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

To: mishedlo who wrote (17548)	12/3/2004 2:43:04 PM
From: yard_man	Read Replies (1) \| Respond to of 116555

I think there is a 50/50 shot that they are DONE. I know everyone will say I am nutz. But let's see what the Grinch steals this year ...

To: mishedlo who wrote (17548)	12/3/2004 5:07:48 PM
From: Cogito Ergo Sum	Read Replies (2) \| Respond to of 116555

well mish, we talked about rates up here in Canada a while back... now what was once a lock... is seeming to have come 'unlocked' ? OTOH with all the Bay streeters now calling for no hike in Dec and actually none into maybe mid 2005 even... maybe we do get one LOL.. Those Canuckies are hard to figure out..... eh! You can't hear a news report on the business channel or even in mainstream news here without the woes of the high loonie being decried... Whiner power LOL... regards Kastel still expecting no rate hike :O) but of course that in no longer the contrarian play up here.. so it may bite me.. what a difference a week makes...

To: mishedlo who wrote (17548)	12/6/2004 5:00:55 AM
From: zonder	Read Replies (5) \| Respond to of 116555

I am not shocked, nor was I shocked in Nov. Was it someone else who was saying "Fed might be done here. I bet they won't be raising rates again"? :-) it is quite clear the fed targets other data than inflation. If they only targeted inflation, rates would never have gotten to 1% would they? For a while there, there seemed to be a real danger of deflation. When "inflation" (or lack thereof) gets so close to zero, you don't take the chance, you lower the rates to negative real levels. That is what Fed has done. In other words, the focus was inflation there as well. But drastic measures were being taken. You keep pointing out the PPI but oil is a large part of it. I also point out CPI. Like it or not, that is how we measure inflation on this planet - CPI and PPI. The fact that "oil is a large part of it" is normal as well, since it IS a large part of the costs we bear every day, buying zillions of different and seemingly unrelated products. the FED just stated that they do NOT target numbers they target their expectations And so? They are doing expectation management. My brother does that on the phone with his girlfriend as well, telling her he'll be there in an hour when it will probably take half an hour. It's Fedspeak. What exactly is the earth-shattering revelation here? They fed did not start its hiking cycle UNTIL jobs improved. They stated jobs as a reason in fact. If the FED is watching jobs for Christ's sake, why is it not logical for me to watch jobs? (1) Because jobs numbers are cooked with birth/death adjustments, and you know it. (2) Because your statement above "Fed didn't start hiking until jobs improved" is BS, and you know it. Payrolls increased by 208K in May 2004 and 195K of it was "birth/death adjustment". They increased by 96K in June, when there was a much larger 182K that came from "b/d adjustment". Where exactly was this great improvement in jobs before Fed started hiking in June??? (2) Because interest rate hikes and jobs are not correlated, and you SHOULD know it. Look up unemployment rates and fed rates through time. Once again you seem more familiar with the ECB's simple rule: target inflation to 2% What "once again"??? I don't even follow ECB, what are you talking about? BTW my position is that the FED will hike SLOWER than what is priced in. That is not the same as expecting no hikes. Then you HAVE changed your position. Sorry for not being up to date on your "position". The last we talked about this (a month or so ago), you were saying Fed is DONE HIKING.

To: mishedlo who wrote (17548)	12/6/2004 5:51:05 AM
From: zonder	Read Replies (3) \| Respond to of 116555

Mish - Check your e-mail for "Inflation Concerns Growing", a report by Bear Stearns out on Friday. Summary - Gold, our favorite indicator of future inflation, has established a beachhead above $450 per ounce despite near universal expectations that the Fed will raise rates again on December 14th. We think core CPI inflation will rise a further percentage point, to 3%, by the end of 2005. - According to Greg Ip of The Wall Street Journal, it appears that a growing number of Fed officials feel the same way, making it unlikely that the Fed will pause anytime soon. - Our view on inflation for 2005 leads us to believe that the funds rate will end next year above our current forecast target of 4% and we are raising our 2005 year-end forecast for fed funds to 4½%. - We think the economy continues to grow at a robust pace in the fourth quarter, despite the modest November payroll gain. Private surveys of economic activity were fairly robust in November and October’s economic data were generally strong. - One risk to the growth outlook—the price of oil—has diminished significantly as oil prices have pulled back to their lowest levels since late August. - We think the bond market rally following today’s jobs report will prove to be short-lived. In 2005, we think the attention of bond investors will shift to the inflation outlook and we still expect a tenyear yield of 5¾% by the end of next year.