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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Craig Lacy who wrote (28525)	9/23/2001 5:29:23 PM
From: Tom Byron	Respond to of 30051

any comments about this s&p 500 monthly chart and the a/d line falling right on the middle line this past friday. tenorioresearch.itgo.com

To: Craig Lacy who wrote (28525)	9/23/2001 9:08:28 PM
From: Logain Ablar	Read Replies (2) \| Respond to of 30051

Craig: For a few reasons the risks to bonds is increasing which means investors will require a higher interest rate for compensation. 1) FED is pumping liquidity into the system. AG convinced the European Central bank to join. Reinflation will put the threat of inflation back into the market. 2) As the FED pumps the chance of the US $$ weakening increases with the additional concern of foreigners selling their bonds to minimize currency loss. 3) Retail investors are being told to put more into bonds vs. equities to minimize risk. A bad sign when analysts say this. Bond funds also lose principle. A lot of capital can be lost chasing yield. 4) Government is now willing to stimulate the economy with additional incentives and spending programs. The $160M surplus is being used to retire Treasuries will now shrink. $55M just last week and more to come. Means more supply not less of treasuries. I think this is a good thing just bad for interest rates. 5) The Dow Jones 20 bond average just gave a PnF sell signal. Of the 17 given since 92 only 4 have not panned out. 6) The FED will cut another 1/2 point in just over a week. Either the FED reinflates the economy or we deflate. I'd say the odds favor the FED which means higher long term rates over the next couple of years. 7) Another sigh IBM just issued 5 yr notes. IBM finance under Gertsner has been astute with bond issuances and share buy backs. 8) If your in a l/t bond fund as rates increase but the fund holdings are paying rates @ todays level the fmv decreases. The fund in effect can/t hold to maturity. This is separate than if your an individual bond holder where you can keep to maturity and redeem @ face value (provided the issurer doesn't call in the bonds, which they do when rates go down). So odds favor this being the time to lighten up on bonds and lock in refinancing.