Dear Diary

JACKSON HOLE, Wyo. -- Sorry so quiet last few days. Been especially busy researching wolves and such. Finally catching up with work now.

Friday

Phone ringing particularly early. Discussions about whether or not bond prettiness (down in yield, up in price ) has anything to do with bullish comments from Bill Gross of

Pimco

on television last night. Love the anti-shares analogies Gross comes up with -- recent bit about piss-ant Internet stocks with market caps bigger than Mexico, Argentina or South Korea had me rolling -- but decide to dismiss him on remembrance that he typically sees "value" (and urges buying) no matter where bonds trade. Recall former employee relating that running any document through a spell check in Pimco's version of

Word

flagged "bearish" as Not Found. And adding it wasn't an option.

Here we go -- this makes much more sense. A rumor making the rounds is that

Greenspan

was "shocked" about bond ugliness (up in yield, down in price) in the wake of Tuesday's and Wednesday's testimony. Easily (and all on its own) accounts for the full point that bonds have tacked on by the time sissy stock market finally opens.

Get around to entering

Michigan

and

Chicago PMI

and

gross domestic product

numbers into spreadsheets. Strength of final sales numbers has me laughing out loud (so much so that, especially against backdrop of slowdown stooges on tee vee, typing this column actually proves tough) -- ditto the 5.8-point surge in the Chicago index. Make mental note that Chicago has risen that much or more only seven times since 1991 and figure that no one will be stupid enough to claim that Chicago strength won't translate over to the

NAPM

numbers to be released Monday. Then, within 14 minutes, read two comments from two separate places claiming exactly that.

Marvel that the market is up so much in the face of such strong numbers. Sure, yields bound to back down a bit at end of month that delivered eight-point bond loss, but sheer strength of fourth-quarter momentum alone guarantees huge first quarter, and Chicago means that NAPM will top 50% for the first time since May 1998. Wonder. Wait. Watch

Judge Judy

scream at punk-looking defendant, telling him he has no character.

Mowing through obscenely big bowl of boneless and skinless sardines when real rumor hits: G is so disturbed about bond ugliness that he has gone to the press. Word is that an article will soon appear, and that it is to be interpreted as an addendum to the testimony.

Nothing much doing for rest of day. Call two excellent technicians and ask if today's action hints -- even remotely -- that the bear market for bonds is at or nearing an end. Both laugh.

Catch an early dinner -- one day a chef from San Francisco will come to Jackson and discover that yes, the words "lamb" and "pink" do indeed go together -- and walked over to the hockey game. Opted to show a little confidence in the

Moose

by downing one beer -- along with a tug on the flask -- every time the

Powell River Regals

scored.

Remember nothing past the first period.

Saturday

Somehow manage to wake right away when alarm rings (an hour early) at three. Wonder whether G went to Wessel or Berry while machine powers up. Rule out the guy whose employer won't publish again until Monday and, with the click of a (grossly misnamed) Favorite,

see that G did have something to say.

Think hard on this. Spin through three CDs (a

Dusty Springfield

, a

Johnny Cash

and then the

Rushmore

soundtrack) and decide that this is all bonds need to turn Diving Board Friday into Oh Yeah! Week -- strong economic numbers be damned.

Here a 12-hour portion of the diary has been blacked out.

Later head to local bar to watch basketball because, (a) bet the farm on

Duke

, and, (b) bar is only place around with more televisions than my place. Ended up easily winning bet and buying Sierra Nevada -- a Chico beer -- for anyone interested. Scooted to reservation at best restaurant in town and confirmed (among other things) that the best part of any goose is its liver -- especially on top of those cute little pieces of toast. Ended up leaving a

Ben Franklin

on a $260 tab, partly spillover Duke happiness, but mostly because the best way to keep that money multiplier working is to give cash to a server.

Ran into

John Cusack

on the way out. His sister was not with him (big minus), but his table was one of the rowdiest in the restaurant (big plus). Accepted an invitation to continue getting trashed with the group; ended up having an excellent time.

But couldn't get anyone to divulge

Joan's

digits.

