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How We Get To 5.5% On The 10 Year, In 110 Short Pages
All you ever wanted to know, and much more, on the opposite of the perspective espoused by David Rosenberg and other deflationists, who believe that Japan is a case study of what to expect in bond yields. 110 pages chock full of information for the bond wonks out there, and a great starting point for anyone who wishes to refute the steepener argument.
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LOL....110 short pages. Was that meant for that swizzle stick that couldn't be bothered to read Chris Martenson's work? Will get to reading it now but couldn't resist commenting on your jab.
The beauty of being in a research group on the street is that when you turn out to be dead wrong, you still have a job.
I tried to go thru it.
I cried Uncle at page 36....
..zzzzzzzz
If you think THIS is boring, try this one:
http://www.amazon.com/History-Interest-Rates-Third-Revised/dp/0813522889
Sidney Homer's tome on interest rate observations and analysis, first pub. in 1963. 716 pages of pure bond rate nirvana - 1800's gilt rates, 1920's bunds, 1930's dollar bonds, you name it, its in there. The local library had an original copy and I skimmed through it. I was strangely happy and peaceful afterwards.......
:)
i do not have the download link active. is there a place this is hosted I can download it?
MS have been so confused for the last 2-3 years it is barely worth reading this rearward biased research which typically illustrates its uselessness by asking a lot of questions. Generally IMO the longer the justification the weaker the initial premise.
Given that they cut all their own proprietary risk at the bottom and are now adding it again and that they as a firm choose to focus on "retail" for earnings tells you all you need to know.
Stephen Roach has such a penchant for pointing out the obvious these days it is just sad to watch
I sure would be nice if it was downloadable.
My favorite part is how they expect a decent run up in interest rates and it will not kill the economy or housing prices.
hahahahahahahhaha
I know it might be hard to believe that there was a US economy before house price speculation or sub-5% interest rates, but the economy was just fine in the late 90s when interest rates were relatively high compared to today.
So no need to panic :)
Thats nice. Market still goes up
Where MS and Rosie part company is on the underlying growth and inflation forecast. MS is bullish on growth with some inflation. Rosie is seeing shrinkage and deflation. Thus low nominal rates. I am with Rosie.
However, his low rate outlook does not, in my opinion, adequately account for decreased credit quality, even for Uncle Sam.
I'll try to boil it down from 110 pages.
For a very long time, academics will define the system, and convince everybody that something can be had for nothing.
This will work for a long time.
Eventually, a few people will figure out how to game the system and make fantastic amounts of money leveraging .1% spreads and yield curve differentials. Somewhat concurrently, reality will catch up with the academic fantasy and everybody will find out that you can't have something for nothing, at least not forever.
Suddenly there will be a great dislocation, and all those conservative investors who worried about whether or not they were going to get 3.85 or 3.9 percent return on their principal, will find out that in fact, they will no longer even be getting their principal back.
Academics will write papers about unforseeable black swan events, providing post-event rationalizations for what happened.
The clock having been reset, the game will start again, albeit with different players.
+1, GREAT SUMMARY.