Economy, the Fed, Gold Rush..

im not so sure we dont have some price and debt deflation. see the mises site today for an argument for stagflation.

gold is gonna get whacked if the war goes well as USD gets a boost. near-term, big boys coming out of gold and into equities - the pro margin has supposedly jumped. longer-term, the value of a greenback is the full faith and credit of guvt, cant imagine many will be happy with the printing presses running FT. the world financial markets' problems have not been cured by a PPT market ramp.

good luck
 
Gold has already been getting whacked and the printing presses will be running as long as the war lasts and long after, until we get a real economic recovery, IMHO. There are several gold stocks that haven't broken their long term uptrends and have been dropping on very light volume, I'm not long yet but i'm keeping cash ready. Right now I'm long QQQ to take advantage of this nice rally.
 
we have some price deflation but its only in manufactured goods where there is too much production capacity. Also companies are getting by with fewer workers.

If you look at the CRB index commodities have just been cranking along to the upside with only minor dips.
 
Quote from MondoTrader:

we have some price deflation but its only in manufactured goods where there is too much production capacity. Also companies are getting by with fewer workers.

If you look at the CRB index commodities have just been cranking along to the upside with only minor dips.
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yes, the CRB is one beautiful uptrend. i went long NEM, a little early perhaps as it will likely test 22 area again. there have few times when i am really comfortable with a position. i saw SPK buying nice properties during the depression, so as we turned, i jumped on and none other than SAM ZELL, overpaid me for my stock. i rode WM up from $19 area a few years back, they were making loans on good apts - sold that one way too early! and now gold; i dont see how the CB can flood the market with liquidity, easy money loans, you friggin name it, w/o a day of reckoning. some say miners are just stocks and will get whacked like everything else, but in some way gold is gonna come back, particularly for furners, so im not sweating it.

BTW, i talked to a process server at small claims court (had to sue an a-hole) who repo's cars and stuff here in s.d. county. he said his business is booming, he said his lot is full with mostly SUVs, but he's repo'ing junk like jet skis too. how can people lose their car on a "no interest loan" - you tell me, but im gonna be making a trip to the auction in the next few years for the best car ive ever owned at a "steal price" - all cash of course!
 
Current economy
There are only two other months in the last decade when payroll declines exceeded 300K -- both during the recession in Oct and Nov 2001. The key question is whether the Feb 2003 plunge was largely aberration or a true reflection of the underlying economy. Only about half of the -308K Feb decline can be explained away. The military reserve call up, severe winter weather and the pullback in travel/tourism given terrorist fears add to uncertainty as war drums beat loudly.

Regardless of any Feb offsets the massive size of the payroll decline tells the tale of an increasingly weak economy. However, the Fed focuses on trends, not monthly spikes, when directing policy. While preparation for a potential ease should be prepared, we only expect an ease bias (economic risk assessment) rather than a cut in the extremely low 1.25% policy rate.

2003311a.gif


Post Iraq
If the wait isn't too long the economy post an Iraq invasion (or better still, complete disarmament and the removal of Saddam) brings a far clearer view of the outlook. The expected return to sub-$30 oil prices and the calming of war/terror fears lifts consumer and business confidence. The rate of acceleration in business investment is suspect given the large remaining excesses but the modest current uptrend will certainly continue. The expectation for near term resolution on the key geopolitical concerns is largely what holds the Fed back from an immediate response to the payroll data.

complete article: http://www.briefing.com/FreeServices/fs_fed.htm



Josh
 
The Federal Open Market Committee decided today to keep its target for the federal funds rate unchanged at 1-1/4 percent.

While incoming economic data since the January meeting have been mixed, recent labor market indicators have proven disappointing. However, the hesitancy of the economic expansion appears to owe importantly to oil price premiums and other aspects of geopolitical uncertainties. The Committee believes that as those uncertainties lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to economic activity sufficient to engender an improving economic climate over time.

In light of the unusually large uncertainties clouding the geopolitical situation in the short run and their apparent effects on economic decisionmaking, the Committee does not believe it can usefully characterize the current balance of risks with respect to the prospects for its long-run goals of price stability and sustainable economic growth. Rather, the Committee decided to refrain from making that determination until some of those uncertainties abate. In the current circumstances, heightened surveillance is particularly informative.

Voting for the FOMC monetary policy action were Alan Greenspan, Chairman; William J. McDonough, Vice Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson, and Robert T. Parry.

http://www.federalreserve.gov/boarddocs/press/monetary/2003/20030318/

Archived Previous Releases: http://www.federalreserve.gov/boarddocs/press/monetary/2003/default.htm


Interesting, is this the first time that the Fed indicated no stance going forward?



Josh
 
Quote from Josh_B:

Current economy
There are only two other months in the last decade when payroll declines exceeded 300K -- both during the recession in Oct and Nov 2001. The key question is whether the Feb 2003 plunge was largely aberration or a true reflection of the underlying economy. Only about half of the -308K Feb decline can be explained away. The military reserve call up, severe winter weather and the pullback in travel/tourism given terrorist fears add to uncertainty as war drums beat loudly.

Regardless of any Feb offsets the massive size of the payroll decline tells the tale of an increasingly weak economy. However, the Fed focuses on trends, not monthly spikes, when directing policy. While preparation for a potential ease should be prepared, we only expect an ease bias (economic risk assessment) rather than a cut in the extremely low 1.25% policy rate.

2003311a.gif


Post Iraq
If the wait isn't too long the economy post an Iraq invasion (or better still, complete disarmament and the removal of Saddam) brings a far clearer view of the outlook. The expected return to sub-$30 oil prices and the calming of war/terror fears lifts consumer and business confidence. The rate of acceleration in business investment is suspect given the large remaining excesses but the modest current uptrend will certainly continue. The expectation for near term resolution on the key geopolitical concerns is largely what holds the Fed back from an immediate response to the payroll data.

complete article: http://www.briefing.com/FreeServices/fs_fed.htm



Josh
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dude, dont read the papers? it was the bad weather.:p
 
They are just trying to keep the dollar from imploding IMHO. Also they don't have to drop rates in order to use open market operations which the press rarely follows and are actually more effective. When they drop rates they are encouraging the banks to expand the money supply, when they use open market operations they are directly doing it.
 
I saw this blurb on msn investor today:

``I would say down, then much higher,'' Kaplan predicted of the next moves for gold. ``Because the gold market is in a secular bull. The run from $330 to $390 was based on emotion and irrational fear. Now we've come back to levels where value is represented. The war premium is really gone.''
 
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