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The Shape Of Things To Come?


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Despite the Fed's bullshit about "non inflationary inflation", the rate increases must come earlier next year rather that later. Here's why.

 

The Fed doesn't want to start the rate increase cycle in June, and then have it run thru the Presidential elections.

 

They need to get their work done months before the elections.

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Jennifer Alban "Current Yield" column in current Barrons:

fed futures trading suggests we won't see a rate hike until May or June.

machinehead: does this affect your support of the strong dollar? :P

My support of the strong dollar, like Snowman's, is purely rhetorical. :D

 

Jennifer Alban is looking at the Fed funds futures. The forecasted chance of a rate hike becomes 50/50 at a futures contract value of 98.875 = 1.125% (halfway between 1.0% and 1.25%). The 50/50 dividing line currently falls between the April and May 2004 contracts:

 

Fed funds futures

 

Interest rates are one of the factors that affect currencies. But expectations of inflation, economic growth, and pure technical trend following also affect currencies. Frustratingly, the "mix" of factors which governs changes over time.

 

I'm constantly involved in the J-yen spot market for business reasons. But I have no ability whatsoever to forecast the J-yen, even with an accurate sense of the purchasing power parity of the yen. Currency trading is voodoo. Unless you have the magic mojo, stay away from it. ;)

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KaliFornia prospects not improving..

 

Just two days before Arnold Schwarzenegger is scheduled to be sworn in as governor of California, his chief budget advisor said on Saturday the new administration would face a "staggering" deficit that will grow to $62 billion by 2006-07 if left unchecked

at some point, the kali deficit becomes a self-reinforcing spiral. Without the ability to print money, and a stagnant economy at best, there's no way to "grow" out of the problem. Two solutions come to mind: default....or secession :D

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Lets see...now Morgan Stanley is ready to settle the probe into its mutual fund scandal. If there was any doubt...the big boys are allowed to rob the bank. When caught...the settle for a piece of the profits. The SEC is hitting these guys with a handbag. Crime pays my friends...just not for the punk who sells joints. That is something that you get hard time for.

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