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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Hawkmoon who wrote (5525)	2/8/2002 1:14:46 AM
From: macavity	Read Replies (1) of 33421

Mr Gross. He is short the short end and long the long - obviously. This 'extra' 1% thing is him being over-simplistic. No-one buys a bond because they can pick up 1% IF THE CURVE STAYS THE SAME . I always thought that yield curve carry trades were more effectively done with duration-neutral spread trades. Still I do agree with him. There is a simple rule. If you keep on going one way and nothing happens, then going the opposite way will not make things worse. (I reckon it actually makes it better). Look at Japan - the way to end the misery is to raise rates not lower them. Then the construction companies which are bankrupt will stop borrowing and stop making the situation worse. End the misery, do not prolong it! Mr G is just perpetuating easy credit. If it got us into the mess, how is it going to get us out of it? Yeh, he is making things better for the feel-good crew, but that does not help in the long run. Good luck to Mr Gross and his position. I still see Uncle Sam as a net issuer of bonds. With JGBs and Treasuries looking like they (may) have formed long-term bottoms. Equity heading south. Maybe the time has come for Gold. It is the one commodity I know where the supply has been reducing over the past years. Good luck to the gold bugs! -macavity

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