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B4 The Bell, Turdsday April 22


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#1 Hiding Bear

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Posted 22 April 2004 - 07:14 AM

:D Welcome to B4 The Bell! :D

Shocked. That's what AG said in 1994 after a very rapid run up in long term interest rates. Could it happen again? Bet on it.

As Fed Signals Rate Boost,
History Offers Warnings

Last Rise After Long Period
Of Low Rates Bred Turmoil
For Bond-Market Investors
April 22, 2004; Page A1
The last time the Federal Reserve ended a long period of ultra-low interest rates was in 1994. The U.S. economy took it well and performed impressively for the rest of the decade. But the rate increases set off a bond-market tidal wave that helped sink the Wall Street firm of Kidder Peabody & Co., California's Orange County and the Mexican economy.

Are we about to go through that again?

Fed Chairman Alan Greenspan made clear again yesterday that the Fed is preparing to raise its key short-term interest rate from its current 46-year-low of 1%. Rates "must rise at some point to prevent pressures on price inflation from eventually emerging," he told a congressional committee, though he also signaled that no increase is imminent. (See related article.) About the only thing he hasn't done is hold up a poster with a big arrow pointing up.

So a bit of history is timely. After a mild recession in the early 1990s, the U.S. economy struggled with a "jobless recovery." It was held back, as Mr. Greenspan put it, by "50-mile-an-hour headwinds" -- a reluctance by banks to lend and businesses to borrow. So the Fed kept its primary tool, the federal- funds interest rate at which banks lend to each other overnight, at what then was deemed a low 3% for 17 months.

By the time the Fed raised rates in February 1994, officials thought they had prepared markets adequately. They hadn't. "We had a far greater impact than we anticipated," Mr. Greenspan admitted to colleagues on Feb. 28, 1994, Fed transcripts record. "Markets ... clearly have been shocked."


http://online.wsj.co...e_whats_news_us

#2 Guest_yobob1_*

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Posted 22 April 2004 - 07:44 AM

Morning.

I may be wrong here, but is seems to me that positive news is providing little or no lift on an individual or cummulative basis. Acts to me like this pig wants to go down hard and some of it is slipping through the fingers of the invisible hand. Could the exits become a little crowded soon? Will more of the sheeple bolt this time as opposed to 2000? I'm betting they will since a few of them who might have been paying attention have discovered that those who mangle their money, are shall we say, less than sincere in their intentions as stated in their soft focus, warm and fuzzy ads depicting retirees bounding through fields of wildflowers or sailing off to the South Seas in their magnificent yachts.

Hyper has been right on DU all along. The suffering, illness and death of that long term problem is the responsibility of every American or British citizen that has allowed our governments to run amuck over the last 50 years. The military - industrial complex that Eisenhower warned of has come fully to fruition and the wage slaves of this country are paying the bill. When will we get mad enough to say enough is enough? Will we wait until the body count on our side reaches 10,000? 50,000? What is the magic number? Did we learn nothing from Viet Nam?
I would venture a guess that every politician in Washington is guilty of some illegal activity worthy of dismissal and or imprisonment by statute. Ron Paul may be the only exception. If we indeed have the best politicians money can buy, perhaps we need to find a different procurement procedure. In the meantime I wish that the whole lot of them were isolated on a barren rock island in the Aleutian chain with a group of hungry and nasty Polar Bears.

Rant off.

#3 DrStool

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Posted 22 April 2004 - 07:51 AM

If All We Have Is Hope

We'd Better Pray Hard

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#4 Guest_yobob1_*

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Posted 22 April 2004 - 08:18 AM

My sentiments exactly. If they raise rates, the patient dies a swifter death. The only possible rate rise I see is if Greenscum plans of leaving in June - which I wouldn't count out.

'Rate Hike' an Idle Threat

Which brings me back to the theory that Sheryl F. finds so distressing that "Greenspan will increase rates, making the dollar strong and pushing metal shares down in the short- to mid-term." We should ask, what possible incentive does the central bank have to push interest rates higher in order to strengthen the dollar? For if either or both of those objectives is achieved it will tighten the noose around virtually all who owe dollars (and I mean mortgage borrowers in particular, although certainly not exclusively). Does the Fed risk toppling a global debt pyramid just to beat down the rising cost of milk, eggs, college tuition and fuel in the U.S.? I should think not.

Mr. Greenspan has flatly stated that deflation is no longer a concern, but let me give you the straight skinny: No matter what he says, it is his ONLY concern. We can also be certain that he would much rather talk about raising interest rates than actually raise them. Count on it. And don't allow yourself to be distracted by recent increases in the prices of consumer goods and services; for they are no more than microscopic blips compared to a deflationary black hole that threatens to implode if even somewhat higher rates are applied to an estimated $150 trillion of very thinly collateralized derivatives. There is simply no alternative logic, and anyone who professes otherwise is either not in command of the facts, or a self-aggrandizing huckster like Larry Kudlow.

