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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Perspective who wrote (241104)5/16/2003 12:26:06 PM
From: zonder  Read Replies (2) of 436258
 
How do you see things behaving vs. the quasistationary analysis?

Not sure. What on earth is a "quasistationary analysis"?

(I am not a native speaker of English. Be nice to me :-)

It sounds like you think the pricing adjustment won't be equal to the devaluation, which I would support

I am saying inflation will lag and might have problem catching up.

That implies, however, that somebody is getting squeezed. I submit that somebody is corporate America

Obviously.

how do you think this impacts different asset classes? impact on bonds will be negative as the Fed will see to it that the holders are indeed paid back in devalued dollars.


Of course. What other dollars are there anyway?

Corporate bonds might be interesting, since this low interest environment is helping companies restructure their balance sheets and that is a Good Thing for bondholders.

T-bills on the other hand are toast. I don't understand why someone would want to be invested in government bonds at this time - currency diving and all that, but most importantly, does nobody notice they are being offered negative real interest rates and that interest rates will not stay this low forever?

Imho, Fed is pumping fears of deflation despite inflation data to the contrary, in order to keep the interest rates artificially low. They would hate to see the credit bubble pop...
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