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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 (64757)	6/28/2006 4:38:14 PM
From: gregor_us	Read Replies (2) \| Respond to of 110194

We Now Have to Ask Again What the FED's Goal Was, When Bernanke whispered in Maria B's ear, thus retracting the dovish nature of his Pause Speech. And then 4 weeks later, when he gave his Monday speech that absolutely tanked the markets again. And of course, the incessant fly-over squadrons of FED Govs all talking tough. Russ and I have keyed in on foreign fund inflows, to the USA. We think that noxious April TIC data, deathly worrisome in its monthly drop of inflows, might have been key in getting Bernanke to switch positions from the Pause Path. However, I'm now considering a new possibility, which is that the FED is not exactly sure what they wanted in the first place. Did they want the bond market to rally? That didn't happen. Did they want the whole yield curve to lift? That has indeed happened. Did they want the curve flatter? Today's poor treasury auction could not possibly have been what they wanted. Isn't it reasonable to conclude the tough talk on inflation in May/June was to make treasury bond investors feel protected? it was to make the world safe for a buyer of USA Debt, right?. Well, that's not happening. And there's no reason btw the curve has to adjust for a higher FF rate "by going higher." It can easily do the opposite. And it hasn't. I think that's a problem. The USD meanwhile has indeed strengthened. Did they want that? Again, I'm not so sure. A ton of this USD strength is very short-term defensive in nature, and alot of it is pushing USD shorts the other way. A huge chunck of all that is going to come off tommorrow, no matter what the outcome. I think the FED really doesn't know what it wants, and I think they're confused about their goal. I think the reason, for this, is that you cannot fight inflation w/ rate hikes in the context of the incessant, gargantuan, flotation of govt debt on a monthly basis. It is farce. I also think they are dishonest. (big suprise). "It is the last duty of a Central Banker to tell the public the truth..." --Blinder. There is NO WAY the FED is telling us the truth about what really worries them, and what their goals are. But hey, if you thought the FED was confused, I listened to bloomberg radio today and it was the longest parade of clueless losers I have every heard in my life. The Chief economists at these various banking houses are indeed the most pathetic. They sound like myself in Econ 101, trying to answer a question after a night of beer and marijuana. I mean the hedging and the gobbeldygook is just astounding. Like I said before, the FED only has credibility when it truly does what it wants to do. What do I think they want to do? I think they want to Pause. Gregor