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"No One Gets Rich Betting Against The Market - Until The Moment The Market Is Wrong"

Tyler Durden's picture


Via Bill Blain of Mint Partners,

There a couple of good reasons to be more than moderately concerned about what’s happening in the fixed income space. Once more my gallant crew, we are sailing into choppy waters... which may mean trouble ahead, but it also spells opportunity! Two things concern me:

Firstly, despite global easing, global bond yields have backed up last few days. Immediately the Fed gets the blame with rumours they may scale back QE – which is reactive nonsense. The Fed has made clear we need to see clear evidence of growth, not just hints, before they change course. But the Treasury market is off across the curve. JGBs, Gilts and Europe are all higher last few days.

Is this a buying window after some mild panic, or has something really changed? Higher government yields don't fit with the thesis coordinated global easing from US QE, Japan Reflation, and ECB peripheral bond support will further fuel an asset grabathon.

Particularly worrying is the Japanese reflation package appears not to be working as predicted - it has caused the Nikkei to soar (next stop 16k!) and the Yen to weaken (through 102 and 110 in prospect), but it was also supposed to lead to a flatter and lower Japan yield curve. Instead we are seeing a massive bear-steepener in JGB yields.

The steepening is particularly relevant at the critical 2-5yr sector of the curve. This is where Japan banks hold their exposures:  some US$ 1 trillion 70% in JGBs and 30% in US Treasuries (which is risk!). Steeper yen curve triggers concerns bonds are in sell-off mode and a steeper dollar curve... Wider bond spreads in US$ trigger concerns on Europe – turning sentiment weaker.

There is so much folk have missed about the critical importance of the current Japan/Yen games in terms of global markets. The fact Japanese investors did not immediately start buying foreign assets was wrongly interpreted as proof it wasn't going to happen - conveniently ignoring the Golden Week fortnight and the fact Japan buyers were wrongfooted by the scale of BoJ intervention and needed to build a new consensus on new investment approaches. Now we are seeing Japan investors in foreign buy mode.

Similarly, the BoJ’s new QE buy programme is aimed at flattening the Yen curve, buying the long end and short. As we’ve said before.. don’t fight Kuroda. But that’s not the way the current steeper curve looks to nervous investors. Hence the fear in today’s market and the pundits screaming buy stocks. Is this a fundamental turnaround point? Or is it too early to call? (Happy to talk about each market anytime.)    

The second issue with the market currently is that global rates are so low the market is losing the will to live/play. When highly speculative CCC names yield less than 7% what's the point in investing? The risk-reward is just too skewed toward higher risk over lowering returns that it simply makes little sense to take.

One big fund in the more alternative space told me Friday “our buying interest has pretty much dried up of later – we’re not being paid for credit or liquidity risk, so it’s hard to justify doing much.” And that view is being echoed across asset classes in the fixed income sector. Again this fuels the “what’s the point in running further risk in bonds.. let’s move into stocks” calls of the market!

No one gets rich betting against the market, UNTIL THE MOMENT THE MARKET IS WRONG. And as we know the market is a pernicious beast that delights in nothing more than wrong-siding the maximum number of people with the maximum losses. Which doesn’t really help much.. is this the moment to buy more bonds on the slide or is it the start of something more significant and a shift out of bonds?

I think its worth paying attention to what’s happening re the JGB curve.. if/when it flattens, it’s a global buy confirmation. You want to be ahead of it.

Take a quick look at Gold this morning – after Friday’s weakness, the sell off continues. But gold volume in Asia is up (nearly double on COMEX futures), despite the apparent absence of global inflation and the dollar’s resumption of core global value yardstick. What does this tell us? Concern factor is very much there.


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Mon, 05/13/2013 - 09:49 | 3555893 LawsofPhysics
LawsofPhysics's picture

Please, 85 billion per month, soon to be 120 billion, soon to be 300 billion, (not even counting other CBs), the "market" is not going to be wrong anytime soon.  There is a "bid" under fucking everything.


Long black markets and sharecropping as scarcity become a real issue as everyone starts trying to take delivery of, well, everything...

