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To: Return to Sender who wrote (31541)	7/18/2006 12:24:10 PM
From: sixty2nds	Respond to of 95632

12:01 BONDX Bond Watch: Trade Slammerd Post Data Pre Bernanke The bond market has been beaten down as players look to inflation data to decipher the dollar's direction. The action had been busy taking "defensive action, Pre-Bernanke put buying by real money," as the market looks to see the chairman trash-talking inflation. The inflation numbers will continue to play, while the Fed-head's commentary tomorrow & Thurs will add some heat to the inflation/rate hike rotisserie. BMO's Andy Busch has a nice tkae, "My belief is and has been that the Fed will take Fed Funds up to 5.50% on August 8th due to inflation. The average 2s-10s inversion is about 45 basis points during Greenspan tightening periods. Why would a new chairman go away from a practice that has proved effective over time?" Trade had been busy early, but had now tapered off, globally bonds are off while the 2-10-yr yield spread is pulling into less inverted territory. PPI was a little hotter than expected though stripping out energy & food the number was inline. Net foreign purchases spiked up in May but the dated nature of report gave markets little support. The buck is better at 1.2506 to the euro & 117.2300 yen to the dollar. Spot gold is up at 646.15 (+3.12) in an otherwise choppy session while the crude is higher at 76.10 (+0.80). The 10-yr is currently -15/32nds yielding 5.126% (for more bond commentary click here).

To: Return to Sender who wrote (31541)	7/18/2006 1:40:57 PM
From: Donald Wennerstrom	Respond to of 95632

RtS, I think a portion of your last remark says it all, << we are still entering a period of time where fear of an economic slowdown* is effecting the stock market adversely.>>* The operative word here is "fear" of the future. In 98 and 02, there was no "fear" - it was the real thing happening in real time. This time, instead of experiencing the real thing, we are "fearful" of the future. The economy is good, earnings are good, 2H06 is looking very good, but the "market" is still "fearful". It is so bad, companies are reporting earnings and upping their profit outlook for the year, and still the market goes down. From Briefing.com today, <<13:00 ET Dow -23.62, Nasdaq -11.23, S&P -3.94 [BRIEFING.COM] The Dow briefly turns positive within the last 15 minutes but almost as quickly relinquishes its push to the upside. United Technologies (UTX 58.90 +0.94), which beat analysts' expectations and raised its full-year profit outlook, and Coca-Cola (KO 43.29 +0.59), which also topped estimates, have been the biggest sources of support among blue chips. However, several components recently turning negative (e.g. AA, AIG, BA, C, and MMM), and International Business Machines (IBM 72.91 -0.79) hitting session lows ahead of its earnings report after the bell, are weighing on the price-weighted index.>> I think we ought to find a cave somewhere, and just go there to hide - come out in 07 sometime just to check if the market is still "fearful" or not.:) Don