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

To: gregor_us who wrote (13013)	5/1/2004 11:26:32 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

It was the same story in the energy stocks, huge commodity moves and at most a double off the absolute lows. I think I got about 50-75% on most of my one year energy plays. That's because the playbook on them is the "reflation trade". So since that's the playbook, you get the big correction when they discard that one. Also apparently under this bizarre and absurd playbook, commodity supply can just be turned on like water out of a tap, and that demand can be stopped by edict. LOL, on that notion I say. Not only can you not turn supply and demand off and on like some light switch, but the next time they go to turn it on, it will blow the house panel fuses. It ridiculous to assume that a commodity boom of this magnitude can just be talked down with the "threat" of a few rate hikes, after years of reckless, easy money and epic maladjustments. But as I've been saying there's a new flucht in die sachwerte playbook, that apparently only I have right now. What do you want to hold as real value in a world where your central bank is run by Joseph Goebbels? US Dollars? US Treasury Bonds? Think you might consider getting a front row seat to this one. And stay out of downtown Berlin.

To: gregor_us who wrote (13013)	5/1/2004 11:27:43 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

i think there were other reflation plays that more than doubled--e.g., i had a four-bagger in FCX from Nov 02 to 03. but it seems the concentration was in tech names as opposed to commodities. reflation exuberance was also evident in a great year for junk, as well as near-zombies (e.g., AMR) some of which were ten-baggers. interesting comment from Mauldin today: Remember, ten-year rates are 4.5%. Could the "natural" yield curve sometime later this year be negative, suggesting a recession 12 months later? Would we be seeing a "false" positive curve because of the Fed holding rates down and thus assume we are not in danger of a recession within the next 12 months? I could make good cases for both sides of that argument, but the answer is that we would be in completely new territory with little historical precedent.