The fucking liabilities and debt hasn't gone anywhere folks.  So many paper promises, so little real assets and collateral...

Mon, 05/13/2013 - 09:52 | 3555905 Rubicon
Rubicon's picture

"So many paper promises, so little real assets and collateral..." amen

Mon, 05/13/2013 - 10:33 | 3555999 flacon
flacon's picture

@Rubicon, that's the truth. Everything works at the casino until there is a lineup at the "Redeem Your Tokens Here" booth. Then the lady behind the counter says: "We ran out of cash. You can come back tomorrow. Tokens are as good as money."

Mon, 05/13/2013 - 10:45 | 3556056 THX 1178
THX 1178's picture

@Laws of Physics. You are right until you are wrong (just like everything else in economics/finance) Wile E. Coyote is in a state of 'not splatting' on the ground until he splats on the ground. The fed cannot print money forever:

1. If the Fed Continues to print money or increases the amount of money printed monthly, bond holders are encouraged to exit bonds for something of higher return. Bond exit = interest rate spike (unless of course Fed buys them all up which it will)

2. But if the fed is the sole buyer of US debt then we are looking at a runaway inflation scenario, which will have to be combatted by an interest rate spike. The fed will have to dump bonds at this point (otherwise people will be flooding into the streets demanding answers.)

3. If the Fed sells debt in competition with the treasury, interest rates spike, money leaves the economy to pay additional interest... stock market tanks and derivatives get triggered. Kaboom.

4. Prices of precious metals are suppressed to keep fiat ponzi going and of course, when you fix prices below fair market value you create a consumption boom followed by a supply shortage. We all know Comex and LBMA dont have the metals in their vaults. If they start delivering paper instead of metal, there will be a run on bullion and precious metals will spike.

5. But in reality, precious metals are not spiking but purchasing power of the dollar is falling. This purchasing power is falling presently, so there really is no support under the Dollar, or the economic system.


It won't last forever. The Central bankers cannot keep this going indefinitely. Not this time. And with precious metals taking that hit recently, and vaults across the world being drained... I estimate that our time in this here equilibrium is about to dry up.

Mon, 05/13/2013 - 10:47 | 3556085 CrimsonAvenger
CrimsonAvenger's picture

It's hard to overstate how damaging a bump in interest rates will be. Savers will be happy (are there any left?), but home sales tank and the fed deficit explodes. They really have to go all-in at this point on keeping the rates down.

Mon, 05/13/2013 - 11:06 | 3556174 Sofa King Confused
Sofa King Confused's picture

My father told me, when I first started investing back in the 80's, that stocks may go up and up and up, but, eventually they must give into gravity.

Mon, 05/13/2013 - 09:55 | 3555913 W T F II
W T F II's picture

You are not correct. There is really NO depth of bid under anything. Perfect conditions for a flash crash

Mon, 05/13/2013 - 09:57 | 3555916 LawsofPhysics
LawsofPhysics's picture

Bullshit, the printing/monetization/POMO is a very real bid.  Provide evidence to the contrary or shut the fuck up.

Mon, 05/13/2013 - 10:01 | 3555923 BLOTTO
BLOTTO's picture

Wait until they release the 'X-Factor' Event on us...the kind you cant research, chart or analyze...

Mon, 05/13/2013 - 10:13 | 3555945 Doña K
Doña K's picture

Starve the rats. Put the lid on investing. Let them buy and sell to and from each other.


Mon, 05/13/2013 - 10:36 | 3556029 Herd Redirectio...
Herd Redirection Committee's picture

There seems to be  a real push in the last couple days to convince people the market is about to turn around (Hilsenrath, various posters on here, etc.) and crash.

All I can say is, I think you are more likely to get gobbled up, than time it perfectly. 

All the "It can't go on" talk just seems primed to get the next round of shorts to commit, and then pull the rug out from under them.  Anything is possible, and obviously the market is overvalued (or, the market is signalling severe USD depreciation in the coming years)

Mon, 05/13/2013 - 12:40 | 3556289 Winston Smith 2009
Winston Smith 2009's picture

That which cannot continue indefinitely won't.  However, exactly when the hammer will come down is not knowable.

