45 ordspråk av John Ryding
John Ryding
The solid trend in payroll growth has been maintained into February. Reduced labor market slack, illustrated by the decline in the unemployment rate since June 2003, appears to be putting upward pressure on wage increases.
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The underlying details of this report paint a stronger picture of the manufacturing sector, as evidenced by the robust growth rate of orders excluding transportation over the last three months.
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There are obviously going to be losers and there are going to be winners from the stronger dollar. The U.S. consumer is the clear winner.
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There is no doubt in my mind that inflation is low and heading lower. I think the patient hand should be willing to accumulate bond positions here.
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There's no barrier to the Fed lowering interest rates significantly.
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There's no doubt there's political pressure on the Fed to do nothing on September 20th. The Fed will allow economics to overrule the politics of the situation.
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This increasing activism by the Justice Department seems to be applying a model of competition that applied to 19th-century America, rather than 21st-Century America.
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This means people will be able to go out and refinance their house where they may not have been able to do before and I think that we have to remember this isn't over. I suspect the Fed will cut rates again in November and that will continue to keep a lid on borrowing costs and hopefully will compensate for some of the lack of credit flows to corporations that problems in the bond market have caused.
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This report is largely an energy story, but the size of the increase can't be easily dismissed.
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We are going through a period of weakness in March and toward the end of February. And that relates to things like Japanese (fiscal) year-end and a few other technical factors. I think getting on the March 30 FMOC meeting, the Fed (will do) nothing that reassures people . . . and I think we set ourselves up for an April bond rally.
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We see the funds rate rising to 5% by the May 10 FOMC meeting and we see an increasing risk of a 5.25% fed fund rate by the middle of the year.
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We've created a buying opportunity in effect.
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With energy prices pushing up overall inflation again, there remains the risk of pass-through into core inflation.
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With the Fed maintaining an economic-weakness bias, Greenspan is more likely to be concerned with the signs of further economic weakness in this report rather than worrying about the increase in average hourly earnings.
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You have to remember it's only exceptional and prolonged heat that changes trends, since the Commerce Department seasonally adjusts out all typical heat. The game is to try to figure out if the weather is seasonally abnormal. Except for this week, we've had a pretty normal summer in the Northeast.
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