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

To: Perspective who wrote (14353)	10/30/2004 12:06:29 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 116555

A consumer led recession (which is really what we are talking about) would be a plus for the buck IMHO as the trade deficit starts to shrink. This is the fundamental backdrop behind the strong buck bounce some of us expect next year before phase 2 of the dollar bear commences.

To: Perspective who wrote (14353)	10/30/2004 1:21:37 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

BC my thoughts are simple. The FED will fight this slowdown all the way. Look at my post from vice chair Fergusun yesterday. The world economy is slowing. You know it, I know it, and perhaps the FED knows it. The problem is that "fighting" may lead to more distortions. MAY is the operative word now. Eventually Japan reached the point where extra stimulus did NOTHING. I think we will reach the same point and that the FED will only go down kicking and screaming. The problem is what does that stimulus do to stocks? I do not know. We could easily go sideways for years like Japan did. We could crash tomorrow. As for the US$, the FED fighting deflation certainly should be US$ negative but does one want want to enter that trade here? My number 1 play is based on the belief that the US, UK, and Europe will hike interest rates far slower than what is priced in. There is every sign one can look at to suggest the UK is done hiking for this cycle. If Eurodollar futures are too much for you to take, I suggest short sterling futures. I have been talking about them for months, mostly to myself. Look at the yield curve on them. It is really quite amazing. Going all the way out to 2009 interest rates are not going to move more than 25BPs?! futuresource.com Is the next play in the UK going to be a rate hike or a rate cut? I think it will be a rate CUT. Sep 06 futures at 95.04 appear to be a bargain. If housing crashes in the UK they will be cutting like mad. If not perhaps we sit around this area for a while. If the world economy heads south or the UK economny heads south it is extremely doubtful they hike. If the curve inverts and it started to the market will start pricing in cuts . I see little risk and lots to gain in LSS futures. I added a future on Thursday and have a whole slew of calls as well. Personally I think Greenspn does one more hike and stalls for a minimum of 4 months. One can take advantage of that as well. I have eurodollar futures and calls. The time to buy these was 3 months ago in the bond panic and rout. Russ thinks another one is coming but I do not. The lastone was caused by blowoff bogus job numbers and blowoff top in refis and blowoff top in housing. Odds of housing and refis going back to April blowoffs is minimal IMO. There is the fear that Asia stops buying US treasuries but IMO that fear is overdone. First off I doubt it, second off even IF I am wrong I expect US buying of treasuries to increase as the stock market falls. Third, if a world wide recession hits, I do not think interest rates are going up anywhere. Even NZ stunned everyone by stopping hikes. Mish

To: Perspective who wrote (14353)	10/31/2004 3:55:41 PM
From: ild	Read Replies (4) \| Respond to of 116555

BC, my strategy in regards to US bubbles Bubbles we have: 1. General credit bubble 2. RE financing bubble 3. Subprime financing bubble My assumptions: 1. No one will ring the bell at the top. 2. The market will sense the bubble coming unglued well in advance and will make the first move on no news. I don't want to miss this first move therefore I risk my capital now. My positions. General credit bubble Long puts on XLF. Time premium is very small especially when you take into account dividends XLF pays. RE financing bubble Short position in mortgage insurers. Their business already very bad even with strong RE. They have been loosing prime customers who can always get 80/10/10 loans. Despite strong RE values credit quality of their customers deteriorating. Subprime financing bubble Short position in NEW and ACF. Comments anybody?

To: Perspective who wrote (14353)	11/2/2004 3:12:57 PM
From: NOW	Read Replies (2) \| Respond to of 116555

great post BC. Want to startt a thread about that? Maintaining purchasing power will be mighty tuff, IMO.