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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: tradermike_1999 who started this subject10/2/2003 11:16:27 PM
From: gumnam  Read Replies (2) of 74559
 
Hi Jay
I am always trying to see how I could be wrong - could it be that US markets go through the most benign case which in my view will be

- US equities holding at current levels or within +/- 10% thus averting any panics/distress/slowdown by J6P
- US Dollar gradually weakening by another 10-15% over the next year resulting in higher nominal USD profits for US multinationals and maybe marginally more competitve US companies mostly at the cost of Europeans.
- US debt markets with 10 year bonds around 4% keeping mortgage markets flowing.
- Tight credit spreads to let US corps to easily roll their debts.
- 2-3% stated inflation, 3-5% real inflation slowly wiping away some of the accumulated debt.
- The Asians keep financing the deficits as they all fight to keep their own currencies weak/pegged.

IN this extremely stable, very very boring scenario nothing very exciting may happen. A couple of years of negative real yields will do a lot to reduce actual debt burden of the US Govt and society. We have already had 2 years of negative real yield a few more years and suddenly debt burdens become manageable.

1) What will prevent this scenario from happening ?
2) If this is a possibility, what are interesting opportunities to make some money?

Interested in ideas from anyone.
Cheers
Gumnam
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