Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (122966)	9/17/2001 4:56:52 PM
From: Mark Adams	Read Replies (1) \| Respond to of 436258

FWIW PaineWebber notes that insurance companies are likely to become forced sellers of bonds to meet rising claims (see "Assessing the Aftermath"). While this would be a negative, insurance company holdings account for less than 2% of the fixed income market and the timing of their sales is uncertain. Foreign investors, which hold nearly 1/3 of the Treasury market and about 22% of the U.S. corporate bond market, may be a larger concern if there is a move toward repatriation or decreased demand for dollar-denominated assets. bondtalk.com Your bonds should be worth a bit more, unless a bigger inflation premium is being built in. I like Heinz suggestion. If you've got some capital gain, put in a stop loss with enough room to keep you from being stopped on noise, and hang on for a bit. Watch the future inflation guage closely. The increase in fiscal (deficit) spending should help ease the deflationary pressures. The real key is credit contraction/debt repudiation. In the meantime, income from cash like assets is getting harder to come by. Lowering the fed rate is going to eventually move the rates paid on money market funds and MM accounts lower, and probably CDs too. That will increase the attractiveness of higher yielding treasuries, barring outlier events and a resurgance of inflation expectations. The range of potential/probable outcomes has expanded.

To: Joan Osland Graffius who wrote (122966)	9/17/2001 5:07:39 PM
From: Logain Ablar	Respond to of 436258

Joan: All of the large insurance carriers (direct and reinsurers) should have contingency plans in place where they have lines of credit they can tap to cover immediate cash needs. So in this sense we should not see the carriers dumping bonds to raise cash to pay claims. Theoritically it should allow for an orderly disposal of the bonds so they are not forced to dump @ the same time as other carriers. I say all but I only have direct knowledge of a few but assume they all have the lines of credit in place. I'd think they would hold the longer maturity bonds with the higher yield and sell the shorter maturity stuff. Over the past decade many companies (insurers) have been investing in the non goverments to gain yield.