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

To: SouthFloridaGuy who wrote (20653)	1/6/2005 9:53:49 PM
From: regli	Read Replies (1) \| Respond to of 116555

I don't think that the yield curve can be a consistent indicator of gold performance. Heinz appears to be a deflation advocate. Based on some posts of his, he also believes that gold will do well in a deflationary scenario and he frequently cites the 30s a sample for both bullion and stock performance. In a deflationary scenario we are going to have a flat yield curve. What gives?

To: SouthFloridaGuy who wrote (20653)	1/6/2005 10:55:25 PM
From: orkrious	Respond to of 116555

the other factor regarding the yield curve no one is discussing is the asian CB's. if they start buying short instead of long the curve will get steep quickly Message 20869025 Message 20920124

To: SouthFloridaGuy who wrote (20653)	1/7/2005 10:33:26 AM
From: John Vosilla	Read Replies (1) \| Respond to of 116555

<I actually think the Fed keeps rising into this. After all, there is still "growth", apparently housing values are still rising so all is well in Dodge. The economy will show the appearance of strength through the first half of the year. I think Greenspan wants to get enough landscape for the next round of deflation fighting; he may even be willing to accept a steeper recession and raise more than expected just to get the landscape to cut hard and fast. However, it took something like a 500 basis point cut between 01-03 to get the economy rolling after the stock bubble collapse, now he may have 300 bp if he's lucky to fight a much bigger bubble burst in housing, and that is assuming he takes it to 0%. I just don't think he can do it. With regard to the yield curve, we already see what is going in the UK and Australia, deflating housing bubbles, lackluster consumer sales (especially in the U.K.). All it takes is an exogenous event to take us down big. Whatever it is, my bet is that it affects oil big time. Best case scenario is a recession equivalent to the early 90's and a 33% decline in the Dow. Worst case scenario is not worth talking about until we get more color> I agree. Perhaps the thinking is a flat yield curve by say fall 2005 and a soft recession is better than letting inflation and interest rates on the long end get out of control resulting in a housing collapse and major adjustment in stock market P/E's. That they even reach your best case scenario is much less than 50/50 IMHO as we are too dependent on the actions of others these days for our fate.

To: SouthFloridaGuy who wrote (20653)	1/7/2005 2:45:34 PM
From: gregor_us	Respond to of 116555

Some Countries Use an MCI--Monetary Conditions Index to judge the movements in overall tightness of monetary conditions. I know New Zealand used this for a while. It takes into consideration other measure in addition to absolute and real interest rates, like the currency levels. Gold appreciation is a function of loose monetary policy - which is exactly what we have had since 2001 until rates began to rise. Today it's not tight in an absolute sense, but it's moving there and it is certainly tight in a relative sense given the amount of leverage in the economy and the insatiable need for liquidity. With the dollar having fallen 6.0% in 2004 and 15.0% in 2003--as an index--I'm wondering how much tighter these 125 beeps have made things. So far, I have agree with the view that Washington's current goal is to get interest rates higher, but to neutralize the effect by getting the dollar lower. Not a dollar crash. But a lower dollar. A much lower dollar in fact, than 83.00 on the USDX. LP