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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (7362)	6/8/2006 12:53:45 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

Jon I'm Bearish ..This Leg of the decline will most likely get us down to Bill Gross's DJIA 5000. This appears to be the other "shoe" to drop, and is the other bookend decline of the same magnitude of the March 2000 to Oct 2003 decline. But in Elliott terms its the wave "C" complete with a true proper financial panic, and a crash phase that is generally recognized and agreed upon by the public. of course these type of things statistically happen in the fall after some sort of "summer rally", but not always. Maybe we fall to SPX 1145 or SPX 1080 and then burn some time in a weak upward correction in price into the 3rd week of July, or maybe Aug and then it's BK Triple Godzilla Whoppers For All * -vbg- * and Yes I do have a patent pending on the phrase.... BK Triple Godzilla Whoppers For All *

To: Jon Koplik who wrote (7362)	6/14/2006 11:01:14 AM
From: Jon Koplik	Read Replies (1) \| Respond to of 33421

WSJ -- various economists' comments on "owners' equivalent rent" / how it screws up C.P.I. data ....................... June 14, 2006 9:56 a.m. 'Foregone Conclusion' on Rate Move; Questions on Role of Housing Costs May consumer prices increased by 0.4%, meeting expectations, after climbing 0.6% in April, the Labor Department said. The core consumer-price index, which excludes food and energy items, grew 0.3% in May, the third straight rise of that magnitude. The core increase again topped Wall Street expectations of 0.2%, as it did in March and April. The data come on the heels of warnings from Federal Reserve officials about the risks of inflation. Following the CPI release, federal-funds futures traded on the Chicago Board of Trade, which Tuesday were putting 86% odds on a rate increase, had close to 100% odds. Below, economists weigh in on expectations for the outcome of the rate-setting Federal Open Markets Committee meeting at month's end, and the role of housing on the jump in core consumer prices. * * * Rising energy prices are still boosting headline consumer inflation. However, core inflation has also accelerated; during the past three and six months it is clearly running much faster than the FOMC's comfort zone of 1% to 2%. Much of the recent acceleration in core inflation has been due to rapidly rising owners' equivalent rent, which in turn has been boosted by the slowing housing market … It seems unlikely that the FOMC can stand on the sidelines with core inflation running at its recent pace. Consequently, it is a foregone conclusion that they will tighten for the seventeenth consecutive meeting on June 29. --Steven A. Wood, Insight Economics * * * The core was driven higher by a huge 0.6% jump in owners' equivalent rent, the biggest increase in 16 years. OER is being pushed up by a combination of falling rental vacancy rates and increased demand for rentals as rising short rates price people out of the home buying market. OER is also probably being pushed up by a technical quirk; it rises relative to primary rents when utility costs slow -- they have fallen for four straight months. Ex-OER, core CPI rose only 0.1%. The story is one of a relative increase in rents; monetary policy is the wrong tool to deal with this. Still, a June 29 hike is a done deal. We just hope sense will prevail in August; a clear slowdown should help. --Ian Shepherdson, High Frequency Economics * * * Excluding shelter costs, however, core CPI is scant sign of the acceleration that the Fed is finding "unwelcome." The Fed's silence on its attitude to the role that rental inflation is playing in generating this year's pick is both baffling and increasingly embarrassing particularly as Fed Chairman Bernanke was happy to talk about this in detail in 2003 and 2004. The Fed needs to address this issue if only because it will make its task of communicating effectively with markets easier. --BNP Paribas Market Economics * * * The failure of May core CPI inflation to ratchet down after two consecutive months at 0.3% provides a strong signal that producers are gaining some leverage in passing higher energy and materials costs through to consumers. We must temper this view, however. The owner's equivalent rent increase, already elevated at 0.4% in April, rose to 0.6% in May … This is a natural consequence of flattening real estate prices as the "cost" of diminished capital gains is passed on to rental rates, imputed or otherwise, and has nothing to do with the higher energy and materials costs pass-through, and everything to do with a deflating housing bubble … We maintain our prior view that the Fed is not yet ready to stand down from its two-year tightening campaign. --Jim Dorsey, Global Insight * * * Although inflation is heating up, April and May retail sales, jobs and wage data indicate the economy is slowing, as do recent reports from the automobile, housing and construction sectors. International oil and commodities markets remain the most important sources of inflation, but those are beyond the reach of Fed policy. If the Fed acts too vigorously to contain inflation, it risks derailing the economic expansion and pushing up unemployment... If the hawks have their way, the soft landing for the economy anticipated by forecasters and the Fed could turn into a recession. --Peter Morici , University of Maryland * * * The two main culprits [contributing to the core CPI increase] continue being owners' equivalent rent and another rise in apparel prices, this time 0.2%. Although that increase is less than the core, the key is that apparel prices had been falling and provided an offset to sectors that had been rising. In a sense that is the other story of the gain in the core CPI -- goods and services that had been falling or rising minimally are now declining at a lesser pace or rising, even if less than trend, at a slightly faster rate. --Nomura Economics Research * * * Given recent rhetoric from FOMC members, today's result basically guarantees a [quarter percentage point] tightening move on June 29, accompanied by language in the policy statement that will leave the door open for further action down the road … While we think that the homeowners equivalent rent component is likely to boost the core CPI this year, it is fair to note that housing (shelter) has a smaller weight in the core personal consumption price index than it does in the core CPI. This is an important point because the FOMC's preferred measure of core inflation is the PCE index rather than the core CPI. -- Joshua Shapiro, MFR Inc. * * * --Compiled by Phil Izzo Copyright © 2006 Dow Jones & Company, Inc. All Rights Reserved.

To: Jon Koplik who wrote (7362)	6/15/2006 4:53:22 AM
From: macavity	Read Replies (1) \| Respond to of 33421

Jon The Deflationistas have spent the last 3 years wondering if we were wrong. But as I mentioned to someone: 30yr yields are where they were 3 years ago and all the commodities are at multi-year highs. This is the strangest 'inflation' that I have seen for a while. It is strange how Mrs Market arranges the seating plan before the Party starts. The biggest surprise, to me, is the dollar rally. This is actually a very deflationary sign but I really did not expect to see it so soon. I guess there is a lot of money to be returned. My read is still bearish for USD, but if deflation really is to occur, I do not see it going beyond the 1.35 EUR level - at least not yet. Who knows? Not me! If this is a C wave - then the party is going to get exciting very soon.