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

To: Crimson Ghost who wrote (2896)	12/5/2003 9:30:00 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

<A sustained stock bear market is out of the question as long as bonds surge on any hint of weakness in stocks or the economy IMHO.> I completely disagree. I absolutely don't think treasury rates are the key variable, unless they trade well below 4%, or 2/10 spreads widen significantly. Weak economy will compress valuations that are now priced for economic perfection. Secondly the risk tolerance will come out of the market, credit conditions will deteriorate, credit spreads will widen (I think this will happen even if economy is strong). This could happen very quickly. Financial stocks abroad are trading poorly now, US is next. Meanwhile the maladjustments (such as energy) in the economy are coming home to roost. I even wonder if a ten year rate below 4% (which I don't expect) will drive consumer credit creation or prevent defaults.