The Bond Says Worry
By James J. Cramer
10/1/98 1:31 PM ET
You like equities? You gotta root against the bonds. You hate
equities, the bonds are your friends. You want the market to go
to 7400, you gotta hope the 30-year bond ramps to the 4.75%
level. It is at 4.92% as I write this.
Wow, is this counterintuitive from everything we know for the last
20 years? But it is the gospel. It has to do with the fact that guys
like me, hedgies, just stare at that bond because we know it
can't lie. And that bond is saying something, mostly that the
world is going to %#$&^#&^ in a handbasket. The bond simply
isn't supposed to be here given the manufacturing index, the
housing market, the auto market, the retail market, the oil
market, the gold market. But the bond is so liquid and so truthful
that I don't think it reflects a short squeeze -- that all of that
current data are nullified. The bond says we must be worried.
As the battle here is against systemic risk -- in other words, that
the system will fail, the center will not hold -- if you see the bond
sell off (interest rates go up), that's good news!
Most people who do what I do can't believe this 30-year bond's
rally. It is so unprecedented, so scary, that it has everybody
spooked and fooled, so I dare not hazard a guess where it
goes. But I know from here, if bonds go up (rates go down) the
market is going lower, not higher. Amazing. |
