Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (7166)	7/20/2005 5:30:27 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

We have to remember that A Chinese Yuan upward revaluation would raise a whole array of prices and potentially give more pricing power to companies in myriad industries. Bill Gross made an interesting point in January of this year in his January Investment outlook when he said. "It is PIMCO’s opinion that central bank purchases in 2004 were the primary force in lowering 10-year Treasury rates from 4.90% to nearly 4.0% in October, while the Fed was in the process of raising short rates by 125 basis points. We could see a run back up towards those levels if foreign buying tapers off, even while the Fed stays low as pointed out in #1 above. www.pimco.com this is another portion of his January report discussing Yuan revaluation........... ---------------- China Revalues Admittedly our most problematic money making theme, if only because of its timing, is our belief that 2005 is the year when China/Asia revalue their currencies upward. Actually, the decision is entirely in China’s hands, but evolving events should force at least a semblance of a resolution. China will be more inclined to revalue if internal inflation accelerates (currently not the case), their banking system stabilizes, and/or tariff pressures from the U.S. threaten to kill the golden goose of free trade. Perhaps just as important, China’s gradual evolvement from WTO inductee to potential kingmaker at future G8 economic policy discussions argues for some type of symbolic move that speaks to cooperation in a global context. Should a meaningful (more than 5%) revaluation occur against the dollar or even a basket of diversified currencies, the event would signify a further extension of U.S. reflation via an upward repricing of U.S. labor and wage rates* that accompany a falling dollar*. Bond bearish? Yes, in several ways. First of all from the obvious effect on U.S. inflation – perhaps as much as ½% over the next several years depending on the extent of the Chinese reval. Secondly, from the prospective sale (or reduced buying) of U.S. Treasury and corporate bonds in anticipation of the revaluation. Such gingerliness may simply reflect the cautionary sales by the PIMCOs of the world in anticipation of the knock-on effects of future inflation. But additionally, the astronomically high levels of bond purchases by surplus generating economies (Japan primarily, China secondarily) may begin to come down as shown in Chart I.

To: Jon Koplik who wrote (7166)	7/27/2005 2:56:16 PM
From: Jon Koplik	Read Replies (4) \| Respond to of 33421

Price of lumber plunging. Maybe real estate lobby is composed of a bunch of liars (?) futuresource.com Jon.

To: Jon Koplik who wrote (7166)	7/29/2005 1:16:03 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 33421

More "no inflation problem" news (but no one pays attention anyway) ................................. (This was at the end of today's WSJ wrap-up on economic indicators). Jon. ****************************************************** ... the cost of hiring and retaining U.S. workers grew at a mild pace from April through June as the growth of benefit costs moderated, indicating the job-market recovery isn't fanning much inflation. The employment-cost index rose 0.7% in the second quarter of 2005, the same rate as in the first quarter, the Labor Department said. Wages and salaries also grew moderately -- at the same 0.6% rate recorded in the first quarter. But benefit costs, which have been nudging up overall compensation costs for years, rose just 0.8% -- the slowest rate in more than three years. Labor-compensation costs moderated in annual terms, rising 3.2% in the 12 months that ended June -- the lowest year-on-year rate in nearly six years.** Workers in the finance, insurance and real-estate industries enjoyed the biggest increase in overall compensation during the second quarter, a 1.1% gain. Total compensation costs for workers in the manufacturing sector grew 1%. Overall costs for private-industry workers grew 0.6% while costs for government workers grew 0.7%. --Jeff Bater and Joseph Rebello of Dow Jones Newswires contributed to this article Write to the Online Journal's editors at newseditors@wsj.com Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved.

To: Jon Koplik who wrote (7166)	8/1/2005 10:53:15 AM
From: Jon Koplik	Read Replies (1) \| Respond to of 33421

ISM's price index falls below 50.0 (50 is "neutral")...................................... But ... everyone knows there's inflation; so who care about yet another data point showing no inflation pressure ? Jon. ************************************************************* August 1, 2005 10:14 a.m. U.S. Factories Steam Ahead As Orders, Production Rise A WALL STREET JOURNAL ONLINE NEWS ROUNDUP U.S. factory activity picked up last month, a private research group reported, as new orders and production rose, hiring perked up, and price pressures eased. The Institute for Supply Management said its July index of manufacturing activity rose to a reading of 56.6 from 53.8 reading posted in June. Any index reading above 50 indicates expansion in the sector. "It appears that the sector hit a low point in May, and has rebounded nicely in June and July," said Norbert Ore, chairman of the ISM's manufacturing survey committee, in a statement. He noted that new orders, which rose to a reading of 60.6 from 57.2 in June, and production, which jumped from 55.6 to a robust 61.2 reading in July, continued to drive improvement in the sector. An index of prices in the ISM's report slid into negative territory, registering a reading of 48.5 after coming in at 50.5 in June.** Mr. Ore said July's reading "indicates that pricing power, at least for the short term, is now once again favoring buyers." An index of employment rose to 53.2 after coming in at 49.9 in June. Separately, U.S. construction spending turned down unexpectedly during June, taking its fourth consecutive drop as residential outlays slid in spite of the hot housing market. Total spending decreased 0.3% to a seasonally adjusted annual rate of $1.093 trillion, the Commerce Department said. Spending fell 1.7% in May to $1.096 trillion; it was originally seen down 0.9% to $1.103 trillion. June residential construction spending fell by 0.4% to $609.1 billion. Spending decreased 3.5% in May; it was originally seen down 1.7%. Nonresidential spending eased 0.1% in June. Outlays for communication facilities climbed but fell for the large category of roads as well as for manufacturing and amusement. Private-sector construction outlays decreased 0.2% to $843.8 billion. Public, or government, construction spending fell 0.5% to $249.2 billion. Federal government construction outlays increased by 4.9%, but state and local spending -- much larger than federal spending in dollars -- fell 0.8% to $232 billion. Write to the Online Journal's editors at newseditors@wsj.com Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved.