L.T.
Now you have me worried, as we think very much alike.
Like you, I see the crunch spreading out from the bond pits. Also like you, I think the U.S. rates can go nowhere but up (and I've been writing as much for over 8 months) due to the need to keep the wall of T bills offshore. Incidentally, the selling pressure here is already mounting, even at the Central Bank level.
I also see the 6.5% figure as a given, probably before the Summer ends (at best) and also think it goes higher, once the gasolene is in the fire. Fannie and Freddie worry me beyond words. They are like a money printing press that has gone out of control. Borrow short - lend long. brilliant. And the sums on their balance sheets simply boggle the mind.
Timing is everything, and I'm always early, but like you, I think we are at the end-game. Aside from the bonds, I KNOW that this semi/PC cycle is imploding. I have never seen anything like the inventories, pricing pressures or saturation levels that are in place now. There is simply no way out for this sector, but a full-blown crash, and as it is by far, the most over-owned sector, I believe it takes the market with it. Unless the market is prepared to overlook an ongoing and expanding disaster, this Q's results should do it.
Your comment that this won't happen, I know is in jest. We both know that it is an inevitability, but neither of us wants to think of what the world will look like, once it has occurred. I'm now forcing myself to try to deal with the possible/probable results, but it is a difficult process. None of us have the breadth of imagination to do this,.........yet.
I much appreciate your thoughtful reply.
Best, Earlie |