Concerning the supposed threat of inflation, we are all so deeply in hock that we should be praying for it, not hoping Mr. Greenspan will "fight" it. And if $50 crude and $3 at the pump should come to pass, do not mistake that for "inflation" either, since, rather than being passed along through the economy as inflation was during the 1970s, it will only stimulate a tsunami of deflationary bankruptcies in industries such as trucking, air transportation and automobiles. And if you do not expect your wages to rise along with the price of gas, milk, eggs, tuition and medical care, then those price increases will not be inflationary for you, but rather deflationary to the extent they will cause you to curtail the consumption of other things. It thus follows that, in a macroeconomic perspective, "inflation" itself has become deflationary
.

Deflation Dead? Yeah, Sure

#5 wndysrf

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Posted 22 April 2004 - 08:20 AM

Hey Soup:

Did you hold on to those KLAC puts? Down $4.00 in the PreMarket.

Congratulations. I was lucky to grab a NVLS short on the "gap and crap" day of their Yearnings Report.

Jobless Data and PPI coming up.

Let's see how much they can bend and distort data this time....

What's up with the U.S. Peso??

Topping pattern, or a continuation pattern to higher highs???

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#6 DrStool

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Posted 22 April 2004 - 08:27 AM

Almost certainly a top. See Uncle Buck.

http://www.capitalst...d/unclebuck.htm

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#7 Lock Limit Down

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Posted 22 April 2004 - 08:56 AM

Hiding Bear
Nice post

I see the invisible hand stepped up to the plate at 1118.25
No surprise.
Smokescreen PPI at .5% and the bond gets a bid but for how long
Metals get the paddles applied but continue to indicate What me worry?
Annual PPI at 6%, manipulated as it is, saying inflationary pressures are building. Who cares sell silver and gold.
Interference everywhere.
Silver getting whacked again now.
Cat one of thier favs blows out to the upside
Should cause a flurry of buying into a key Dow component.
More and more money into fewer and fewer stocks. One sick sick market. Very few can get past the daily headlines. Undeneath the averages an accident waiting to happen.
Posted Image
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." --- Thomas Jefferson

#8 Guest_yobob1_*

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Posted 22 April 2004 - 09:08 AM

Glad you put that "almost" in their Doc. :lol:

Unemployment claims down from an upwardly revised previous week but higher than expected. Core PPI driven up by higher truck and SUV prices? I'm willing to bet I can buy the same truck cheaper now than I could 3 months ago. They're only looking at the "ask" and not the "bid".

And one for Sleddy

Another 4,000 jobs slashed combined with plant closings means these are not temporary lay-offs.

CHICAGO (Reuters) - Healthcare products maker Baxter International Inc. said Thursday it will cut up to 4,000 jobs to control costs as it reported a first-quarter profit that fell 13 percent from a year earlier.

Baxter to slash up to 4,000 jobs

#9 soup

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Posted 22 April 2004 - 09:22 AM

wndy: I am short klac, unfortunately I sold puts against the postion yd. Had a nice profit and wanted some insurance. Oh well, one thing in this world is certain, when I hedge folks should take the other side. No real complaints, I still have a nice profit on the short, but yes I did leave some on the table.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#10 brian4

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Posted 22 April 2004 - 09:22 AM

Morning Crew-Helmets on, Buckle up- window at the Bell for 35 minutes-I expect a hard DOWN day-if I am wrong you can all throw tomatoes at me-Lock n Load! ;)

#11 rog

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Posted 22 April 2004 - 09:35 AM

KLac is 9.2% of the sox

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Posted 22 April 2004 - 09:41 AM

Morning Crew-Helmets on, Buckle up- window at the Bell for 35 minutes-I expect a hard DOWN day-if I am wrong you can all throw tomatoes at me-Lock n Load! ;)

eXPECTING 1111spx completing C wave down then off to da races...

we will c

#13 Lock Limit Down

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Posted 22 April 2004 - 09:41 AM

They are buying the housing {rocketing}and selling the SOX
Now stepping up to the spoos as always closing the gap
Nothing conclusive but dont like the HGX signs
Posted Image
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." --- Thomas Jefferson

#14 brian4

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Posted 22 April 2004 - 09:41 AM

break 10,285 on the Dow-Back up the Truck! ;)

#15 Lock Limit Down

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Posted 22 April 2004 - 09:45 AM

Just cant believe this trin at 2.99
Bad data???
Anyone confirm pls
Posted Image
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." --- Thomas Jefferson





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