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

To: russwinter who wrote (18242)	12/9/2004 8:24:56 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Russian stocks lose $10 billion in value UPI - Thursday, December 09, 2004 Date: Thursday, December 09, 2004 6:35:54 PM EST MOSCOW, Dec. 9 (UPI) -- Nearly $10 billion was wiped off Russian stocks Thursday, the Moscow Times reported. The huge fall was caused by investors' fears that a surprise $158 million tax claim against Russia's No. 2 mobile phone operator VimpelCom signaled a new arbitrary onslaught against private business, the paper said. The RTS stock index plummeted 5 percent, sending it down 10 percentage points in just two days to close at 546.1. The steep decline sent it below its Jan. 1, 2004, level, reversing the rapid growth trends of recent years that have seen Russia outperform most other emerging markets. "International investors are radically changing their view of Russia," Alexander Kim, equity strategist at Renaissance Capital told the Moscow Times. "They are reassessing the risk premium for the country and we are seeing a massive reduction of position." Investors have already been spooked over the Kremlin's protracted legal onslaught against oil major Yukos, which faces breakup in a Dec. 19 auction of Yuganskneftegaz, its key production unit, over $20 billion in outstanding tax bills. The move against VimpelCom appeared to dash previous hopes that the attack on Yukos was an isolated case, the Moscow Times said. -- Copyright 2004 by United Press International. All rights reserved.http://www.menafn.com/qn_news_story.asp?StoryId=CqBFB0eidCNvZC2LHlxn0B2nRCW

To: russwinter who wrote (18242)	12/9/2004 10:43:33 PM
From: mishedlo	Respond to of 116555

Heinz on Walmart Via Email Wal Mart also just decided to massively slash prices. welcome to the K-winter.

To: russwinter who wrote (18242)	12/9/2004 10:43:46 PM
From: mishedlo	Respond to of 116555

Heinz on Walmart Via Email Wal Mart also just decided to massively slash prices. welcome to the K-winter.

To: russwinter who wrote (18242)	12/9/2004 10:44:17 PM
From: mishedlo	Respond to of 116555

Heinz on Walmart Via Email Wal Mart also just decided to massively slash prices. welcome to the K-winter.

To: russwinter who wrote (18242)	12/9/2004 10:44:53 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Heinz on Walmart Via Email Wal Mart also just decided to massively slash prices. welcome to the K-winter.

To: russwinter who wrote (18242)	12/9/2004 10:52:35 PM
From: mishedlo	Respond to of 116555

Heinz on the Pound and the Rand Via Email Mish: UK Oct global trade deficit widens as imports hit record high [this might hurt the pound and support the US$ - mish] Heinz: usually takes longer than one expects. e.g., i'm still waiting for South Africa's record current account deficit to even dent the Rand just a little bit. Mish comment He did not say this but it is pretty clear what he is thinking Heinz is watching the Rand for a break South African miners have severely lagged other miners IF the Rand heads south, SA miners might be a very good bet

To: russwinter who wrote (18242)	12/10/2004 12:27:14 AM
From: mishedlo	Read Replies (3) \| Respond to of 116555

CBOT raises MARGIN on GOLD by: cyrus52004 Long-Term Sentiment: Buy 12/09/04 08:09 pm Msg: 46699 of 46712 Well it looks a little more clearer why gold and silver capitulated violently on WED.Not only were technicals toppy,but the CBOT has raised margin requirements starting the business day of DEC 9. Obviously the big brokerages knew this before its annoucement and sold known that under capitalised folks would have to liquidate. No headlines announcing this Action. 100 oz Gold contracts went from $900 to $1200 for hedge and maintenance for 5,000 oz Silver went from $1500 to $1750 for hedge and maintenance. This is how they stiffed the Hunt Brothers when Silver was $50 an ounce. Raise hedge to 100%. This is the 3rd hike in two years. cbot.com.

