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

To: mishedlo who wrote (49827)	4/18/2006 7:10:57 PM
From: Perspective	Read Replies (1) \| Respond to of 116555

Yet when you look at the market action, it's really hard not to give in and believe in the inflationary scenario. How much are the rates actually slowing the momentum in commodities? BC

To: mishedlo who wrote (49827)	4/18/2006 9:06:20 PM
From: regli	Respond to of 116555

Mish, I felt that this section of the Stephen King article was quite interesting: Message 22365430 "... One mechanism that doesn't seem to be working to the advantage of the US these days is the emerging markets channel. During the 1990s, higher US interest rates often signalled disaster for emerging markets. Whether it was the 1994 Mexican crisis, the 1997 Thai crisis or the 2000 Argentinian crisis, US interest rates were heading upwards. Emerging markets back then were acutely vulnerable to the effects of tighter US monetary policy. When US interest rates were low, emerging markets attracted excessive capital inflows that typically led to domestic overheating, asset price inflation and big current-account deficits. Once US interest rates started to rise, however, the process went into reverse: capital headed for the exit, current account deficits could no longer be funded, and emerging market economies collapsed. Oddly enough, this was all rather good news for the US economy. Rising US interest rates placed a lid on US inflation not so much because US growth slowed down but because the US, indirectly, benefited from the deflationary forces unleashed within emerging markets. Collapsing economies elsewhere in the world led to lower commodity prices and a strong dollar, at a stroke making US imports a lot cheaper. The US had, inadvertently, found a mechanism by which domestic inflation could be lowered without the need for domestic output losses. This mechanism no longer works. Emerging markets have deliberately avoided running current-account deficits. Indeed, the offset to the ever-widening US current-account deficit has been an ever-growing emerging market current-account surplus. Partly a deliberate act of policy - China has no intention of going the same way as Thailand or Mexico in the 1990s - it's also a reflection of rising commodity prices, which have provided higher export revenues for the likes of Russia, the Middle East and some countries in South America. They, in turn, have benefited from the continuation of strong growth in China, India and other fast-developing areas of the world economy. Unlike the 1990s, therefore, US monetary policy isn't having much of an effect elsewhere in the world. Commodity prices are still rising and, as a result, US inflation isn't behaving itself. ...

To: mishedlo who wrote (49827)	4/19/2006 6:22:46 AM
From: shades	Read Replies (1) \| Respond to of 116555

Channel stuffing Has princess finally sucked all the money from boyfriend/daddy that she can? No more new jeans for princess? I continue to believe that the American consumer is the weak link in the global daisy chain. marketwatch.com Which gets us to the moral of today's story: It's almost always a red flag when receivables grow faster than sales. Double that when receivables rise while sales fall; triple that for sales to a distributor; quadruple that when the distributor is in another country. P.S.: I've heard rumblings from industry insiders that the high-end jean business is finally slowing in the U.S. Couple that with heavy insider selling and the possibility of too much stuffing last year and the first quarter, expected May 1, could be a doozy.