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Are we going to talk about UPWARD revisions today???
looks like this means recession or not will be determined soon
Please if u have time or team,
Take a look into Cisco ....(good level for a entry point 15-16)? whats behind this massive drop?
Appreciate anyinsights about CSCO.
Both can go down at the same time. Rare, but . . uh . . . not good.
Yep, when the reckoning comes, the correlation of all assets reverts to 1. Even gold will take a momentary dip.
Think of a universe where Fed stops buying USTs . . . China stops buying USts . . . Pimco stops buying USTs . . .formerly 'hope-filled' equity analysts downgrade profit expectations on an oil shock . . .Japan sells its USTs . .
Not likely I know. Completely out of left field I know. But, lets just pretend.
I think we revisit the prior lows per
and we break the trendline of death for the US Gov, after which interest rates eat them alive
but, we are approaching a presidential mid-term election and we have (by far) the largest military in the world, so...
Yep, hard assets draining fiat-based paper.
given the choice of "many" or bill gross being right, i think i'd side with gross over the longer term.
I am convinced Martin Armstrong's Economic confidence model predicts a topping out 'turn date' in Treasuries next week.
Always trust a man who went to the Big House for his personal convictions. Agreed. (no sarc)
Wow, that double bottom really boosts the bullish argument for the 10-year, even after the recent two month run.
That said, I fully recgonize that the risk/reward today is far less attractive than it was in March. So initiating big "buy and hold" positions today is not the way to go.
Tactically, if the S&P corrects (after it sinks in that the Fed will truly let QE expire for a while) and if funds needs a place to park for a few months, then there's a strong short-term case for a break out in the above chart.
Disclosure: After ~4 months of being long the 10-year (50% of portfolio), I've reduced my risk by shifting everything into the 5-year.
BTW---after redrawing this chart (NOT using the log scale), the descending trendline has ALREADY been broken!
Its all Technicals
In reference to Bill Gross or any other forecast or recommendation - "early" is wrong. His trade is a loser.
All paper trades will be losers. All physical assets (especially revenue-bearing) will be winners.
HUH? Even if its just bad timing, that necessarily means money left o nthe table (ie losses) We could all be right if it didnt matter WHEN we bought and sold. Gross's timing was especially poor.
Yes, his timing was poor, but I doubt he wasn't hedged to some extent. Again, all things paper are going to be problematic, period. This will remain the case so long as price discovery and valuation remain impossible.
I don't understand something. Gross is saying that treasuries are a bad investment going forward. What is his argument? Deflation is coming and treasuries are not costless to buy or trade? That inflation is not going to abate as the Fed thinks. Treasury interest rates are too low?
Treasury rates are too low and the Fed will keep them there. The government nor the consumer can handle higher interest. Real inflation is currently sitting at our around 10% with slow money velocity. When QE2 hits the system we will be looking at 14-20% real inflation. If money starts to pick up velocity then hold on to your shorts. All this in the face of a high unemployment.
Bill Gross is of the opinion that Treasuries are a bad investment at low interest when inflation is currently around 10%. That's a guaranteed looser of 5-6% on your money (currently). He is just a tad early in his play but still correct IMHO.
"On the other hand, should the ratio of the UST/SPX breach above the 0.97 level, the down cycle will be broken and it may be time for a new regime of consistent Treasury outperformance."
Here's someone who thinks Treasuries will do very well for a while, but then they will get whipsawed:
"Mr. Edwards' thesis could perhaps be summarized as "first deflation, then inflation."
"Edwards thinks that bond yields, already just below 3% on the 10-year note, could fall all the way down to 2%."
"If that happened, we would be mimicking the experience of Japan.... and the Japanese Nikkei index lost more than 75% (three-quarters) of its value in result."
"Ultimately, though, Edwards thinks out-of-control inflation still comes in the end. That is because the long-term costs of a deflationary downward spiral are too painful for any democracy to bear."
"And that is when you get the truly "nuclear" all-in policy responses that turn the currency into confetti and send bonds crashing through the floor."
"The new downside target [for the S&P]? A toe-curling 400 on the S&P, or roughly a 70% fall from recent levels."
Oops--sorry for the triple post. I got an error message, so I reposted. Then I got a lengthy delay, so I hit the X button (cancel--I thought) and reposted again.
Since you were so kind as to say so may I suggest you try for the dynamic below (Not many have employed it) Have fun !!
I suspect we'll channel here until post July 4 holiday in the US. By then a clearer picture in European sovereign debt and post QE will be available for Mr. Market to gaze at in the high heat of summer while watching austerity discontent on the streets. Meanwhile the RRE situation in the US, China and perhaps Australia coupled with diminishing returns in the IND commodities and related segments of the export led recovery story will be topical.
I'm sure Bill Gross won't mind being a bit early on his UST call since the very same dynamics are in play with respect to his marginal purchasing of RMBS last fall. That RMBS shopping spree should yet yield quality dividends later this fall through winter. IF Bernanke is even somewhat successful at pinning the 10 to 2-2.4 to boost RRE purchases in the US then Bill may have to wait a bit longer for his UST position to pay out.
In other words momma is gonna have some pretty hips show on that pretty chart. Nice that even on a bounce in S&P the 10 is steady below 3.
So much for this effort at "normalization" of the long end to 5. More fodder for unusual & exigent peddlers.
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