Inflation

“Risk-free bond returns could become return-free risks.” The Leuthold Group has hedged its fixed income position by shorting U.S. Treasuries. May completely hedge entire fixed income exposure later this month.

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Much of the upward price movement in commodity prices, as measured in U.S. dollars, is the result of the weak dollar. A weaker dollar has an inflationary impact on U.S. prices.

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Stocks can go up, when interest rates go up. Rates are expected to rise over the second half of 2003, but stocks have proven they can go up in environment of rising rates.

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Is the Fed ready to buy Ten Year Treasuries to stimulate the economy? This could certainly lead to another housing/refi boom. But are lower rates really necessary to boost business spending?

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We think deflation fears are overblown, but, it isn’t necessarily bad for stock performance.

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Is the Fed ready to buy Ten Year Treasuries, if necessary to stimulate the economy? This could certainly lead to another housing/refi boom, but will it be the catalyst to boost business spending/borrowing? We think not.

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New bond market timing tool discovered. Testing reveals it has a remarkable forecasting record. Currently signaling bond market top!

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The grand 20+ year secular bull market in bonds is probably topping out.

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The spread between Long Quality Corporates and twenty year Treasury bonds at the pinnacle is back down to a more normal range, as the Treasury shortage elimination-thesis has fallen apart due to rising budget deficits.

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We believe it is still an opportune time to add to High Yield positions. The economy is improving and corporate profits are rebounding from depressed levels.

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Many of the questions in this month’s issue came from December’s client meetings in Chicago.

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High Yield bond only fixed income area strongly appealing to us, currently.

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We believe it is an opportune time to add to High Yield positions. The economy is improving and corporate profits are rebounding from depressed levels.

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While this higher reading is still far from signaling a significant inflation increase, we do believe that mild upward pressures are building.

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Huge secular bull market in bonds (emerging in 1981) is topping out.

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While the higher Commodity Diffusion Index reading is still far from signaling a significant inflation increase, we do believe that mild upward pressures are building.

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Huge secular bull market in bonds (emerging in 1981) is topping out.

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Expect CPI and PPI to both edge higher in second half of year...could be negative surprise, but not something big.

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Expect CPI and PPI to both edge higher in second half of year...could be negative surprise, but not the start of something big.

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Expect CPI and PPI to both edge higher in second half of year...could be negative surprise, but not the start of something big.

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