John Pitera's Market Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: macavity	2/8/2005 1:11:30 PM
	2 Recommendations Read Replies (3) of 33421

So Bonds are a bust! Eh! The Secular Bull Market in Bonds/Bear Market in Yields appears to be still doing fine from where I am. There was an idea that we had seen a (secular) bottom in 2004 - the Yearly charts pointed up for both 10 and 30 years, but even though new yield highs were set in 2004 both ended down on 2003 - a higher high but a lower close on Yearly Charts - not bullish! So from 2003 we had a Cyclical Bull in Yields that has now given way in spectacular fashion to a Cyclical Bear. It actually turned back to bearish in 2004, but yield supports have collapsed this year to confirm. Stop Press:The Secular Bear in Yields as predicated by the downward-sloping 55Mth EMA is still on! Schaeffer wrote a great article about the bearish sentiment in bond prices. Not one single analyst predicted lower yields!! Talk about leaning the wrong way. Foreign central banks selling - yada yada; weak dollar - yada yada; inflation in commodities -yada yada! The 30Y yield has just broken its 2004 low on news that came out on Friday. I have no idea what the news was - that is why it is called technical trading - and it is quite apparent that there are plenty of people now covering. I re-iterate; we have seen this before - Japan 1989-?. People remain in denial that we are in a deflationary bust! Yes, I know it is hard to imagine but it is deflationary. Why? As yields are falling, simple! I know that we can, and should, define inflation i.t.o. monetary aggregates but there is an easier method - The Secular trend of long-term yields. If they are falling then it is disinflationary/deflationary. Monetary aggregates are fine, but are open to too much interpretation. If the long-term cost of capital (The Secular Trend) is falling then it is saying that people are demanding a smaller return for cash. You can pick your reason from whatever fundo-mumbo-jumbo you choose - increased money supply, reduced aggregate demand, central bank manipulation - yada yada! With short-term rates this low and long-term rates falling it is a pretty good guess that there is no excess of long-term investment opportunities out there relative to supply. In fact if you convert the money supply i.t.o ounces of gold then it is obvious to see that money supply in ounces of gold is actually falling, and has been for a while. Why? Because this is how central banks were historically run, and to compare economic periods to each other then (I believe) you have to do this. For a minute there in 2004 - I just thought that Mr G had got away with it. -macavity

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next