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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 (17316)	12/1/2004 4:31:37 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

well there actually is some merit to the logic. Everytime variable rate loans go up there more mandatory money out of the pocket and less money to save Mish

To: patron_anejo_por_favor who wrote (17316)	12/1/2004 4:36:53 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

The pound rose to its highest level against the US dollar in more than 12 years today, in the latest sign that the UK economy is strengthening. Sterling hit a peak of US$1.9223 - its highest level since the UK was forced to withdraw from the Exchange Rate Mechanism in September 1992 - while the dollar fell to a nine-year low against a basket of currencies. The development, which made the prospect of two US dollars to the pound increasingly likely, came as manufacturing data signalled the sector was recovering from its recent weakness.... Tom Hougaard, strategist at City Index, said: "This is momentous. It is really frightening, it is an indicator that the big foreign investors are pulling the plug on the US." guardian.co.uk

To: patron_anejo_por_favor who wrote (17316)	12/1/2004 5:24:24 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

post from GoofyInMD on the FOOL on the Falling US$ This didn't start last week. Why did all these countries continue to go along for the ride. Moreover, if they cut the US off now where will they market the products they make for American market? This is way more complicated then just turning off the tap to the US. My rant reply It is indeed tons more complicated. A falling US$ with a China peg forces Europe to bear the brunt of it. Of course they could spend as recklessly as we do but as long as they do not, they will suffer. Japan is suffering as well, a higher YEN is hurting their exports and Japan is about ready to sink back into deflation. The US is forcing the EU to inflate or die, and so far they are selecting deflation. As for the US, the party continues and everyone seems to think this is a free lunch. People act as if we can forever keep on sucking up 80% of the world's savings and use them for personal consumption. Well there is no free lunch but the loose and easy money has spawned multiple bubbles in junk bonds, the stock market, and housing. The latter is the only thing keeping the economy growing. Right now it is party on dudes but the next recession will be far far worse than the collapse of the Naz that hit us in 2000. A giant ponzi scheme of ever expanding credit is what it takes to keep this bubble growing. Housing is showing signs of stalling so what does Bush do... Wants more free loans and free down payments for deadbeats that can not pay their apt bills on time and will have no clues about the problems facing homeowners. But it is inflate or die here too, and a home or two in every pot. The end game is easy to see for those that can think ahead: As soon as demand in China is strong enough for China to depeg its link to the US$ prices are going to rocket up in short order. Right now we are begging them to depeg. Right now it is not in there best interest. As soon as they have sucked out 99.5% of all the potential jobs they can take from us and as soon as all the techonology transfers from the US to China are made and as soon internal demand in China picks up it is going to be lights out for the US. Rest assured when China does depeg it will be in THEIR best interest not ours. The time is coming. Fortunately, for the short sighted US thinkers, that just might be a ways off. 3 years perhaps. In the meantime we peacefully outsource our jobs, give them our technology, and they are clever enough (for now) to keep lending us money at below cost rates. The stock market cheered today more US spending. The US savings rate fell to .2%. I guess housing will keep on rising forever, and people can keep doing cash out refis to support current consumption. Let's see borrow $1M, plunk it down on a house with 0% down. A 20% a year rise and one can take out 200,000$ a year to live off (and make the current interest only mortgage payment to boot). Looks like a free lunch to me. Party on. This can all continue forever, and Jedi is the tooth fairy and I am the Easter Bunny. Mish