Sunday

Woke 90 minutes before

Lakers-Houston

game began. Read and re-read the Greenspan blurb, thought hard about what a couple of moles had to say (oh yes, dear reader, the

Fed

has its share of rogues) and came up with this:

• That testimony was not bullish -- period. Nor did G intend it to be bullish -- period.
• Think about it. Back on Oct. 5, the yield on the 30-year Treasury dipped as low as 4.693% (an all-time intraday low) and settled at 4.712% (an all-time closing low). That's when the bear market in bonds began -- waaay back in October, not on the first day the Chairman testified. And Greenspan knew it -- even if market participants didn't (and they clearly didn't). Further -- and this is a point not many picked up on -- the Fed was actually entirely happy with the slow grind (down) in price that brought yields up, gradually, to an average 5.36% during the week ended Feb. 19 (the week before he testified). There is nothing better than that for the slowdown scenario G craves so badly.
• So what happened? G fully intended to keep this upward drift in yields intact -- but he went too far. The line that suggested that the last of the three easings might have to be taken back at some point in future pushed his testimony definitively into bearish territory. It was there even without that line, mind you -- and the employment report to be released Friday (pieces of which G will see as early as tomorrow) will highlight the fact. So rid your head of the ridiculous notion that G intended the testimony to be bullish -- that's just plain stupid. There were far, far too many outright bearish statements in the document for it to be interpreted as such. Besides, in order to believe that, you must also necessarily believe that G was unhappy with the backup in yields that began back in October. Nothing could be further from the truth. (And even if he was unhappy, he would have sent a clearly bullish signal -- one strong enough that the market would "correct" and quit pushing yields up.) Surely he was concerned about the pace of the Tuesday through Thursday backup -- but not its direction.
• Think about it. Greenspan saw the bond reaction to his testimony on Tuesday. When he testified again on Wednesday, he could have, at any point during the Q&A period, dropped any of a number of comments -- even one relatively mild in tone -- to get bond yields to quit rising. Did he? Not even close. Then, after he saw the reaction to no change in his tone on Wednesday, and after he saw even more blood spill on Thursday, he could have inserted any of a number of strong bullish comments into a newspaper piece slated for Saturday. Did he? Nope. He merely had a reporter point back to the portions of the testimony that wise market participants ignored to begin with. The most important sentence in the piece was the one about policymakers "currently seeing no need to raise interest rates" -- but that actually says very little. The market is in the process of adjusting to the fact that rate cuts have been wiped clean off the chalkboard -- and to the fact that the Fed has done absolutely nothing to throw cold water on the notion that the next move in rates, whenever it comes, will be up.

Also keep in mind that Berry, as applauded as he is, has not proven at all useful when it's mattered most. Even with the "access" he has, he had no idea that the April 1994 intermeeting

tightening was coming. Ditto last autumn's intermeeting ease, the scoop on which a no-name reporter in London dug up.

Anyway, despite all that, I'm still thinking that the Berry piece alone would be enough for the market to rally this week -- while first watching

Kobe

throw down one brutal dunk en route to an embarrassing

Pippen

performance. (What do

Martha MacCallum

and

Michael Jordan

have in common? They both need to get rid of their ridiculous new glasses because they're not fooling anybody.) Then watched

Alice

talk to that trippy

Caterpillar

.

Monday

Bond up a couple of ticks overnight, but G chose not to speak to Wessel.

It's already clear that the Berry factor will disappear quickly and completely if the economic numbers surprise big on the upside.

And they do.

Enter them all into spreadsheets. Make a note that disposable (after-tax) income is on track to rise even more this quarter (6.1%) than it did last (5.2%), when spending surged 4.5%. Torture my second-quarter consumption increase enough to beat it down as "low" as 3.4% in order to get a good feel for just how wrong the morons calling for two-point-five will be. Triple-check the residential numbers in the construction spending report because they look big enough to be typos; they're not.

Laughing out loud entering the

NAPM

numbers, thinking, (a) the sissies who called January strength an aberration are now explaining a second straight month of "screwiness," and, (b) what are the forecasters who dismissed Chicago strength on Friday telling their clients right now?

Beginning to think about the

employment report

to be released Friday. Have estimates from two of three excellent forecasters (the other not out until later this week), which square with what spreadsheet says -- good chance of a 300K print. Take a minute to calculate that, thanks to the January increase in both hourly earnings and the consumer price index for medical care, the first-quarter

employment cost index

is already on track to look uglier than it has at any time since the first quarter of 1992, and note that a big wage number on Friday will make it look even worse.

Decide that economic numbers over the next month or two are likely to prove so strong that, (a) yields are going to rise further, and, (b) it will take a much stronger Fed statement than G muffled through Berry to convince the bond market that it's wrong.

Gotta go now. Sardines -- and

Basic Instinct

on

USA

-- await.