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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (3456)12/16/2003 12:54:20 PM
From: mishedlo  Read Replies (2) of 110194
 
Actual text of message sent to Pimco
Lets see if I get a reply.

Through Holes In The Floor Of Heaven

Sorry Paul, I do not buy your analysis.
With your call for 1.5% hikes in 2005 you are making huge assumptions that I believe to be unwarranted.

You assume that not only will reflation work, it will work in spades. In the meantime leading indicators are falling a bit (not that I place too much faith in these), the job market is not showing improvement (I do put a lot of faith in the meaning of that), retail sales are on the low end of targets, and refi money has all but dried up.
Why would anyone assume that reflation has worked to the point of being self sustaining with M3 falling, refi-activity sucking hind wind, no pickup in payroll taxes or wages, and signs of a topping stock market to boot. Unless a recovery is self sustaining, interest rates are not likely to be hiked, at least significantly (if indeed at all!)

You might be correct about bonds not being the place to be but only because of credit risk and other factors (like China and Europe refusing to buy more of our overpriced treasuries), and because of credit risks due to a FALTERING economy, not because of the 1.5% hike in rates you are calling for. In short, I think you totally blew it.

Mike Shedlock
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