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

To: UncleBigs who wrote (48987)	1/7/2006 12:29:55 PM
From: westpacific	Respond to of 110194

Precter, his overall theory is correct. I now follow a better market timer, this guy is so solid. He sees no way out of the deflationary collapse. I sent him an email today to ask how these FED liquidity injections and if the FED just keeps gunning the money supply how that plays into his models. Will let you know his response when it comes. This ole timer is damn good (been published in Barrons many times), one of the best in the business and been at it as long as old R. Russell - Mr. Perma Bear. LOL The problem with Precter - he moved to a Colorado ski resort so is playing more than tracking now. He is loaded off his fame. Never follow these guys anymore. If you have access to Prechter, keeps us tuned in from time to time. West

To: UncleBigs who wrote (48987)	1/7/2006 6:04:23 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

I do think he'll be way behind the curve on monetary conditions. A hike to 4.75% on Fed Funds will almost ensure a housing meltdown in bubble markets and probably cause a subprime liquidity event. Of course, I think that might be what he wants. He needs a crisis as an excuse to aggressively ease. I agree on all but one point. BTW when I am away care to ghostwrite for me? There is no doubt in my mind that the FED is targeting asset prices. They created a bubble in housing and they know it. They also created a bubble in junk bonds and they know that too. In fact, I think they want to create a recession (or a serious prolonged slowdown), but not a "hard one". The difference between now and 2002 is corporate balance sheets. I think they believe corporations will be able to stand a slowdown or recession because of those balance sheets (provided corporations do not blow it all on buybacks). What I think they do not understand is that capex is not going to pick up, nor do they understand what is going to happen to employment in a housing slump, nor do they understand the magnitude of the housing bubble. The biggest thing they do not understand is how hard it will be to turn this puppy around once a housing bust gets underway. In that regard I think they will pause in May but will not be talking of cutting (changing bias) until December. If I am right on that and we are right that 4.75 is a huge overshoot, the big problems come in second half of 2006 and simply continue on. Mish