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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Knighty Tin who wrote (15701)6/22/2004 10:44:40 AM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
But, if he gets aggressive, pardon me while I laugh, they could get crushed.

OTOH, and CI had a good piece about this recently, while they may not get crushed from a solvency perspective, the large free profits provided by the spread-carry-trade arb opportunity could quickly disappear, and this in an environment where effective financial profits are like 35-40% of total corporate profits (CI ballpark, when you add in the GMACs and the GE Capitals along with all the official financial profits).

so we could see a serious decline in US profits as a result of a yield curve flattening. good thing the stock market doesn't care about profits -g-
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