Economic Events, with links
4.20.04 - Elliot Wave International
Did you know that "fear" of a certain "dreaded
event is approaching a fevered pitch on Wall Street"?
That "Nervous investors will be hanging on every word" about the
event?... That "worries" about it "have sent shock waves through the financial world"?... That "few events strike as much
fear in stock investors," including "White Knuckles" and "Anxiety"?
These quotes come from several news articles that came out over the weekend and this morning. But in truth,
this sort of scare language from the financial press really can only mean one thing: What they describe is not only NOT scary
-- it's certain to be an utter non-event..... You can also look at the flip side. Remember in early 2001, when conventional
wisdom said "Don't fight the Fed," as the rate cutting campaign began? After a record eleven reductions in rates that year,
the major stock markets still lost ground, on the way to the bear market lows in 2002. As usual, the conventional wisdom has
it wrong -- if anything, the evidence suggests that they have it backwards....
(YES, IT IS JUST MORE THAN POSSIBLE SINCE WE KNOW THAT "THEY" PLAN TO IMPLODE THE WORLD ECONOMY, TERROR
ATTACK(S) INDUCED OR NOT - WHICH RATHER SEEMS PRETTY OBVIOUS AT THIS STAGE - TO ENFORCE THE "ONE WORLD GOVT")
Eye On China
Issue #076 4/19/2004
There’s a quiet, but raging, debate taking place among economists: Is China
in a boom/bust cycle that is about to go bust? If bust is the outcome, it would most likely hammer U.S. financial markets.
For the sake of your investment portfolio, it’s important to pay attention to China..... So, if China’s torrid
growth pace turns into a bust, it could be very ugly for the U.S. interest rate picture. If a key buyer of U.S. bonds —
China — stops buying, because it is facing its own credit problems (that’s what happens during a bust), the U.S.
Treasury would be forced to jack up the rate of interest it pays on its bonds in order to entice a new source of buyers. Rising
rates would hammer already over indebted consumers...... What we are talking about here is the potential for a massive increase
in U.S. interest rates. It’s an ugly and unlikely scenario. But, it is possible. And because it would be so potentially
devastating for U.S. financial markets......
What Tax Cut?
By Evelyn Pringe
04/19/04 "ICH" -- Any long-term financial benefit anticipated
from the Bush tax cuts has likely gone right out the window to the rising cost of health insurance and out-of-pocket medical
expenses...... Hikes in Medicare premiums have really hurt retired seniors on fixed incomes. Since Bush took office, monthly
premiums for Medicare Part B have risen 46%, and they are expected to increase another 13.5% this year..... Those people still
wondering what happened to their money from the Bush tax cuts, should check to see how much they lost over the past 3 years
during visits to a doctor, hospital or pharmacist.
The Face of Deflation
16 April 2004
...... The problem is that once you see
deflation in the numbers it is too late to do anything about it..... A deflationary downturn could have a much worse impact
on our economy than it did on Japan's....
Questions of Interest
By PAUL KRUGMAN
..... the International Monetary Fund urges
the Federal Reserve to prepare the economy for higher rates to "avoid financial market disruption both domestically and abroad."
But how far will rates rise? Let's not get into Greenspan Kremlinology, parsing the chairman's mumbles for clues about the
Fed's next move. Let's ask, instead, how much rates will rise if and when normal conditions of supply and demand resume in
the bond market.
My calculations keep leading me to a 10-year bond rate of 7 percent, and a mortgage rate of 8.5 percent —
with a substantial possibility that the numbers will be even higher. Current rates are about 4.3 and 5.8 percent, respectively;
you can see why the I.M.F. is worried about "financial market disruption." Why 7 percent? Well, in the past 20 years the average
yield on 10-year bonds has, in fact, been about 7 percent. Why shouldn't we think of that as the norm?....... Finally, there's
the upside risk. As I've pointed out before, the twin U.S. budget and trade deficits would set alarm bells ringing if we were
a third world country. For now, America gets the benefit of the doubt, but if financial markets decide that we have turned
into a banana republic, the sky's the limit for interest rates......