Excerpt -
Fed Pushes Toxic Brew on Bonds
By James J. Cramer
4/28/2005 3:43 PM EDT
URL: thestreet.com
Bond market's getting scary. Real scary. The bond market sees what I see: the buildup in the General Motors (GM:NYSE) short, the looming inability of GM and Ford (F:NYSE) to get what they want, the sharp slowdown in spending, the buildup in inventories so monstrous that people have to cut price to move. And the bond market's saying, "Look Fed, we don't care what you do to stop Lennar (LEN:NYSE) , we don't have any demand except from those we don't want to lend to, like the auto companies."
That's what this decline in the 10-year yield -- the rise in bond prices -- is saying. No, make that screaming. It is frightening to people; the credit departments all over the Street are worrying about this stuff. They see it happening. They know that the high oil price coupled with the hawkish Fed has taken a situation that could be benign, as it was in the spring of 1998, and make it toxic, like it was in the summer that year.
People don't understand that psychology and credit are handmaidens. We have a very dangerous situation brewing, one where the safety of the 10-year, coupled with the lack of demand, is going to force the 10-year through the one-year if the Fed keeps up this nonsense to stop the inflation that's already been stopped, sans housing. |
