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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (2121)	11/14/2003 1:13:38 AM
From: t2	Read Replies (2) \| Respond to of 110194

Mish, My point is simply that if foreigners were to pull out of the US bond market, the damage would be to the bond market. They are not big stock holders. Actually I would bet that when they decide to pull money out of bonds, a small amount could make its way into the US stock market as pricing of stocks is less connected to currency than bonds. Just look at what happens to a lot of Japanese stocks when the YEN rises too much, the stocks pull back. Pricing of US bonds versus stocks is different from an international perspective when factoring in exchange rate movements. So if the US dollar index was to decline by 20%, do you think the stock market drops by the same amount. I would make the case that in US dollars, the stock market should be higher. This is the same argument I was making about a year ago, when I stated that a weakening US dollar was good for stocks. All "expert" commentary that I had read stated that a weak dollar was bad for US bonds and stocks. I see the same argument is still being made and still I disagree with it. Too me it seems that more people are bigger believers in stock bubble 2 than they were of stock bubble 1...and therefore have more bearish positions than they ever did back in 1999/2000....which makes sense since 2000 was not that long ago. These relationships are very complex and a rational or logical approach to the analysis will probably not work simply because too many are thinking the same thing. That weak dollar, weak stocks prediction seemed to have unanimous consensus and they were all wrong!