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Observations On The Bond Bubble From TrimTabs And TCW
TrimTabs' Charles Biderman discusses the flow of funds, and the interest rate outlook for 2010: nothing too outlandish - the Treasury bubble thesis revisited, as well as the biggest issue of all - the roll (much more on this from Marla soon). Also some observations on the interplay of money markets and alternative funds, extensively discussed here. Also, according to TCW's Chief Global Strategist the treasury bubble will burst in a few months, coupled with a collapse of the dollar. What this means is that rates will surge. What this also means is that once rates surge, equity values will be whacked as the cost of capital will no longer be zero (sorry Zimbabwe Ben, but you are completely wrong - a cost of capital of zero is the number one reason for pretty much all bubbles). So what do futures do? Up, up, up. The stocks-bonds divergence trade is alive, schizophrenic, utterly insane and well.
So let's get this straight: PIMCO said yesterday to get out of the bond market. Now TCW has joined the chorus calling for a bond bubble. How many more of the world's biggest bond managers will it take for equities to decouple from the mysterious futures buying bid? We suggest you forward all relevant correspondence:
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Strap in TD and crew see: PHK
http://market-ticker.denninger.net/archives/1813-Carnage-Continues-PHK-Who-Smells-Smoke.html
Old news Skippy. TD and Marla commented on this last week, before Denninger. Also, Denninger assumes too much. He may understand things, but he's a shrill emotional voice. Can't remember who said it, but somebody once said if you expect all the people who caused this mess to go to jail, you're an idiot. Denninger expects this and rants on it constantly. Follow his rants at your own risk.
denninger is a sad case....shrill emotional voice
is indeed apt....i agree that he can connect the
dots and see substantive issues but he totally
lost me with his juvenile tantrums and nazi-esque
attitudes....
i am all for exposing evil but he is not smart
about it.
I like Biderman. Must drive him nuts to watch these employment figures go by and taken as gospel.
Anyhow, Byron Wien's top 10 surprises for 2010, 25th year edition
http://www.fundmymutualfund.com/2010/01/byron-wiens-10-surprises-for-2010.html
clicked thru this and looked at his predictions for 09. he nailed S&P 500, oil, gold, and UST10 (close).
Surely, you mean 33 Liberty Street?
Taken from Byron Wien
"Japan stands out as the best performing major industrialized market in the world as its currency weakens and its exports improve. Investors focus on the attractive valuations of dozens of medium sized companies in a market selling at one quarter of its 1989 high. The Nikkei 225 rises above 12,000"
Japan is only self funding because its (now shrinking) population keep buying their bonds. Why would I want money in a overly indebted country with a shrinking funding base, to buy assets denominated in a depreciating (according to him) currency on the basis of rising export earnings (in Yen) which I'll never see because the company either plunks them on the balance sheet in cash or pisses them up the wall in shoring up zombie group companies? And all at only a quarter of what was the most overpriced market anywhere, ever!
i don't think you want to be short the dollar if bond yields are rising
That's exactly what I was thinking. Can't have it both ways, people.
Traders are all over the Ozzie Dollar for just that reason: higher interest rates. If US rates rise, expect the greenback to stiffen mightily.
(I've always wanted to say that...)
:D
So... while "people" are moving into bond funds, besides me and perhaps maybe 5 others on ZH, who the hell is buying Treasuries? I can guarantee that it's not the individual investor, they're in cash. The banks might be buying the short term bills (as a proxy for cash, ty for agreeing on that) but who the heck is buying ANY other type of treasury?
Also, if you use sentiment indicators at all, what percent are bond bulls? I keep repeating, besides banks, who are the "investors" buying treasury bills?
(ps... my answer is no one, the banks don't want you to because if the rates become negative, they have to pay to own short term cash, they want the rates low, they just don't want them negative)
TrimTabs used to be the best source of ephedrine for cooking dope. Oh... hold on... I'm thinking of MiniThins.
Kids, don't cook dope; it's bad for your teeth.
I know there's quite a fantasy of seeing US Treasuries collapse and the world go into freefall, but why would anyone who also believes in the PPT and manipulation presume that such a thing will ever be allowed to happen?