Mon, 05/13/2013 - 10:45 | 3556070 tmosley
tmosley's picture

There are reletively few institutions participating in the program, and those institutions may act against the Fed, since they are not the same.

It could happen.  That doesn't mean that it will, but the probability is non-zero.  I'd say it's not even less than 1%.

Mon, 05/13/2013 - 11:32 | 3556281 LawsofPhysics
LawsofPhysics's picture

The unfunded liabilities remain, you either re-structure the debt, eliminate the debt (jubilee) or reduced your liabilites, period.  These are the only options (aside from chaos and death of fiat of course).

Mon, 05/13/2013 - 12:24 | 3556470 WhiteNight123129
WhiteNight123129's picture

Of course it is a real bid, but for every bid there is an offer.


Mon, 05/13/2013 - 10:23 | 3555951 mayhem_korner
mayhem_korner's picture



The flow of currency underlying the bids is not going to fail.  So the bids will be there.  But if the faith in that counterfeit currency fails, the bids won't matter and we won't be talking "flash crash".  We'll be talking dollar DOA and the most massive reallocation of wealth in all history.

Mon, 05/13/2013 - 10:44 | 3556063 fourchan
fourchan's picture china, thanks to nixon kissinger and the trilateral commission. 

Mon, 05/13/2013 - 11:28 | 3556265 Herd Redirectio...
Herd Redirection Committee's picture

If there is no enemy, you have to create one.

Same as, when things get serious, you have to lie.

I sometimes stop and wonder if people in China ever wonder where those factories came from.  Literally, where was that factory, before it was opened in China. What are those people doing now?  Will that happen to me?  (the answer is yes, but its still 15 years from manufacturing leaving China en masse IMO)

Mon, 05/13/2013 - 10:12 | 3555943 kito
kito's picture

@ laws....what about all of the bad bank debt swept under bens rug???? Is it a liability if its no longer a "liability"????

Mon, 05/13/2013 - 10:18 | 3555954 mayhem_korner
mayhem_korner's picture



Unless the sheep still buy into the dollar when it's devalued to triple-digit monthly inflation, those "liabilities" on the Fed's balance sheet will never again see the light of day.  Just as intended when they were moved there.

Mon, 05/13/2013 - 10:34 | 3556020 Hedgetard55
Hedgetard55's picture

No longer a "real" liability, merely a "nominal" liability. The tab was picked up by holders of cash and cash equivalents through purchasing power debasement when Ben printed the $ to buy the assets.

Mon, 05/13/2013 - 11:46 | 3556336 LawsofPhysics
LawsofPhysics's picture

It is not a liability as long as no one demands to be paid.  CDS, where money/debt go to die...

As I have siad before, many ways to destroy "capital" these days.

Mon, 05/13/2013 - 12:45 | 3556546 WhiteNight123129
WhiteNight123129's picture

Here the deal.

Debt is a promise to deliver money at given point.

The Fed trumps this definition by rolling-over indefinitely.


Mon, 05/13/2013 - 11:30 | 3556275 Winston Smith 2009
Winston Smith 2009's picture

"The fucking liabilities and debt hasn't gone anywhere folks. So many paper promises, so little real assets and collateral"

Exactly.  By far the biggest house of cards in history that's worldwide to a greater extent than ever before, all held up by central bank debt creation that can't be withdrawn without causing the whole rigged mess to come tumbling down.

Mon, 05/13/2013 - 12:12 | 3556420 WhiteNight123129
WhiteNight123129's picture

The debt has vaporized in the Central bank and against that out of this magic box came out new created money. So so excess debt gets in the magic box and some excess base money gets out of the magic box. Follow the logical conclusion.

That is a negative duration environment.

Mon, 05/13/2013 - 09:50 | 3555894 emsolý
emsolý's picture

We need Minsky's Second Moment

Mon, 05/13/2013 - 09:51 | 3555897 Legolas
Legolas's picture

The headline is spot on.  Anyone putting money into markets these days is simply betting.  Nothing more.

