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A Bernanke Surprise ???


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#1 Frac_Man

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Posted 14 February 2007 - 10:47 AM

Not even sure speaks when he speaks today .... Who is this Guy ? Enjoy Hank

#2 arbman

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Posted 14 February 2007 - 10:49 AM

Very strange... USD and Long term rates are going down together, the commodities are flat for the week and not much movement for the day. I am not sure this scenario can end very well. You have short term inflation from the USD which is boosting the stocks, a long term slow down forecast by the bonds. It is not clear whether the commodity prices are stable because of an impending slow down or increased supply... What will the Fed do? - kisa

#3 Frac_Man

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Posted 14 February 2007 - 11:13 AM

It's not very pretty !








Very strange... USD and Long term rates are going down together, the commodities are flat for the week and not much movement for the day. I am not sure this scenario can end very well. You have short term inflation from the USD which is boosting the stocks, a long term slow down forecast by the bonds. It is not clear whether the commodity prices are stable because of an impending slow down or increased supply...

What will the Fed do?

- kisa



#4 arbman

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Posted 14 February 2007 - 11:15 AM

OK, it is getting clearer now, the inflation expectations are going lower as the commodities also started to head lower, this is confirmed by the bonds so the money went out of the energy and utilities and into the growth issues. I think it is still some sort of a slow down with the moderation in the prices ahead and near an IT top after this short term whiff. The confirmation would be a rally in USD back up again, what a stretched market... - kisa

#5 fib_1618

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Posted 14 February 2007 - 11:25 AM

What will the Fed do?

"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

Nothings changed...Bernake is making that very clear in his testimony this morning.

And if nothings changed, the market has continued clarity.

Clarity, in this case, is more money driving prices higher.

Fib

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#6 arbman

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Posted 14 February 2007 - 11:37 AM

Fib, the commercial credit growth confirms this, the money supply grew enormously last year and it is clearly not sustainable without lower rates. The long term bonds are saying the inflation will be lower or there will be USD destruction. The USD should eventually head higher and what the growth will do from that point on is to be seen. If there is a true technology driven turn around, this could be very bullish with the mild inflationary pressures. If the stocks go lower into the 4.5 yr low and the Fed lowers the rates, it would be again very bullish as well due to another inflationary blow off into 2008-2009. In any case, I expect the tech stocks to make a good low this year and the year should end well. It is this time frame between now and an eventual low in summer that worries me the most... - kisa PS. if the USD can not bottom despite this rosy picture, then the other central banks are too restricting on their currencies, this would not be bullish. So a further decline in the USD would not be bullish...

#7 fib_1618

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Posted 14 February 2007 - 12:53 PM

If the stocks go lower into the 4.5 yr low and the Fed lowers the rates

The 4 year low already passed last August, and the interest rate A/D lines continue to suggest stability in current rates.

So a further decline in the USD would not be bullish...

Not necessarily.

Fib

http://stockcharts.com/c-sc/sc?s=$NYA&p=M&st=1985-01-01&i=p58522282883&a=98120792&r=602.png

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Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

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#8 pdx5

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Posted 14 February 2007 - 12:55 PM

This stock market is rising mainly on one commodity... hope of a goldilocks scenario! But let us try to wake up from the wet dream..shall we? Chrysler just announced 13,000 GOOD PAYINGF JOBS cut.. Private housing is not showing any signs of stopping the bleeding.. Labor costs are in an uptrend.. US $ is hovering near 10 year lows.. National Debt is in stratospehere and climbing every year and if you count the UNFUNDED OBLIGATIONS of US Govt for vested Social Security & Medicare benefits, it is much much higher. The Fed is caught between Iraq and a hard place. If they drop rates, US$ plummets which can't be any good for all those imported goods and inflation. If they raise rates to support the sinking US$ that will surely prick the over-inflated real-estate and commodities baloon. Iraq related spending is expanding, not shrinking. If Bush's surge does not succeed then get ready for a genuine civil war breaking out in Iraq which could easily spread. Sunni countries such as Saudi, Egypt, Jordan, the gulf emirates, etc will not allow shia population of Iraq backed by shia Iran to massacre the sunni minority in Iraq. The only positive in the economic situation is the good earnings of corporations, better than usual cash levels in corporate treasuries and the high level of M&A. Is this sufficient to move the ball forward? The jury is still out on the outcome. In the meanwhile China economy (currently 3rd largest economy in the world) is expanding at 10%, India (4th largest in world in purchasing power) is expanding at close to 9%, Brazil is expanding at 8+% and so are some of the former Soviet satellites, and Asian tigers. Seems to me for long term investors the place to be is in foreign stocks.

Edited by pdx5, 14 February 2007 - 12:58 PM.

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#9 arbman

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Posted 14 February 2007 - 01:06 PM

If the stocks go lower into the 4.5 yr low and the Fed lowers the rates

The 4 year low already passed last August, and the interest rate A/D lines continue to suggest stability in current rates.

So a further decline in the USD would not be bullish...

Not necessarily.


The 4 yr low and the 4.5 yr low are not the same cyclicals...

The USD is hugging the bottom of the range, don't be so confident that it will justify for the foreigners to hold the US equities if they slip lower. So far, the USD depreciated from the record highs over the past 6-7 yrs, it is time to bottom. In other words, you are worth as much as your money, too much depreciation in the currency is never good...

The labor market and the service jobs are the last to run, if they peaked, this cycle also peaked and the economy will not turn around before a good correction and lower rates. I don't believe the service sector will see a substantial damage, so I don't expect the massive lay offs like 2001-2002, instead just a low and more monetary stimulus, mostly for the housing...

- kisa

#10 fib_1618

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Posted 14 February 2007 - 01:32 PM

The 4 yr low and the 4.5 yr low are not the same cyclicals...

Difference please? (Just so you know, the current 4 year cycle used to be the 4.5 year cycle prior to 1982 where it began to contract.)

The USD is hugging the bottom of the range, don't be so confident that it will justify for the foreigners to hold the US equities if they slip lower.

Maybe you're missing the point of what would cause the Dollar to decline while seeing US equities advance. Any thoughts?

The labor market and the service jobs are the last to run, if they peaked, this cycle also peaked and the economy will not turn around before a good correction and lower rates.

How is then we can have virtually full employment in the United States based on a large percentage of "service jobs"?

All this fundamentalism is starting to give me a headache. :wacko:

Fib

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"Beware of false knowledge; it is more dangerous than ignorance" - George Bernard Shaw

 

Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

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