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Politics : Idea Of The Day

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To: Ross who wrote (20970)	10/20/1998 3:55:00 PM
From: IQBAL LATIF	Read Replies (1) of 50167

I hope Jerry Favors make a nice comparison to the fact that never in four hundred year history of bond trading a firm shorted TB's against junk, long Russia short TB to the tune of 30 billion $ had skewed the yield curve, it looked flat about to turn inverted, omen for a huge recession but this yield curve took no time in turning to a normal growth oriented curve as yields rose and prices dropped once the positions were unwounded, how can he neglect exaggeration. Not in an environment when bond moved from 128 to 135 on speculation, now the pundits realise may be it was not the impending deflation but huge speculation. The bond is back now to 128 level, moreover Fed is in a mode which may see rate lowered until begining of next year I would think that market is thinking now rates to be cut another 75 basis point, the last hundred year has also not seen earnings beating street expectations by margin which no one really anticipated, the BKX sector took the market down remeber my level of break of 600 it is this sector I predicted would lead the market higher so it is doing, but I agree we would need to be very careful and earnings more than cuts will drive this market...

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