Mon, 05/13/2013 - 10:09 | 3555941 oddjob
oddjob's picture

Allocating capital based on luncheon agendas is not betting, its just dumb.

Mon, 05/13/2013 - 09:54 | 3555900 dolph9
dolph9's picture

There's no such thing as the bond "market."  Even in equities, as corrupted as they are, there is some background real market activity no matter how small.

All bonds eventually end up as Treasury debt, and all Treasury debt is monetized by Bernanke's digital printing press.

As such, prices will never stop rising and yields will never stop dropping until the whole thing blows up in default or hyperinflation, and then that's the end of the experiment called the United States.

Mon, 05/13/2013 - 09:54 | 3555910 LawsofPhysics
LawsofPhysics's picture

Correct, the liabilites are very real and still there, you either restructure the debt (dare I say hard default), forgive the debt, or remove (kill) the liabilities... same as it ever was.

Mon, 05/13/2013 - 10:24 | 3555965 yogibear
yogibear's picture

Agree. Depends on which one. Probably why Bernanke will not continue. He knows what's coming. I would lean towards the hyperinflation end. 

Those that hold hard assets would end up better off. Loans would instantly become less, priced in yesterday's dollars.

Mon, 05/13/2013 - 11:31 | 3556278 Herd Redirectio...
Herd Redirection Committee's picture

I heard the businessmen (besides Oligarchs) who did well during Russia's chaos were, for e.g., car salesmen selling on consignment.

Consignment during hyperinflation, good work if you can get it.

Mon, 05/13/2013 - 09:53 | 3555901 SheepDog-One
SheepDog-One's picture

No, not 'until the 'market' is wrong'...reality comes crashing back in whenever it suits the bansker overlords to go all short and pull the rug out again.

Mon, 05/13/2013 - 10:37 | 3556038 Herd Redirectio...
Herd Redirection Committee's picture

Exactly.  W/ manipulated markets this is an important distinction.

Mon, 05/13/2013 - 09:52 | 3555904 LawsofPhysics
LawsofPhysics's picture

The ten-year yield is holding above 1.9%, go ahead, let it rise to 2.5%, I double dog dare you.  Stupid fucking puppets in CONgress.  How are we gonna continue to fund the MIC, the debt, and all those liabilities should yields go to 3.0% or higher.  Stupid fucking sheep.

Mon, 05/13/2013 - 09:57 | 3555915 dick cheneys ghost
dick cheneys ghost's picture

What they cant print they will STEAL....the Neo-con Imperial ambitions of this country take precedent over everything else

Mon, 05/13/2013 - 13:14 | 3556683 WhiteNight123129
WhiteNight123129's picture

Are you talking about real rate increase or nominal?

If inflation rise by another 2%, actually the 10 years yield 2.5% are easier to repay than today.

It is like a treadmill, even if the you run faster (higher interest rates) but the speed of the treadmill increases even faster, (the inflation), that you move backwards not forwards.

Same thing with interest payments, if inflation increases faster than nominal yield, teh debt is easier to repay (it moves backwards) despite the nominal interest rates accelerating.



Mon, 05/13/2013 - 10:00 | 3555918 100pcDredge
100pcDredge's picture

'The Market' in so far as one would want to speak about 'a market' is always right.

And it really exists, 'The Market', deep in the eh... somewhere. Maybe over the rainbow?

Mon, 05/13/2013 - 10:00 | 3555920 Mike in GA
Mike in GA's picture

Kyle Bass said (appx 4-5 mos. ago) a 200 basis point rise in JGB yields effectively wipes them out. 

So, what, another 2 weeks?

Does anyone else get a sense that the train is accelerating?

Mon, 05/13/2013 - 10:06 | 3555935 AynRandFan
AynRandFan's picture

Yes.  The Japanese situation is the only real thing that is changing.  Gotta figure that a collapse of the JGB market will swamp every financial market like a tsunami.

Mon, 05/13/2013 - 10:26 | 3555972 HulkHogan
HulkHogan's picture

Could you imagine the 10% drop circuit breakers halting trades across the market on the hour, every hour. Those circuit breakers are going to cause more panic than they are meant to stop.