To: russwinter who wrote (18242)	12/10/2004 12:31:20 AM
From: mishedlo	Respond to of 116555

Grain Report CORN Hi, this is Tim Hannagan its Wednesday Dec. 8 and the markets are closed. We came into this week knowing 2.02 basis March futures was a support price we could test with this week being the last week for funds and traders to pressure of supply side news ahead of Fridays U.S.D.A. monthly crop report while next week leaves only 9 days to buy back much of the massive short positions being held by large traders and funds. We hit 2.014 after the opening but quickly turned up on light short covering. I look for choppy two sided trade Thursday with a mildly bearish crop report Friday giving us a lower open which should be bought with the thinking that the period of Dec. 13 to Dec 23 will lay out as short covering ahead of year end, month end and pre holiday existing. Thursday the 23rd is our last trading day before holiday market closings begin Friday the 24th Buy the February 2.00 put for 4 cents or $200 for downside insurance and buy March corn on a lower open Friday and look for the last half of Dec. to see shorts buy back positions. WXRISK.COM sees potential for a major snowstorm form the 15 to 20 crossing the plains, midwest and heading east. This would lock up grain on the farm raising cash bids with farmers holding onto cash sales until after Jan. 1 to delay tax payments. Note I will be out of my office Thursday. I will post a Friday report. BEANS On my last report Monday I called for turn around Tuesday to give us a test of our 5.24 support basis March futures. Our low was 5.244. I said expect a trade Wed. to Thursday thru support with trade thru 5.20 but not lower than 5.19. So far, so good. Now what. Thursday looks to see choppy two sided trade ahead of Fridays crop report. The trade expects a bearish report with no new news or surprises. I expect a lower open in which I will buy long March futures and look for large traders and fund holding a huge short position to begin buying back shorts into the close with further short covering ahead of our holiday closing. Consider buying the February 5.10 put for 10 cents or $500 for downside insurance and buy March futures on a lower open Friday and hold for a short covering rally into late Dec. Funds should want to pay bonuses on profits taken for month and year end. All the markets out there are exercising there year end profit taking. Silver and gold broke heavy today after rallying since May. Foreign currencies also collapsed after a 8 month rally and of course energies after rising since January decided to take profits beginning Dec. 1. Its more probable than not that corn, wheat and beans will experience similar short covering after falling since summer. WHEAT Wheat pulled back to its old low form last week of 2.95 basis March futures after the open today on news Canada's final wheat production report of the year showed production at 25.8 m.m.t. up form 24.5 last month and 23.6 a year ago. This brought on sellers right on the open. Note, the market is trading tonnage on this report. On the surface the size of the crop looks bearish as Canada competes for world exports against the U.S.wheat prices. Reasons wheat is grown for human consumption which makes quality more important than quantity. Wheat has to be high enough in protein quality to meet milling needs for breads, cereals and pasta. Low quality wheat heads to the feed ration for animals. Though Canada's production reflects increased planted acreage the poor growing weather in Sept. and Aug. left 30% or less of their crop suitable for milling needs and or exports. The U.S.will fill the hole left in exports by them eventually. Fridays U.S.D.A. crop report looks to have the report show a drop in U.S. ending stocks form last months report due to Canada poor quality crop and a late season drought in another export competitors country Australia. March has support at 2.95 to 2.98. Lows for the rest of this month should be this week as the massive short position held by funds look to begin buying back next week ahead of the holiday and year end. Buy the February 2.85 put for 5 cents or $250 and buy March on a dip with a stop close only under 2.95.

To: russwinter who wrote (18242)	12/10/2004 12:40:03 AM
From: mishedlo	Respond to of 116555

Heinz on the Pound and the Rand Via Email Mish: UK Oct global trade deficit widens as imports hit record high [this might hurt the pound and support the US$ - mish] Heinz: usually takes longer than one expects. e.g., i'm still waiting for South Africa's record current account deficit to even dent the Rand just a little bit. Mish comment He did not say this but it is pretty clear what he is thinking Heinz is watching the Rand for a break South African miners have severely lagged other miners IF the Rand heads south, SA miners might be a very good bet

