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

To: mishedlo who wrote (76568)	3/20/2008 4:03:06 PM
From: Real Man	Read Replies (2) \| Respond to of 116555

Looks like stocks, treasuries, and the dollar are all celebrating commodity deflation. <G> I wonder how spreads are doing. Selective cash placement has done the trick.

To: mishedlo who wrote (76568)	3/20/2008 5:59:33 PM
From: Mike Johnston	Read Replies (3) \| Respond to of 116555

This is absurd. Back in 1999 people were buying cash burning revenue-less companies at 500X eyeballs and buying CSCO at 1% earnings yield. At the end of 2001 people were buying dollars at 120, when it was clear that the asset inflation based US economy is a house of cards. In 2005/06 they were investing in real estate at 2% cap rate or buying "one door and 2 window" tool sheds in crappy neighborhoods for half a million dollars. Now somebody is buying fixed income at 0.50% yield in time of 10-15% inflation, when it is clear that the Fed is giving out money and will print trillions if necessary and that 20%+ inflation along with socialism is on the way.

To: mishedlo who wrote (76568)	3/20/2008 9:24:33 PM
From: Real Man	Read Replies (1) \| Respond to of 116555

Message 24427100 Deflationary forces that can stall USD fall for some time. However, as soon as stress is relieved a bit, the slide on weak fundamentals and interest rates differentials continues - at least, until US recession goes global or US current account reverses. You can track deflationary flows as LONDON and the Caribbean combined in TIC data, as foreign banks turn to FX swaps to satisfy their USD liquidity needs. However, so far these flows are substantially lower than what is needed to counter US monthly current account deficit - and, God Forbid, foreign CB flows. If those reverse and FCB sell USD, God help us. Now that USD became second carry trade funding currency after Yen, this too has to be taken into account when thinking which way the buck will go. As long as the world is stronger, the buck will continue to fall. As long as the global economy does not go into recession, commodities will likely keep rising, even though a significant global slowdown could hit them. If the Fed chooses to do massive bad debt monetization like they essentially did with Bear, well, inflation will skyrocket. I think we come to crossroads when SOMA runs dry.