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

To: t2 who wrote (2122)	11/14/2003 1:45:12 AM
From: mishedlo	Respond to of 110194

T2 you are missing the big picture. Re-read my post. The big factor is widening credit spreads. If bonds tank over concerns of defaults you do not see stocks taking a hit? Get real. It will affect stuff like GM F and all kinds of big turkies AND every bank or whoever that is in those bonds. The icing on the cake and NOT the catalyst is foreigners seeing all of this and bailing at the same time. We could also see municipal or state defaults. What happens if CA defaults. Look at all the HUGE corporate debt. What if they can not roll it over at good prices. How will that affect bonds AND stocks? Think about that for a second. Then tell me what happens if they can not get it rolled over at all?! Risk of a meltdown in stocks and bonds at the same time is very very real and in fact I think 100% guaranteed at some point but not sure exactly when. Most likely not until after the election but it really could be any time. M

To: t2 who wrote (2122)	11/14/2003 7:35:22 AM
From: Wyätt Gwyön	Respond to of 110194

simply that if foreigners were to pull out of the US bond market, the damage would be to the bond market. you need to look at the fact that the USD and Treasurys have been moving in opposite directions. you seem to think foreign investors are in T's because of their investment merits. far from it! they are in T's to support the dollar and do not care about their returns. this is the Asians i am talking about. imo this basic and essential point must be understood in order to perceive what is going on in currency markets. 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. a weakening currency is NOT a support for a stock market. just look what happened to the Asian stock markets after their Currency Crisis! the thing you need to keep in mind is that these things, like extreme currency movements, do not happen in a vacuum. i suggest looking at some past historical examples of tanking currencies and their related markets, AND economies. also, imo US stocks are often not priced on their investment merits. they are in fact just a bubble controlled by OPM players. tanking currency is just one less prop for the bubble.