To: patron_anejo_por_favor who wrote (17316)	12/1/2004 6:10:41 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Pound peaks as US dollar falls Staff and agencies Wednesday December 1, 2004 The pound rose to its highest level against the US dollar in more than 12 years today, in the latest sign that the UK economy is strengthening. Sterling hit a peak of US$1.9223 - its highest level since the UK was forced to withdraw from the Exchange Rate Mechanism in September 1992 - while the dollar fell to a nine-year low against a basket of currencies. The development, which made the prospect of two US dollars to the pound increasingly likely, came as manufacturing data signalled the sector was recovering from its recent weakness. It was also prompted by the record US current account deficit, which is expected to continue to widen unless the dollar depreciates. Although the news will be welcomed by shoppers heading across the Atlantic for Christmas bargains, British companies dependent on the US will suffer as their goods become more expensive. Tom Hougaard, strategist at City Index, said: "This is momentous. It is really frightening, it is an indicator that the big foreign investors are pulling the plug on the US." The dollar dropped further against world currencies today - hitting another record low against the euro - amid speculation that the Federal Reserve will say a weaker dollar should help narrow America's ballooning budget deficit. Robert Barrie, economist at Credit Suisse First Boston, said concern about the US current account was a major factor in the rise in sterling. But he added that signals the UK economy was getting stronger had helped tipped the pound to today's high. The pound's surge today took it to levels not seen since before the UK was forced to leave the Exchange Rate Mechanism on what was described as Black Wednesday. This caused the pound to tumble against other global currencies including the dollar. The latest rise coincided with data signalling that the UK economy was getting stronger, which boosted sterling. Yesterday, Bank of England governor Mervyn King denied that recent rises in interest rates had put the UK economy on the brink of "a real slowdown". Figures from Nationwide also boosted the currency, as they showed house prices recovered from a fall in October to rise by 1% last month. This was followed by today's upbeat data from the Chartered Institute of Purchasing and Supply (CIPS), whose manufacturing report painted a picture of a strong industrial recovery. The surprise pick-up came as separate research showed European counterparts had endured a period of stagnation. In the UK, the Purchasing Managers Index from CIPS posted exactly 55 - above the no change in activity mark of 50 for the 17th month in a row. The figure showed the fastest growth since July, following a surge in domestic orders. Economists called the data an encouraging signal for UK industry, but warned it was too early to talk of a sustained recovery, particularly after GDP growth of 0.4% in the third quarter and a poor recent factory study from the CBI. Paul Dales of Capital Economics said: "Although today's survey is undoubtedly encouraging, we will need to see a meaningful improvement in the hard data before concluding that industry has shrugged off the weakness evident in the third quarter. "For the time being, it still looks like other areas of the economy may not be able to compensate for the slowdown in household spending that appears to be under way."

To: patron_anejo_por_favor who wrote (17316)	12/1/2004 7:16:03 PM
From: mishedlo	Respond to of 116555

Thoughts from NZ New Zealand dollar has continued to appreciate. The appreciation will support the RBNZ's expectation that economic growth will slow further down the track. But more importantly, the higher New Zealand dollar buys the RBNZ some time on the inflation front, as it will help offset high domestic inflation in the near term. A higher New Zealand dollar will keep tradables inflation lower than would have otherwise been the case and this will dampen overall inflation. As mentioned above, the higher New Zealand dollar will contribute to slower economic growth. In turn, this will help to lower domestic inflation further down the track. Overall, the RBNZ's inflation forecasts are unlikely to change markedly from where they were at the September MPS. Specifically, there will still be very little headroom for the RBNZ to absorb intensifying inflation pressure. With growth continuing to be stronger for longer the risks are weighted toward intensifying inflation pressure. The labour market is unequivocally tight and capacity utilisation is at its highest level on record. Therefore, the risk is more towards the RBNZ raising rates than lowering them. Current market pricing implies the next move by the RBNZ will be a rate cut by June 2005. Given inflation is likely to be forecast at the top, if not above, the upper limit of 3.0% for 2005, we expect the RBNZ to signal that a rate cut is still a long way away. That said, the actual timing of a rate cut will be partly dependent on the New Zealand dollar. For example, if the currency goes through the roof then a rate cut becomes more likely. In summary, we expect the OCR to be left unchanged at 6.50%. We expect the accompanying MPS to be relatively balanced but believe the RBNZ will signal that rate cuts are off the agenda for some time. more here www1.asbbank.co.nz