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

To: russwinter who wrote (24697)	3/2/2005 9:15:41 AM
From: Chispas	Respond to of 116555

FX Trading .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Jack Crooks March 2, 2005 Well, Australia proved this morning that it’s not all about interest rates—growth counts. We have the euro zone heading south (IMF upbeat on U .S., China growth, gloomy on Euro), Canada still an open question (Sagging Canadian exports prompt rate-cut talk), Japan looking weak, despite recent numbers, and the US chugging along—someway, somehow. And today, the dollar seems to be reflecting that reality. Here is my simple take on the rising concern about Asian central banks reportedly ready to reallocate out of the dollar en masse: Let’s just say for a moment that you are a policy maker in one of the key Asian countries that does a lot of exporting. And as you survey the landscape you notice a decline in demand from many of your smaller customers. You also notice that your key customer—the US—is becoming an increasing share of everything shipped. Question: A) Do you decide to make it more difficult for your key customer to buy your product by making it more expensive i.e. by allocating some your countries foreign exchange into other less-important customers’ currencies (euro, yen, Australian $)? B) Do you decide that it makes sense to keep your largest and increasingly important customer happy by making your selling terms agreeable? I’m going with B! So let’s say we take that rationale for dollar weakness off the table—at least for now. What do we have? A US economy that looks downright prosperous compared to its key competitors. A Fed Chairman that looks increasingly serious about punch bowl removal. Shazam!! The US dollar has both growth and yield going for it at the moment. Of course we know what is lingering in the background—those Double D’s of Doom i.e. the current account and the federal budget deficit. As big and as bad as those Double D’s are—one has to believe that rationale is now well beyond stale i.e. in the price. And low and behold, there are actually some people who are brave enough to write an article favorable to the US-- March/April edition of Foreign Affairs magazine, “The Overstretch Myth”, by David Levey and Stuart Brown. I haven’t seen much play from this article within the currency crowd, but then again, most in the currency crowd seem to be rooting for a total collapse of the dollar and some type of hegemony by China or Europe or anyone else. Here is the summary: “The United States' current account deficit and foreign debt are not dire threats to its global position, as would-be Cassandras warn. U.S. power is firmly grounded on economic superiority and financial stability that will not end soon.” I know many are lapsing into an apoplectic fit of rage after reading that paragraph. But, I think it’s important to consider that maybe, just maybe the dollar isn’t dead after all. fxstreet.com

To: russwinter who wrote (24697)	3/2/2005 9:20:46 AM
From: RealMuLan	Respond to of 116555

That is only 1/3 of China's foreign reserve, no big deal<g> How much Japan spent? Not that I want to compare apple and orange, just want to put things into the perspective<g>

To: russwinter who wrote (24697)	3/2/2005 10:45:46 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. mergers boost layoffs 17% in February [good god they are even spinning this as positive. Wednesday, March 2, 2005 3:23:22 PM forexstreet.com NEW YORK (AFX) -- Layoffs at U.S. corporations jumped 17 percent in February to 108,387, boosted by increased merger and acquisition activity, international outplacement firm Challenger Gray & Christmas reported Wednesday Nearly 50,000 of the announced layoffs, or more than 40 percent, were directly due to mergers, the firm said. Most of the merger-related cuts were in telecommunications. During the month, SBC Communications announced plans to acquire AT&T, while MCI agreed to a deal with Verizon. February was the fourth month in the last five in which announced job cuts exceeded 100,000. Layoffs were up 40 percent from February 2004's 77,250 The Challenger survey covers announcements of job reductions at U.S. companies, not actual layoffs. The announced cuts can take place immediately or over a period of months, sometimes through voluntary actions such as quitting or retiring "The numbers do not necessarily mean the job market or the economy are backsliding," said John Challenger, CEO of the outplacement firm. "In fact, the cuts are probably more indicative of an energized economy that is continuing to build momentum." "There is a unique labor market environment where both job creation and job destruction occur simultaneously," Challenger said [Yeah creating jobs at Wal-mart at minimum pay and destroying jobs elsewhere. That is unique all right. Obviously bullis too. Mish] In February, telecommunications firms announced 33,270 job reductions, the most in the sector since October 2002. Transportation companies announced 12,188 job losses, while consumer-products companies cut 11.627 jobs The Challenger data are not seasonally adjusted The Challenger survey covers only a small portion of job losses; most small businesses do not announce job reductions. In January, nonfarm payrolls grew by 146,000, government data show. Job growth averaged about 185,000 per month last year February's payroll data will be released on Friday. Economists are predicting net growth of about 221,000 jobs.

To: russwinter who wrote (24697)	3/2/2005 10:48:20 AM
From: mishedlo	Respond to of 116555

Greenspan says ´major´ deficit cutting are necessary Wednesday, March 2, 2005 3:24:33 PM afxpress.com Greenspan says 'major' deficit cutting are necessary WASHINGTON (AFX) -- Federal Reserve Chairman Alan Greenspan told Congress that the U.S. fiscal budget is unlikely to improve in coming years "unless major deficit-reducing actions are taken." He called for a major overhaul of Congressional budget laws, including renewing rules to offset any spending or tax cuts by cutting spending elsewhere. Greenspan repeated his support for private retirement accounts to bolster Social Security. He said that Congress should tackle Social Security "sooner rather than later."