Adjustable and interest-only mortgages constitute 2/3rds of new home loans

Section:

By Jim Sinclair
Monday, May 16, 2005

http://www.jsmineset.com/

Chinese and Japanese holdings of U.S. Treasury instruments declined
in April. Someone should tell the U.S. media because this
development is earth-shaking in a financial sense.

Clearly the most important news of the day got little play in the
financial media. The Treasury International Capital (TIC) report
reflects the ability of the United States to finance its federal
budget and trade deficit and therefore the current account deficit --
all of which are out of control. Everything most certainly hangs on
the TIC figures, including the future of the dollar and therefore
the price of gold.

March Treasury International Capital data reported that foreign net
purchases of domestic securities amounted to US$60.1 billion, down
from a net $98.1 billion in February. This was way below the
forecasted consensus of $72 billion. Foreign central banks sold a
net $14.4 billion, down from net purchases of $18.7 billion in
February.

Most important was that Chinese holdings of U.S. Treasuries declined
for the first time in a year, while Japanese holdings fell for the
second time in three months.

The report from the New York Fed economic index returned the worst
number since 2003. This is another piece of evidence that the U.S.
dollar recovery is rolling over. That puts the Fed directly in
between a rock and a hard place.

That being said, I believe you can take to the bank that the
decision between the Fed acting to hold up the equity market or the
dollar favors the equities while damning the dollar.

You have heard now from Ruben and Volcker, but hey -- what do they
know compared to charts and star gazing?

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