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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 (4305)	1/2/2004 9:52:33 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Mish, You might be proved right about interest rates. The only problem is what happens if dollar continues to drop..and especially if it accelerates. We may not get a bond market bubble bursting after all...yields remaining low. There is just way too much talk of higher interest rates. Too much bullishness on equities also a concern. Even Rydex Nova/Ursa is pretty high and it was the one contrarian indicator that worked best in 2003r. What happens if companies' outlooks are just so so. Lower rates and a (lot) lower stock market. Stock markets tend to crash at the tops; after seeing the gains of the past year, one can finally make a case for some sort of crash as a real possibility..much more than a year ago. T2 - Thanks for posting Here is a question for you that I keep asking everyone else with no answer: What makes you think the US does not WANT the US $ to fall. All this talk about "strong $" when in fact their policies have been anti-USD. The only fly in that ointment is that although the FED may indeed want a weaker $, there is no question it wants low yields on treasuries. Can they have their cake and eat it too? Nearly everyone here would say No Way Charley! But wait a second. Perhaps, just perhaps they ALREADY DID have their cake and eat it too. Look at where the US$ is. Look at where treasuries are. Chomp chomp. Now what. Now there is talk from Canada about lowering rates, speculation from Germany about lowering rates, Japan still seems willing to support the US$ and buy treasuries, and Europe is pissed about the rise in the Euro and talking of intervention, and guess what......all of those are going to tend to support the US$ and/or US treasuries. Also bear in mind, and I discussed this with my broker a week ago, that bonds typically do poorly in the last week of the year. There was no explanation, just does. Just like there is a coming up weak period for gold. Starting somewhere early to mid-Jan, there is as weak period and usually big dip in metals. Hmmmm Are the forces aligning here for a bounce in the US$? Now, I am not going to bet on the US$ or on Treasuries, but if we stabilize down here on eurodollars, I am adding to my eurodollar position (if margin and prudence allows). Mish