Mon, 05/13/2013 - 10:07 | 3555936 Tinky
Tinky's picture

Oh yes, it's accelerating, which leads to this question: Is the wall towards which it is directly heading softening?

Mon, 05/13/2013 - 10:21 | 3555959 Doña K
Doña K's picture

The answer is the same to the question of "when you stand on an icy sidewalk, do your feet get colder or the sidewalk gets warmer?

Mon, 05/13/2013 - 10:08 | 3555937 kito
kito's picture

No way the fed and/ or worlds central banks let jgb yields rise to the point of danger....they just won't let it happen.....

Mon, 05/13/2013 - 10:49 | 3556097 Vooter
Vooter's picture

Gee, you're right--bad things only happen to other people...

Mon, 05/13/2013 - 10:59 | 3556145 kito
kito's picture

oh vooter, dont you know??? we live in UTOPIA now.......there are no more recessions....there is always growth......its all so perfect now thanks to the worlds will be waiting a while if you seriously think tptb will just let japans yield rise to the point of overt insolvency...................NOT GOING TO HAPPEN ANYTIME SOON.......

Mon, 05/13/2013 - 11:22 | 3556243 Vooter
Vooter's picture

"you will be waiting a while if you seriously think tptb will just let japans yield rise to the point of overt insolvency...................NOT GOING TO HAPPEN ANYTIME SOON......."

But that's the BEST PART! Watching the monkeys frantically running from hole to hole in the dike, trying desperately to plug the leaks, only to be eventually and inevitably overwhelmed, and then rounded up and gassed...all the fun is in watching TPTB lose their P! And they always do...

Mon, 05/13/2013 - 11:33 | 3556286 kito
kito's picture

i hear ya............but massive global cb coordination is a powerful thing.........and not to be underestimated.................

Mon, 05/13/2013 - 12:22 | 3556459 WhiteNight123129
WhiteNight123129's picture

The point of danger is when it rises too fast, otherwise it can rise slowly for years no one cares, as long as the rates are not too negative in any given year.

If you want to sodomize the Japanese retirees, buy DXJ. The Japanese gov has decided to pay you to rape the retirees.

Japan gov has decided to sacrifice teh old generation (inflate away the debts). The young have no savings.

What a wonderful job is mine \ sarc...

Mon, 05/13/2013 - 10:01 | 3555922 nomorebuyins
nomorebuyins's picture

If you get rich betting against the market, your money will simply vanish.

Mon, 05/13/2013 - 10:13 | 3555944 Bearwagon
Bearwagon's picture

You will vanish.


Mon, 05/13/2013 - 10:02 | 3555926 LawsofPhysics
LawsofPhysics's picture

Of course, no-one "gets rich" until they actually sell either.

Mon, 05/13/2013 - 10:03 | 3555929 kito
kito's picture

oh lookie, the dow is a whopping 60 points...........the fear is palpable.................not..................

Mon, 05/13/2013 - 10:16 | 3555952 PontifexMaximus
PontifexMaximus's picture

I hope it will stay red the whole day long til the last 5`, time enough to close in green.

Mon, 05/13/2013 - 10:17 | 3555953 kito
kito's picture

oh lookie....the dow is now down 30 points....couldnt have guessed that!!!...............

Mon, 05/13/2013 - 10:48 | 3556093 tmosley
tmosley's picture

Of course.  No one is afraid of the waterfall until they are going down it.  

It's how you go bankrupt.  Very slowly, then all at once.  Ignoring the tipping point nature of economies will get you into trouble.

Mon, 05/13/2013 - 10:04 | 3555930 AynRandFan
AynRandFan's picture

Hilsenrath: the Fed will slow its bond purchases someday.

We are supposed to conclude what?  That something has changed?  If this "announcement" was a trial balloon, it was only a picture of a trial balloon.

Mon, 05/13/2013 - 11:40 | 3556312 Winston Smith 2009
Winston Smith 2009's picture

We are supposed to conclude that the Fed is aware of a few smart people saying "this can't go on forever" and responding with "yeah, we know; we plan to quit eventually... someday... when we get the results we desire" to which a few people respond "you mean results which can't be achieved using your methods" to whom the Fed responds "have faith."

