	Respond to of 116555

Brazil central bank unexpectedly raises base rate by 50 basis points Wednesday, October 20, 2004 10:00:33 PM afxpress.com BRASILIA (AFX) - The central bank's monetary policy committee (Copom) unexpectedly raised its benchmark Selic rate by 50 basis points to 16.75 pct. According to a survey compiled by AFX News, 31 economists out of 34 expected the Selic rate to be raised by 25 basis points to 16.50 pct, while only three expected an increase of 50 basis points Prior to the announcement of the rate decision, ABN Amro analysts had said that: "we note a wildcard possibility (perhaps 3 pct) of no hike due to declining inflation and slight possibility (perhaps 10 pct) of a 50 basis points hike with a signal that it would be the last". The Copom said the decision was unanimous, and no bias was adopted The central bank said in a statement that today's rate hike follows the moderate monetary tightening initiated last month, when the Selic rate was raised by 25 basis points =================================================================== any thoughts on the significance of this (if any) Mish

To: patron_anejo_por_favor who wrote (13778)	10/21/2004 12:19:39 AM
From: mishedlo	Respond to of 116555

Japan´s export-led economy in cyclical adjustment phase [It is truly amazing that no one and I mean no one other than mish board and Russ's board thinks this slowdown is real. Hell I am not sure if Russ even thinks there is a slowdown - mish] Thursday, October 21, 2004 3:49:45 AM afxpress.com Japan's export-led economy in cyclical adjustment phase - SMAM TOKYO (AFX-ASIA) - The month-on-month decline in Japan's trade surplus in September shows the export-led economy is in a cyclical adjustment phase, Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management said. Japan's merchandise trade surplus fell a seasonally adjusted 21.8 pct in September from the previous month, as exports declined 2.3 pct while imports rose 2.5 pct, the Ministry of Finance reported earlier today Compared to a year earlier, the trade surplus rose 12.7 pct to 1.24 trln yen, the 14th increase in the past 15 months but below market expectations Japan's export performance is being watched for evidence that strong demand abroad for Japanese products continues to play a major role in fueling a domestic economic recovery. "The figures did not come as a surprise... as I believe Japan's manufacturers are now adjusting their inventories. I also expect bearish data for industrial production and machinery orders for the July-September quarter," Muto said He attributed the September drop in the trade surplus to the slowdown of the US economy, Japan's largest export market. A slew of US data released recently show a weakening of its manufacturing sector, partly due to the waning effect of last year's massive tax cuts. "However, US consumer spending remains strong," Muto said, noting that should support US economic expansion going forward. Muto said he believes there is little cause to fear the drop in Japan's merchandise trade surplus will be anything but modest and short-lived "The current adjustments are not as serious as before... with the trade balance still increasing 12.7 pct (in September) from a year ago," Muto said. "The economy is still recovering, albeit at a more moderate pace." Muto expects the adjustment by Japanese manufacturers to continue for several months, and output to begin rising again in the April-Sept period next year "Spiking oil prices and a slowdown in China's economy remain major worries, and could drag on Japan's economic expansion. Japanese corporations can absorb the adverse impacts of rising oil prices by cutting costs, but if that hits US consumer spending, it would pose a threat," Muto said