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

To: Wyätt Gwyön who wrote (20905)	10/28/2004 6:41:51 PM
From: russwinter	Respond to of 110194

Coffee buying crack-up boom for me! In the duh du jour category, we have the Fed. Somebody must not have been paying attention at the MoP to let this report get out.: NY Fed-Slower cenbank buying would hit dlr, rates Thu Oct 28, 2004 03:20 PM ET By Victoria Thieberger NEW YORK, Oct 28 (Reuters) - U.S. interest rates would rise and the dollar would fall if Asian central banks slowed their recent heavy purchases of U.S. assets, the New York Federal Reserve warned in a report on Thursday. Central banks, especially those of China and Japan, have built up their holdings of foreign currency assets in recent years and have been massive buyers of U.S. Treasuries and other assets. The increasing importance of foreign official holdings of U.S. assets has made some in financial markets worry about the consequences if Asian central banks were to slow their buying. The New York Fed report confirmed what many analysts suspect: that asset prices would be lower without the participation of foreign central banks. "Absent this inflow of official capital, U.S. asset prices would have to fall in order to attract additional private flows," the study posted on the Fed's website on Thursday said. As U.S. Treasury prices fell, that would push market interest rates higher, while the dollar would also likely decline, the study said. Offshore central banks hold about $1.05 trillion in Treasuries, or about 28 percent of the entire U.S. government debt held in public hands. Many analysts say the buying has kept yields lower than they would otherwise be. Earlier this year, heavy currency intervention by China and Japan led those central banks to step up purchases of U.S. assets to park the proceeds from selling their own currencies. "Lower U.S. asset prices would attract additional private inflows. A weaker dollar would also be a likely part of the adjustment pricess, attracting additional private inflows, by making U.S. assets cheaper in foreign currency terms," the Fed said. "Finally, higher U.S. interest rates would help reduce the U.S. economy's need for foreign capital by encouraging saving and reducing investment spending," the study said. The paper was written by Matthew Higgins of the New York Fed's Emerging Markets and International Affairs group and Thomas Klitgaard of the Research and Statistics group. Generally, Fed officials including Chairman Alan Greenspan have played down the impact of such a scenario when asked about mounting foreign purchases. The New York Fed analysts noted the majority of economists, including Greenspan, believe the required adjustment in the dollar and U.S. asset prices would be "relatively small." But they also said a minority argues the adjustment would be "sizable". "Continued large U.S. current account deficits raise the risk that foreign investors could eventually require some combination of lower U.S. asset prices, higher U.S. interest rates and a weaker dollar as compensation for adding to their stock of claims on the United States," the analysts concluded.

To: Wyätt Gwyön who wrote (20905)	10/28/2004 7:00:00 PM
From: TH	Read Replies (4) \| Respond to of 110194

Darffot, "Peet's is much better than SBUX" Way better. I wish I could find it in the Detroit area. Good Trading TH

To: Wyätt Gwyön who wrote (20905)	10/28/2004 7:01:19 PM
From: Elroy Jetson	Respond to of 110194

The example of price increases at Peet's Coffee is deflationary when Peet's can't make their debt payments and files for bankruptcy.

To: Wyätt Gwyön who wrote (20905)	10/28/2004 8:30:06 PM
From: mishedlo	Respond to of 110194

i'm sure Mish can explain why this is really deflationary. No I can't But I can state that it is 100% totally meaningless compared to these charts Corn futuresource.com Did I hear you screaming deflation over that? How about this one? Beans futuresource.com So please be my guest and bitch about "inflation" in coffee. Of course I expect (well no I do not) you to harp on deflation in corn and beans and for that matter wheat. So either stop bitching about nonsense or start talking about DEFLATION in corn, beans, ans wheat. You will note that I have NOT talked about deflation in terms of corn beans and wheat. So which way do you want it? Both I presume? Now if Corn ticks up here will you be bitching about inflation in corn? Given your nonsense on coffee I bet you will. Mish

To: Wyätt Gwyön who wrote (20905)	10/28/2004 9:24:22 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

The thing that irks me most on this board is that EVERY slight uptick in ANTHING is immediately pounced on as PROOF of inflation. Today it is coffee. Well for over 6 months the price of corn and beans and wheat have fallen like a rock. Not one single peep. Not a one. I did not bitch about them being deflationary either. Now starbucks or whoever raises coffee prices and we hear about it as if it is some big earth sahttering news and worse yet I am mocked over it. Well take a look at lumber: futuresource.com Corn futuresource.com Beans futuresource.com Any screams of delation from the commodity bitchers here? No - nary a peep. How about the prices of houses falling in California and Las vegas and San Antonio? No, no one here cares, all we want to talk about here about is ANY uptick in ANYTHING. Well what about oil? My view is that oil acts like a tax and is NOT inflationary. At least on this one there is some room for disagreement. But given that the US, UK, Japan, and Europe have all lowered GDP estimates because of rising oil I believe by far and away I have the better argument. Furthermore, given that oil has geopolitical factors as well as peak oil factors it is totally NUTS to play the whole rise in oil as a rise due to "inflation". It is even sillier to think that the rise has an inflationary affect when wages are stagnant. Speaking of wages...... This board convenient ignores them for the US and Europe, but immediately raises the big red flag when wages in China rise $US 50/ per month. Is that really a big deal? Of course you ignore the fact that even China is losing manufactoring jobs. You ingore Chinese productivity increases. Now what about steel? Message 20697616 Message 20698127 What about housing? Everyone here think that houses are going to keep rising to the moon? If housing declines, will you totally IGNORE it like I expect or will you call it deflation? OK so where are we? I will freely admit that there WERE hugely inflationary pressures put on by dropping rates to where they were while at the same time lowering taxes, and giving tax credist to businesses. I will also admit that the CPI is a joke and inflation was far worse than reported. The housing boom we saw as a result was Russ's crack up boom. Well IMO that boom is about ready to turn to a bust. Housing prices are now falling in the US, UK, Japan, and Australia. So where's the beef? Nowhere here, as we are more concerned with a meaningless rise in the price of coffee. BTW pork chops last week were $1.69 a pound. Any talk of deflation there? We HAD and that is HAD as in PAST TENSE our crack up boom. Now we have rising interest rates, falling home prices, rising inventories, China exporting steel, China stopping two new steel mills from coming on line, more bad news on the jobs front just today in the US, GM laying off 9,000 more workers in the US, ATT getting rid of 12,000 workers or whatever it was, airlines that are about ready to go bust and would if idiots did not front them more money, tax credits expiring, a stock market that surely looks on edge (especially financials), an expectation of both home prices and stocks crashing on this board which IMO is contradictory with a view of inflation, and I get a meaningless rise in the price of coffee rubbed in my face. In short, those hugely inflationary pressures are now taken off IMO, the "inflation" that a simultaneous record stimulus of tax credits, GSE loans, refis, declining rates, etc etc etc has or is about to expire. What next? What is next should be clear but it sure is not if one focuses on coffee and other nonsense. Mish