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

To: Mike Johnston who wrote (60320)	5/5/2006 9:19:43 AM
From: GST	Respond to of 110194

I share your view.

To: Mike Johnston who wrote (60320)	5/5/2006 9:50:25 AM
From: Oblomov	Read Replies (2) \| Respond to of 110194

>>with the Fed frantically printing money. in what way is this happening? M1 is up 0.9% from a year ago, and M2 is up 4.7%

To: Mike Johnston who wrote (60320)	5/5/2006 10:27:30 AM
From: LLCF	Respond to of 110194

What about: 4.) continued weakening employment picture, leading to home mortgage defaults?? 5.) higher costs of living leading to mortgage defaults? 6.) The above leading to deflation in the RE market in general including overbuilt retail and office markets? 7.) Falling dollar leading to decrease in retail spending (due to higher prices), including travel, hotel other service industries? 8.) Given that the US IS a 'service economy', with ever increasing money being sucked OUT (higher import prices of everything due to falling dollar)... how can deflation in assets NOT be on the table??? I agree that the biggest losers will be bag (bond) holders, and that hyper inflation is probably inevitable mid to long term, but past inflationary periods have NOT been kind to stocks or RE short term as far as I know. Disclaimer: I'm NOT disagreeing in the longer run... I think hyperinflation is a likely scenario, but I don't assume the fed will be agressive soon enough to stop asset deflation when it starts. I don't think anyone is going to be all surprised if home prices 'deflate' by a nominal 20-25%??? These numbers always lag and I see homes as: 1.) Average Americas BIGGEST asset by far. 2.) Expectations at the Fed and other agencies that values WILL go down, and therefore expect little action due to initial pain period for homeowners. DAK

To: Mike Johnston who wrote (60320)	5/5/2006 10:28:23 AM
From: John Vosilla	Respond to of 110194

"There are are more and more signs that the adjustment will occur through a decline in the dollar and high inflation rather than a drop in nominal values. As far as i am concerned the deflation argument is dead." A good rational summary. I think assets most at risk of heavy losses in the next few years are long term bonds and bubble RE valued at very low cap rates today.

To: Mike Johnston who wrote (60320)	5/5/2006 10:33:46 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

what is going to happen to overvalued assets with the Fed frantically printing money> Fed drains repo pool off to only $16.75 billion this morning. Fed has had only one coupon pass in the last six weeks. ny.frb.org BOJ site hasn't been updated since May 2nd, www3.boj.or.jp but bank reserves fall from 32.88 trillion on March 1 to 17.56 trillion on that date. The end of ZIRP on May 19th can't be ruled out. That would be a Bradley turn date as well.

To: Mike Johnston who wrote (60320)	5/5/2006 10:37:47 AM
From: stockfiend	Read Replies (1) \| Respond to of 110194

The Fed has been lulled into complacency by the muting of the bond-market vigilantes, silenced by huge inflows from dollar-hamstrung FCBs. The mantle has been picked up by the "commodities vigilantes". Unlike the bond vigilantes, they can't force the fed's hand via long-term rates. But they will eventually force their hand by making a mockery of their currency.

To: Mike Johnston who wrote (60320)	5/5/2006 3:25:14 PM
From: mishedlo	Respond to of 110194

I will be wrong if... You left off the only thing that makes any sense Credit contracts and asset prices collapse Mish