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To: Les H who wrote (7634)	6/2/2003 9:50:52 AM
From: Les H	Read Replies (1) \| Respond to of 29596

A bubble is growing in the fixed-income world Over in bond land, that danger has been overlooked recently, with prices staging huge leaps that can legitimately be described as bubblelike activity, and reminiscent of the action in stocks during the mania. It appears to me that there is asset allocation going on, in terms of folks who own bonds selling bonds and buying stocks. That does not affect the fixed-income market at the moment because all the levered-up players there continue to pile into the carry trade (a strategy of buying longer-dated fixed-income securities and borrowing against them overnight on a leveraged basis). But one of these days, the declining dollar will have an impact on the fixed-income market, I would think, forcing interest rates higher. And then all hell will break loose. Meanwhile, though I think fixed-income is a bubble that is destined to end in an ugly mess, I would caution readers against attempting to short this market. Trying to fight markets when they get into blow-off stage can be very, very tricky. This also holds true for the housing stocks, which have also seen extremely frenzied activity. In the absence of a catalyst -- and in both of these cases, I can find none -- I, myself, prefer to short a failing rally. moneycentral.msn.com