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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bond_bubble who wrote (60022)5/1/2006 3:49:09 PM
From: russwinter  Read Replies (3) of 110194
 
shock and awe" should start soon>

It's really hard to calibrate, but I just get a very strong sense that these Risklove trades are already in big trouble. We have seen amazing complacency, even as the bond markets get slammed, and that gives loses especially to leveraged players. Now the carry currencies like the Euro and Yen are rallying, that's more loses. The cost of funds for repos, etc, for financing this dash for trash, keeps going higher and higher, and will unless there is a major break in commodities (more asset collateral), that's more expense. There has to be a series of credit events in some trash plays already underway, that are being papered over, maybe that's why XBD and CME are suddenly quite weak? A massive and ugly liquidation just seems increasingly likely.

<Do you also believe in a possible conspiracy theory were Fed is "already" heavily monetizing the deficits?>

Not really, they haven't had to, the Asians have done it, although that's changing in my view.
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