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

To: ild who wrote (43457)	10/14/2005 10:30:38 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Close to my view, although doubt we see 1200, and a break right here would be no surprise. Am comfortable with my previous post's tactics.: tradingmarkets.com Incredibly sloppy buying by the Riskloves this AM, strange gaps on small opening trades= more ugly candlesticks and bearish divergences. From the Hoye report on golds: Our memo noted that the COT model gave a sell on gold, and concluded that a brief decline *would correct the excesses of the goldbugs buying for the wrong reasons ()*. The downside on the correction would be around 460, the next upside target 542. () another Humpty Dumpty trade

To: ild who wrote (43457)	10/14/2005 10:31:27 AM
From: carranza2	Respond to of 110194

An insight from Roach's piece which is perhaps a bit premature but incredibly trenchant if ultimately shown to be correct. Bears quoting: What these results suggest is that mounting import price and labor cost pressures have much less of a bearing on underlying inflation today than was the case earlier. The reason, in my view, boils down to one word -- globalization. Over the past 15 years, growth in global trade has exploded and globalization has come of age. This fundamentally alters the concept of domestic pricing leverage. With globalization spreading from tradeables to once-nontradeable services, pricing has increasingly transcended the pure domestic cost considerations of our now antiquated closed-economy models. As a result, cost pressures now bear more on profit margins and earnings than on the ups and downs of inflation. Even our own US inflation forecast sees core CPI inflation drifting up to just 2.7% by late 2006 -- hardly a major breakout from the disinflationary channel of the past 10 years. A breakdown of the linkage between costs and prices represents a profound shift from the inflation paradigms of yesteryear -- and a potentially tough challenge for equity investors who continue to draw comfort from backward looking earnings surprises.

To: ild who wrote (43457)	10/14/2005 11:16:43 AM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Fri Oct 14 2005 10:24 trotsky (frustrated) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "only if they are SOLD..." the problem however is that if someone sells an asset that has inflated due to to monetary pumping, someone else must BUY it. thus the net amount of money in the system is not changed by this transaction. the ability to use the money for productive purposes is NOT enhanced. in any event, the new Goldfish theory that asset inflation due to monetary pumping somehow increases the economy's ability to create real wealth is of course completely misguided. the basis of capital formation is the pool of REAL funding, not the 'money' created out of thin air by the central bank. if the central bank could create wealth by monetary pumping, the third world would be a utopia of untold riches. on the contrary, monetary pumping and the associated asset price inflation DIMINISH wealth creation by setting in motion artificial unsustainable economic activity that eats into the pool of real funding while not conferring a long term economic benefit. capital is malinvested, as the monetary pumping creates all sorts of false signals regarding future demand. the solution is not, as the Wanninski school insists, for the Fed to adopt a strategy of setting rates at a certain level, or targeting certain prices, the only solution would be to dissolve all central economic planning agencies and leave 'policy' to the free market. this will however not be done, as the current system allows politicians to buy votes by means of spending money well beyond the state's income, via borrowing more. if the fiat money system did not exist, they could only spend more money by raising taxes overtly ( monetary inflation is a covert tax hike ) , which would see to it that they would soon be sent packing. in any case, all attempts to 'fix' the system by prescribing this or that 'policy' to the guardians of the printing press are a complete waste of time. not one of these prescriptions can possibly address the fact that money pumping damages the pool of real funding. Date: Fri Oct 14 2005 09:04 trotsky (@the dollar) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved it seems to me that the dollar has been in a cyclical bull market for quite some time. the question is how far will it go? to that end, consider the lead/lag effects of rising short term interest rates and a contracing yield curve. since the contracting curve indicates monetary tightness, which is also confirmed by the sharp slowdown in broad money supply growth measures, a stronger dollar is a logical outcome ( the trade deficit may be a long term negative, but the dollar has often ignored the deficit for years running, so it is not a good argument in connection with near to intermediate term bearish expectations ) . the lag effect of monetary policy in turn, plus the change in inflation expectations embodied in the TIPs/treasury spread, suggest that dollar strength could last well into next year. whether gold will continue to ignore a stronger dollar as it has recently done is a different question.