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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (41075)	9/7/2005 4:18:03 PM
From: Canuck Dave	Read Replies (2) \| Respond to of 110194

Yeah, I think you're right. I think deflationists are in for a rude reality check. The Canadian dollar? Outlook is pretty good right now. Lumber prices soaring taking pressure off softwood export subsidies, wage inflation causing government to consider raising interest rates, and... Got Oil? CD

To: GST who wrote (41075)	9/7/2005 7:18:23 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 110194

Inflation may be bigger worry than growth: Fed official By Rachel Koning, MarketWatch Last Update: 5:34 PM ET Sept. 7, 2005 [ Page 1 \| 2 ] E-mail it \| Print \| Alert \| Reprint \| CHICAGO (MarketWatch) - It is growing less likely by the hour that Katrina will knock the economy from its steady growth path, and a top Federal Reserve official suggested that inflation, not weak growth, may be the biggest concern in months ahead. The Congressional Budget Office said in a report released Wednesday that Katrina's negative impact on the economy "will be significant but not overwhelming." See full story. Katrina could trim growth by 0.5 to 1 percentage point from the second half of the year. Although sizable, it is not enough to stop the economy in its tracks. Economists were expecting average growth of at an average 3.5% annual rate from July-December. In a speech on Wednesday, Chicago Federal Reserve President Michael Moskow stressed the Fed's inflation fight hasn't been sidelined by Katrina, and the storm's aftermath may even aggravate inflation risks in the near term. "I'm concerned about core inflation running at the upper end of the range that I feel is consistent with price stability," he said. "If we indeed start to see a string of higher inflation numbers, people may begin to expect permanently higher inflation. If this occurred, the Fed would need to respond accordingly in order to restore price stability." "It appears that he believes the need for higher rates may now be even greater than before the storm," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. Still, the Federal Reserve will have to use intuition to assess the damage of Katrina because of the unique nature of this storm in crippling a major U.S. port and the heart of the U.S. oil refining industry leaves many uncertainties, Moskow told the Futures Industry Association. "We are going to face a number of judgment calls in trying to assess the impact of Hurricane Katrina on the national economy," he said. "Clearly, this is a horrible disaster in terms of lost lives and property destruction. And it's a big loss to the local economies. But at this time it's very difficult to say how the national economy will be affected." Read the prepared text of his remarks. In reaction to Moskow's remarks, bond prices fell further and benchmark 10-year yields rose to 4.15% following what most analysts said was a decisively hawkish tone. See Bond Report. Stocks end higher Stocks initially dipped on the interest-rate outlook but they returned to higher ground in the final hours of the trading day. See Market Snapshot. Moskow's address preserved much of the hawkish rhetoric he offered a few weeks ago. That speech was seen as further evidence of a hawkish shift on the part of some of the Fed's rate-setting panel, which includes Moskow this year. The central bank's policy-making Federal Open Market Committee next meets on Sept. 20. Ahead of Moskow's speech, the bond market was relatively confident -- pricing in a greater than 50-50 chance -- that the FOMC would raise its target lending rate from 3.5% to 3.75% at the next meeting. Assessments The odds had been cut in the storm's wake, however. Some economists think the Fed should hold off on a rate hike in September in order to get a better assessment of Katrina's damage. less confident of additional rate hikes this year and early next. Moskow told the group and repeated to reporters after the speech that he was unwilling to "speculate" about the next interest-rate meeting. Katrina's impact on the economy will depend on the extent of the damage to the energy refining and distribution systems, shipping infrastructure, and other critical components that affect the national economy, Moskow said.

To: GST who wrote (41075)	9/8/2005 12:25:04 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

"To assume that prices will fall simply because we cannot afford to buy something is the ultimate self-centered delusion. Poor people understand this clearly -- poverty " Betting on the strength or purchasing power of the dollar and expecting lower costs with your dollars in the future for services you need in your daily life is a ticket to a future of poverty. Even builder Hovnanian warns because its costs are skyrocketing and margins are shrinking so those betting against builders finally get it right a few years too late but for the wrong reason.