Mon, 05/13/2013 - 10:14 | 3555946 Kina
Kina's picture

When you learn to chase the dragon there is no end.

Mon, 05/13/2013 - 10:14 | 3555950 Iam Yue2
Iam Yue2's picture

The market will end the year significantly lower than it is today; that is a given. The rest is mere superflous conjecture.

Mon, 05/13/2013 - 10:20 | 3555958 mayhem_korner
mayhem_korner's picture

The market will end the year significantly lower than it is today; that is a given


THAT is superfluous conjecture.

There is a space between what is and what ought to be, y'know...

Mon, 05/13/2013 - 10:21 | 3555960 scatterbrains
scatterbrains's picture

I suspect Ben is going to be stopped by a few large sovereigns that have already probably told him,  either stop printing or we will drain every last flake of gold from your vaults.  Up until now they've been able to create a mirage of stable prices especially in the pm's but despite Ben claiming that gold is just a relic to be cleared out of the way, that nigga knows that gold is the only real money that exists on earth and best believe he will let the world collapse to shit before every last bar is stripped out of his master's greedy little fingers.  I think we are at that point now. That recent gold flush was their last attempt to keep the game going.. it failed and now they either have to cough up the last of their real money or quit the print game.


Mon, 05/13/2013 - 10:32 | 3556004 orez65
orez65's picture

Ben is checkmated.

If he stops printing the bond market goes into panic selling, resulting in hyperinflation.

If he keeps printing it will also result in hyperinflation.

No way out.

Mon, 05/13/2013 - 10:29 | 3555986 Aurora Ex Machina
Mon, 05/13/2013 - 10:36 | 3556031 orez65
orez65's picture

That is plagiarism by Mark Dow.

That quote is three months old. 

It was said by the head of the Central Bank of Argentina.

Mon, 05/13/2013 - 10:46 | 3556075 Vooter
Vooter's picture

Mark Dow: "Is this going to hurt?"

The Hangman: "No one's complained yet!"

Mon, 05/13/2013 - 10:32 | 3556008 orangegeek
orangegeek's picture

Markets up about 15% so far in 2013.


Time to buy?


NASDAQ100 hourly breaking below channel support.

Mon, 05/13/2013 - 10:47 | 3556081 Sandmann
Sandmann's picture

Funny Tyler how you fail to comment on Moodys taking the Coop Bank in Britain down 6 notches to Junk. Some people might think that odd for a bank that was supposedly going to relieve Lloyds Banking Group of £60 billion in assets, 632 branches and 5 million unwilling Customers by EU Fiat.

Some people might wonder how a bank that was lining itself up for a £1.5 billion dowry from Lloyds then went on to report a £674 million loss and is very short of capital for a mutual.

Is there a reason for ignoring this ? It is not Spain; it is not Greece; it is not Italy; it is not is another British Bank that 5 years into this crisis is in the very same position as RBS and HBOS were in 2008 and that means there has been NO CHANGE

Mon, 05/13/2013 - 10:50 | 3556100 Bearwagon
Bearwagon's picture

"It is not Spain; it is not Greece; it is not Italy; it is not Portugal." And that's the difference. The UK has this modern technology, called a printing press, while the others don't ....

Mon, 05/13/2013 - 11:00 | 3556148 Sandmann
Sandmann's picture


Take a look just got bigger. This is the start of the Second Leg

Mon, 05/13/2013 - 10:59 | 3556142 thismarketisrigged
thismarketisrigged's picture

this ''market'' if u want to even call it that, is the biggest fucking joke.


i know we all sound like broken records, but geez. how is it every fucking day, no matter the data, no matter how far we r overbought, this market just does not sell off?


its sickening, it really. i  cant take it anymore


we all r waiting for the crash, and its going to happen, but when? can this go on for like 10 plus years?


i mean its insane, volume fucking sucks dick, but these markets just dont sell off. i really want bernanke and obama punished, i  hate these men.

