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

To: patron_anejo_por_favor who wrote (42180)	12/2/2005 3:32:08 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

End of rate increases not yet reached: Fed´s Yellen - Friday, December 2, 2005 7:36:47 PM afxpress.com End of rate increases not yet reached: Fed's Yellen - UPDATE 1 SAN FRANCISCO (AFX) - An end to the current phase of interest rate increases has yet to be reached, Janet Yellen, president of the San Francisco Federal Reserve Bank, said on Friday However, Yellen also said there will be a time when the language in the Fed's statement will have to change to reflect an easing of monetary policy. "Two phrases in particular are at issue: 'remove accommodation' and 'at a measured pace,'" Yellen said, according to the text of a speech distributed to news organizations. "While it seems unlikely that the end of the current tightening phase is yet at hand, there obviously will come a time when these two phrases are no longer appropriate, and other changes to the statement may be needed as well." Yellen is one of the Federal Reserve policymakers who helps set interest rates. Often considered a voice for lower interest rates among Fed policymakers, Yellen will hold more sway in 2006 when she becomes a voting member of the Federal Open Market Committee. The Fed is expected to raise interest rates for a 13th consecutive meeting on Dec. 13 to 4.25%, continuing a push for higher borrowing costs that began in June 2004. However, markets are torn about when and at what level this cycle of rate increases might end. Some market observers now expect a pause at the Fed's meeting on March 28, while others see rates rising continuously to 5%. Some policymakers voiced concern during their Nov. 1 meeting that the Fed might go too far in tightening monetary conditions. When the minutes of that meeting were released in late November, stock and bond markets rose and the dollar fell as traders expected the Fed to slow the pace of tightening. Still, Fed officials have also noted that the U.S. economy has shrugged off the worst effects of Hurricanes Katrina and Rita and recent reports, such as third-quarter GDP data, have shown strength in the economy A report on Friday pointed towards a strong labor market and contained wage inflation Wage growth is a chief concern of the Federal Reserve, which fears that wage pressures could imbed an inflationary psychology in the economy. Average wages are still rising slower than inflation, however. Yellen said on Friday that the U.S. economy has held up well in the face of higher energy prices this year and the impact of hurricanes. That strength should continue in the first half of 2006 and then growth should wane slightly from the winding down of post-hurricane rebuilding efforts and the lagged effect of interest-rate increases on sectors such as housing and consumer durables, Yellen said. "Concerns about downside risks to the economy seem much smaller than just a few months ago." she added Core inflation, excluding energy and food prices, has also remained under control, running at an annual rate of 1.6% during the six months ending in October, Yellen noted. "This suggests to me that core inflation has been essentially compatible with the Fed's price stability objective, even in the face of a rather large oil shock that started well before Katrina," Yellen said. "I'm generally fairly optimistic about the future for inflation."

To: patron_anejo_por_favor who wrote (42180)	12/2/2005 4:26:02 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Texas Homebuilding Mish, I live in Southeast Texas. Housing starts have stopped. Not slowed down, stopped. All of our Mexican guest workers are busy cleaning up and rebuilding. There are no framers, concrete finishers, sheet rock hanger, brick layers or painters, tile mechanics available now. A typical new home was selling for about 80 dollars a square foot. No one will even try to build a single family home now. If housing starts are up in the south, it must be in North Florida and Alabama. Not here Cheers Qazulight

To: patron_anejo_por_favor who wrote (42180)	12/2/2005 4:32:54 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

DJ Fed's Fisher: Fed Should Not Monetize Budget Deficits DJ Fed's Fisher: Fed Will Continue 'Countering' Inflation DJ Fed's Fisher: Long-Term Deficit Projections 'Daunting' DJ Fed's Fisher: Deficits Not A Threat To Econ Right Now DJ Fed's Fisher: 'Left Unchecked' Deficits Threaten Econ DJ Fisher: Globalization Challenges Social Security Outlook Thanks to ILD who posted this on Russ's board DJ Fed's Fisher: Fed Should Not Monetize Budget Deficits By Michael S. Derby Of DOW JONES NEWSWIRES PHILADELPHIA (Dow Jones)--Federal Reserve Bank of Dallas President Richard Fisher warned Friday U.S. government budget deficits must be reined in at some point, and said the central bank must act to counter any inflation pressures that might arise from fiscal profligacy. "Longer term deficit projections are daunting, even if they do not present a clear and present danger to an expansion now entering its fifth year," Fisher said at a conference held by the Federal Reserve Bank of Philadelphia. But he added, "left unchecked they will become a grave danger to our prosperity and run the risk of seriously undermining the progress we have made in taming inflation." Fisher, a voting member of the interest rate setting Federal Open Market Committee, didn't directly address the near-term outlook for interest rates. But he did say that the central bank mustn't make it easy for the government to pursue deficits. "When fiscal policy gets out of whack, monetary authorities face pressure to monetize the debt," Fisher said. He said that to do so would be a "cardinal sin" and "it is the duty of the Fed to refrain from the slightest temptation to monetize deficits or embrace any other inflationary policy." He said that the Fed "can be expected to continue countering inflationary pressures should they arise."