Elaine Garzarelli Message Board

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Non-Tech : Elaine Garzarelli

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To: Imuah who wrote (166)	12/19/1996 8:30:00 AM
From: Andy Nemo	of 292

Exactly, my point Jack. The long bond keeps rising for no obvious reason. This could be the start of the long bond/short JPY squeeze. But I don't know about that YET. I think that we maybe is seeing all the Companies' treasuries issuing bonds as fast as they can at these low levels. And all the new bonds drives up the yield. Also people are shaky and don't want to take major positions (just look at the small interest there were for the 2 year auction yesterday.) There are more and more opinions going in the line of selling stocks and either going cash or buying bonds. Morgan Stanley thinks that we're walking on a very thin line, where we sooner or later (probably sooner) will drive into the ditches. If we get stronger growth, yields will be up and we will see a major correction. OR the growth will slow down even more, and we will get profit warings. Either way the market has to go down. The worst possible scenario (that is not the most unlikely) is that we get a drop in bond prices because of the long bond/short JPY squeeze at the same time as we get profit warnings. Then there will be no cushion in the form of a rise in bonds. And we will se a very ugly market. Comments Jack?? Andy

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