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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (26262)	2/11/2005 2:47:12 PM
From: mishedlo	Read Replies (1) of 110194

(*) Roubini feels bonds trade 200 bps lower than the natural level because of heavy handed CBs intervention. I think it's even more because of the lies about inflation data, that apparently the cognoscenti actually accept. I think the natural rate in 300-400 bps higher than the Bretton Woods II fixed level. It will go even higher if the money printing renews. You can feel what you want. You are entitled. I read that article and when someone eggagerates that much it is a tough read. I think maybe 25-50 bps and 50 bps is max. I do not think the 10-yr market can be manipulated that much. As for yesterday, one day does not a market make. Japan's holdings of treasuries has been steady since OCT or so. The yield on the 10 yr has plunged in that time frame. Was that manipulation from Japan between auctions too? I ask you to read "The Dollar Crisis" by Richard Duncan. I purchased it fully expecting to read about hyper-inflation but he explains in great detail what is happening and whay and how all of thse credit cycles end, and why. Finally weak economic numbers will only be deflationary and "bond friendly" if the Wizards change their Uncle Ernie pedophile proclivities. That's not impossible, but the proof will be in the pudding (their actions). Weak economic numbers and weak housing numbers will spell trouble just as it did in Japan. Still not sure when and what will burst this bubble for good but odds are overhwelming that it is not a paniced treasury market (at least one for any length of time) Maybe we see a spike like we say last Spring but I doubt it. Strong job numbers would cause a spike for sure. How high I do not know. Housing is quite simply not affordable and the end of this boom should be nearly over. If you have not read "Tomorrow's Gold" by Faber or "How to Profit From the up coming real estate bust" I suggest that as well. Oddly enough on the latter, he describes why it will occur very well and has a nice discussion on the US$ as well. The How to profit by it section is not that great but is less than 1/4 of the tail end of the book. Mish

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