Mon, 05/13/2013 - 11:12 | 3556197 Vooter
Vooter's picture

I hear ya...just make sure you have other passions and people, and that you spend most of your time on makes things a lot easier...

Mon, 05/13/2013 - 11:33 | 3556287 thismarketisrigged
thismarketisrigged's picture

thankfully i do man, but still this sucks.


i guess it will feel so much better when it does happen because of the long wait, but just overall, it makes no sense, and i dnt know, i am getting impatient seeing this economy stink so badly, and everyone suffering but these fucking wall st fucks.

Mon, 05/13/2013 - 11:03 | 3556155 Lewshine
Lewshine's picture

You've got to be kidding me? Are we really having this conversation...Still?....AGAIN? Wit and wisdom aside and with all due respect to those who know how to structure a sentence better than myself - BUT. let me clarify for the 100,000th time; These downside moves are nothing more than clever little algo blimps allowing new and stupid money into the carnival. There is ABSOLUTELY NO asset class in the States (for sure) that is not under the microscope of the Norad/Fed trading terminals. June of 2012 THEY perfected these algos, and they handle everything; Commodities, Stocks (easily), Bonds...And yes, even City & Corp. muni's. Watch how oil "is allowed" to move up - But as soon as it becomes a threat to overall consumption - BAM! Down goes Frazier regardless of fundamental factors. Regardless of shrinking supplies or otherwise. THIS IS THE FRIGGIN MATRIX! STOP PRETENDIN G THERE IS ANY INHERENT RISK IN POURING YOUR LAST PENNY INTO EQUITIES WITHOUT BEN'S GUARANTEED RETURNS.

Mon, 05/13/2013 - 12:12 | 3556428 sgorem
sgorem's picture


Mon, 05/13/2013 - 11:45 | 3556330 Winston Smith 2009
Winston Smith 2009's picture

Japan is toast within the next few years.  So is the Euro/EU, at least in its current form.  As a result, there will be a flight to the temporary safety of the US dollar, driving rates into negative territory and allowing the idiotic US pols to continue to run huge deficits with no immediate repercussions.  Eventually, with our national debt in the stratosphere, rates will return to historic norms and we will be Greece.

The end.

Mon, 05/13/2013 - 12:06 | 3556404 Law97
Law97's picture

The New Beginning.

Mon, 05/13/2013 - 12:09 | 3556413 WhiteNight123129
WhiteNight123129's picture

The most lethal thing long term for bonds is money printing (the liability side). The most beneficial thing for bonds in the short term is the purchase from central bank. If you do not plan for the long term, instead of being ~all dead in the long term~ you are ~all dead in teh short term~.

So do like Mohammed Ali in Congo, endure the punch and protect yourself for 1-2-3-4 rounds, and then when the other side is exhausted you deliver your punches.

That is what shorting treasuries is all about.


Mon, 05/13/2013 - 12:27 | 3556440 Law97
Law97's picture

Hey, look, another +10 point move on the S&P on no news. 


I agree with everyone that the markets are totally controlled by the Fed.  However, I also believe that the Fed will have to engineer a correction to silence the growing chorus of market watchers who are now overtly talking about Fed manipulation and how the stock market will never be let to go down, etc.  Just look at the comments on any of the mainstream financial news sites and its looking like ZH!  People are really waking up.  And THAT is why the Fed, if they are smart, and I think they are diabolically so, will send the market down 150 points this summer:  to maintain some shred of illusion that the markets are not totally rigged.


Pathetic that we traders have been reduced to totally disregarding all fundamentals and have to trade based solely on what we think the Fed is gonna do ...

Mon, 05/13/2013 - 12:29 | 3556484 Downtoolong
Downtoolong's picture

Just like the laws of physics, at some point you can’t ignore the simple math anymore.

A half percent increase in yields from 5% to 5.5% results in a relatively modest drop of about 10% in the underlying value.

The same half percent increase in yields from 0.5% to 1% results in a relatively huge drop of about 50% in the underlying value.

Present lower yields mean greater investment risk from a rate increase. It’s unavoidable, particularly when rates are clearly artificially distorted by you know who.

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