Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (109964)	3/26/2010 2:10:48 PM
From: Hawkmoon	Read Replies (1) of 116555

Doubt that pattern holds when stocks breaks When stocks break, would we not see a retreat into the USD and bonds, which are traditional "safe-havens"? Sell equities and buy debt.. Since both markets vy for investor dollars, selling in one generally creates buying in the other, right? This is where I find Fitzpatrick's analysis to be interesting. If we we're to see the 10 year cave into a reverse H&S formation, then yields can be expected to go much higher and money will flow out of bonds into equities. Yet, if the USD follows to the upside, that's normally bad for equities since exporters and commodities are now at a further disadvantage to foreign imports. So where do people run to? Some say gold.. Some say Commodities.. Others, like Prechtor, say just hold cash (and maybe UUP).. So, as you state, what will be at issue is when the USD decouples from rising yields on the 10 year. One other thing is that this is likely to crush the mortgage markets. Rising rates will make it even more difficult to find qualified borrowers who can pay a higher mortgage payment every month. Hawk

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