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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (36916)	8/2/2003 7:01:17 PM
From: Maurice Winn	Respond to of 74559

Kerry, about time!! <Since the rate on the benchmark 10-year Treasury note bottomed at a 45-year low of 3.11% on June 13, the yield has risen by more than 1.25 percentage points to 4.41%, the sharpest rate increase in such a short period of time since 1987. The price of the 10-year note has declined 11 points, $110 per $1,000 bond, equivalent to three years of income, while the 30-year bond has plunged 19 points. So much for "risk-free" Treasuries.> Giggle... Fiat currencies are NEVER risk free. The tide has turned. Fiat currencies run by mob-rule electorates are the ones which need the risk premium, not the Q, which is owned and run by the shareholders. <Mortgage securities have fallen as much as eight points in price in the past two months and the super-hot junk bond market has finally started to cool off. The Treasury market has cratered because bond investors have stopped worrying about deflation and recognized that the Federal Reserve will do all it can to stimulate the economy and thereby generate inflationary pressures.> This is not a surprise. It was amazing that people thought there'd be a deflationary implosion after having got through the first year of the Biotelecosmictechdot.com collapse which did NOT lead to the cascading collapse which might have caused a deflationay black hole. Thanks of course to our great and wondrous hero, Uncle Al KBE, who the Aztec primitives can't understand, although he speaks slowly enough and writes a lot of it out. <"The bond vigilantes have returned," says Jim Bianco, head of Bianco Research in Chicago. Bianco says bond investors may force intermediate and long-term rates high enough to offset the effects of the Fed's accommodative policy of keeping short rates at 1%, or even force the Fed to start raising rates now that the economy is accelerating.> And when interest rates rise rapidly, this will be good for companies with $$billions in the bank, such as QUALCOMM and Microsoft. It will be bad for heavily indebted companies with little or no revenue and no profits. The auction block will be busy. Mqurice