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To: Bill Harmond who wrote (64772)	6/26/1999 6:54:00 PM
From: GST	Respond to of 164684

William -- I will focus on buying the rally -- but there will be no rally until bond yields stop their march upwards. The dynamic underlying this move in bond yields may yet take us by surprise, which was the point of my posting -- ie. there may not be a rally. I do not want to be a 'hero' here and buy an expected rally, only to see the market fall off a cliff when the selling in bonds just goes on and on. No need to create an elaborate model here -- bonds and being sold off and taking stocks with them. But you can't calculate the prospects for a rally until you understand the selling.

To: Bill Harmond who wrote (64772)	6/27/1999 3:49:00 AM
From: GST	Read Replies (1) \| Respond to of 164684

William <have confidence that bond yields are extended to the upside already.> What is the difference between this 'confidence' and unfounded complacency? We are a couple of bad days in the bond market away from something much worse than we have seen so far in the market, while volume in the stock market has evaporated, and every attempt to rally the bond market is met by heavy duty selling. If hedge funds are indeed unwinding positions as large as suggested by both the yen and gold carry trade, there is a whole lot more bond inventory waiting to be sold. A spike in interest rates will not cause interest rates to come down. It will feed on itself as it forces more short covering. We are flirting with a bad, bad stock market -- I will buy if it turns up. Will you sell if it slips off the deep end?