To: russwinter who wrote (18242)	12/10/2004 8:10:12 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

from rodger rafter on the fool 8 times a year the FOMC meets to set monetary policy. They give us a clue after each meeting as to their plans by issuing a statement in Fedspeak that says what they'll try to keep the Fed Funds short term rate at. They also give an indication of what they plan on doing in the future and make up a bunch of nonsense about how tame inflation is and how healthy of the economy is so that people don't panic and move to Canada. Monetary policy, however, involves much more than just setting short term interest rates. For most of the year, I've been trying to track what the Fed actually does to intervene in the markets by keeping a spreadsheet with the Fed's reserve credit, repurchase agreements, the maturities of the treasuries they buy and sell and the securities they hold for foreign official and international accounts. I can't say that the data proves anything one way or another, but this is how it appears to me that the fed and other players have been acting this year: For the first 6 months of the year, the Fed worked to keep short term rates low to boost the economy. The Fed gradually increased its holdings of treasuries that were expiring within 90 days by just over $21 Billion, creating money and spending it to suppress short rates. Holdings of longer term notes declined by $2.5 Billion, so I figure the Fed was letting mid and long term rates go with the market. With the Fed's injections, and a big spread between short and long term rates fueling the Carry trade, money supply expanded rapidly during the first 6 months of the year (M3 at a 10% rate). Foreign accounts were big buyers from Jan to March, eased off in April, picked up their buying again in May, then eased off in June. At the late June meeting the Fed appears to have decided it was time to tighten before inflation got out of hand. For the next month and a half, reserve credit actually declined by about $13 Billion, which coincided with the big July-mid August steep stock market selloff. M1, M2 and M3 all contracted slightly during this time. The Fed used up repurchase agreements and bought back mostly 1-5 year notes, but holdings of short maturities dropped. Foreign activity slowed way down during this time as well. At the early August meeting, they appear to have changed course again. While they raised rates by their "measured" pace just as they did at the previous meeting, the behind the scenes actions were quite different. Over the last 4 months (including 3 meetings) the Fed has increased reserve credit by $40 billion, increasing holdings of bonds maturing in over a year by almost $17 Billion and 90 days to 1 year by over $6 Billion, while letting their holdings of short term notes stay flat. Meanwhile, the amount of repurchase agreements has risen by about $14 billion, representing bonds (of unknown maturity) they've agreed to purchase from banks. Based on the recent past, these are probably mostly long term notes. Over the past 4 months, short rates have risen pretty much on their own, while the Fed appears to have been working hard ($40 B) to keep longer rates down. It may be that the Fed set policy for long rates at the 3 meetings, and had to inject increasingly more to keep them down. The biggest single week increase in reserve credit was $11 Billion from 11/4 to 11/11, mostly from increased repurchase agreements. The next week 90 day to 1 year holdings rose $2.68 B, 1 to 5 year holdings rose $2.88 B and 5 to 10 year holdings rose $3.67 B. Those are exceptionally large numbers which really stand out in the data. Meanwhile, money supply seems to be growing at an extreme pace again. Seasonally adjusted, M1 is up 4% in just the last three weeks. Unadjusted it is up almost 10% in only three weeks! Granted, there's a lot of volatility to money supply numbers, and the flight out of the dollar also probably has something to do with the dramatic rise in M1 (and M3 to lesser degree), but the amount of money the Fed has been injecting to keep rates down and the result it appears to be having on the money supply probably is making the Fed's nervous, just as it did probably did back in the Spring. Official foreign purchases slowed to to a trickle from mid-September to mid-October, but have returned to a more moderate level as the dollar has fallen. For some reason, about 80% of that activity has been in federal agency debt rather than treasuries. Normally, they buy 80%-90% treasuries, unless activity is extremely large for the week, in which case its about 30%-40% agency debt. If anyone has a clue what's up, with the agency debt, let me know. Anyway, back to the Fed... Heading into the meeting next Tuesday, I think the Fed is planning on a change of course. Since the last meeting: 1. The dollar has had a mini-crisis. 2. Foreign banks have temporarily and grudgingly rushed in to support the dollar. 3. US money supply has taken off. 4. Fed credit has risen more in 4 months than it did in all of 2003. 5. Long rates have started up in spite of the Fed's heavy buying. 6. Portions of the stock market have risen to new yearly highs. My own best guess is that after talking things over, the Fed will: A. Stick to their 25 basis point per meeting "measured" rate hikes. B. Significantly slow their rate reserve purchases of notes over 90 days and let them rise. C. Issue more hawkish language intended to support the dollar as a way of fighting inflation. D. Boast about the economy's robust growth as cover for continued rate hikes. If the Fed does get tighter behind the scenes with their treasury purchases, it doesn't bode well for the stock and bond markets. We'll see what they say next week.