Hi, N.O.,
Stranger things have happened.
Real rates are still incredibly high. How many times did the Core rate of inflation decline this year? Did I hear right that last 12months inflation was pegged at 1.9%? Wasn't it about six months ago a discussion of new measures for indexing infaltion should be made? Congress would love it since they could spend more money since appropriations are where most of tax $$$ go. Even Greenspan stated that Inflation could be overstated by as much as 2%. Real inflation is a neg.# in my opinion. With the US inporting deflation from Asia, the 30Yr. bond which is an Investment instrument which historically trades at 2-2.5% over inflation, could bring in a tremendous demand. What is it I hear about the comming cuts in supply by the government due to rapidly declining deficits??? A guaranteed real 6% sound pretty good agains other Risk adjusted returns.
When you come to think of it, since the 24hr rate is pegged at 5.5 and readily trades (like yesterday) at 5.75, and the price for the 1 month stands at 5.04 6month at 5.13 and one year at 5.12, on can argue that the inversion has started to occur. You have to go out 5 years out to get a better rate than overnight Bank interbank rate. Look at Libor, what is the 6 month rate? I call this an Investor vs Fed induced Inversion.
On your list of what will turn (bring in willing buyers) SMU;
1, 2 and 4 are given positive knowledge built into the price. I very seriously doubt that those announcements would have any more than a 24hr effect, if anything negative since a positive development/announcement is expected.
3. Biggy - but ..... don't you think IF,........ IF we would be within a 60 day window of this that SMU would trade Up and give a TA signal before the news?
5. The most logical - and that is why a March announcement is being priced today.
March is a long time away,
Have a good one everyone,
J |
