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

To: russwinter who wrote (3243)	12/11/2003 8:15:02 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

In fact it's getting to be a free for all i was just thinking this today. as you know, many NPV discounting models for equities rely on the Fed Policy Rate, so a low Policy Rate can be used to justify ever higher equity prices (according to the models and the bubbleheads who espouse them). and likewise, it seems this is being used to justify ever higher prices in all and sundry anti-USD carry trades. with AUD policy at 5.5% or whatever, they have a big premium to the carry...NZD has a big premium...gold has no yield but the carry is so cheap... notice that in each case, the focus is not the "fundamental value" of AUD/NZD/bullion/whatever, but rather the low opportunity cost of relinquishing USD. i hate it when things get away from fundamental value. it seems each time i try to have some fundamental theme impetus for my investment direction, the theme gets coopted by Leveraged Speculators and things get out of hand. where's a body gotta go these days to get away from confetti makers AND speculators? so this gives me cause for concern--could anti-USD just become another bubble?

To: russwinter who wrote (3243)	12/11/2003 9:25:54 PM
From: mishedlo	Respond to of 110194

Yes, I read that article. I think the implications are nuts. I have no problem with investing in commodities, but BORROWING to invest in gold or anything else is nuts IMO. At some point (and this is back to where we are in agreement no doubt) borrowing at 1% and loaning at 4% for 10 years is going to cause a HUGE MFing blowup with the leverage these people are doing it. That is why I do not like treasuries (but you might not see that from my posts). However, I will NOT bet against them, and I sure as H am not going for that spread that everyone else is. My play is quite simple. Regardless of where interest rates SHOULD be, it will take longer to get there than anyone thinks. It is a very very simple concept. In the meantime, anytime anyone gets an extra 15 ticks on the TNX bidders step in and down goes the yield. Even IF the 10Yr cracks, there is no guarantee the FED will hike. It will be put off until doomsday. No doubt the entire thing is rigged and crooked and Citycorp and JPM will know in advance when it will happen so they can unwind their trades, but for right now..... Party on DUDE! M