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

To: mishedlo who wrote (15925)	11/16/2004 10:47:39 AM
From: yard_man	Respond to of 116555

$tnx looks a little different these days -- I wonder if we couldn't get a little spike soon, nonetheless ... But I am with you -- higher energy at this juncture == deflationary pressure. Credit can't grow fast enough to offset.

To: mishedlo who wrote (15925)	11/16/2004 10:56:07 AM
From: Haim R. Branisteanu	Read Replies (4) \| Respond to of 116555

.... core PPI .... and retail sales ... but regardless there will be another 25 bp IMHO BWDIK

To: mishedlo who wrote (15925)	11/16/2004 11:11:58 AM
From: zonder	Read Replies (3) \| Respond to of 116555

If Treasuries do not believe the PPI was that high or that significant, why should I? (1) Very broadly, if you do not at least THINK that you can outthink the market, you should never risk your money, since you are accepting outright that the market is always right. And by consequence, whenever you take a position with the expectation of a price move from the existing level, you are wrong. (2) More specifically re "treasuries and PPI" - PPI is up 4.4% on a yearly basis as of October. You say treasury yields are less than this. The question to ask is "Can the market POSSIBLY be right on this?". The answer is "No". So why are treasuries at NEGATIVE REAL levels, considering annual inflation ABOVE their yields? The answer is twofold, imho: (a) The world is full of idiots, a significant portion of whom will invest in treasuries with no regard for, nor understanding of, the concept of "inflation". ... and more importantly, (b) There are huge buyers of US treasuries with very deep pockets and little concern for what their yields are. [Asian Central Banks, for example] Especially that latter makes an inefficient market where the prices of assets might be disconnected from issues of concern for their values. In short, treasuries might "yawn" at PPI number but that does not mean "the biggest increase in PPI inflation in 15 years" is not important.