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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 389.75+0.5%4:00 PM EST
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To: RJA_ who wrote (62479)4/4/2010 2:25:24 PM
From: carranza2  Read Replies (1) of 218129
 
Rosenberg was saying several things to support his argument;

1. Boomer retirement funds will increasingly be going to bonds, including Treasuries, because our investment needs as we age will emphasize safety over risk. More fixed income=lower yields=bullish market for Treasury instruments;

2. He believes the Japanese and Depression examples support his thesis that credit deleveraging=deflation or disinflation and
takes 5-7 years to run its cycle during which history shows bond yields remain low.

3. The 'bonds are trash' argument/trade is too crowded, too facile.

I think the Depression example might be flawed because my impression is that we did not have nearly an equivalent amount of stimulus - which implies public debt growth - during the Depression as we have had in the current cycle. Nor did we have the huge amount of unfunded liabilities we have assumed in the past few years. Thus, Rosenberg might not be taking into account these factors which will influence Treasury bond yields upward; I find this unlikely but I don't think he mentioned them during the debate.

On further reflection, I think Grant's arguments, though presented a bit less forcefully than Rosenberg's, also have a lot of merit. The audience, a sophisticated bunch, seemed to have thought so, too.
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