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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (8668)	7/2/2004 3:54:57 PM
From: mishedlo	Respond to of 116555

From Brian Reynolds... IT looks like we have a fundamental disagreement, but that’s cool. I spent nearly three years on thestreet.com’s sites, where there is just about every perspective imaginable. My motto is love all, serve all (like the Hard Rock) as long as they’re cool. You may have a misperception of the way I look at the world. I do look at Tsys (and they do have an impact, esp w/ refis) but the rubber meets the road for me in corporates. Both corp and equity investors rely on corp cash flow for returns; I’ve written numerous times that if we lose the corp market, it is all over (roughly 2 yes ago ago today, I was screaming on Street Insight that WCOM’s impact on junk was a disaster, even through stocks had been up that week). Stocks and Tsys rising/falling together or not has never been a point of mine. Sometimes falling Tsy yield are bad (’02 flight to quality, when junk was shunned) sometimes good (’03, when junk was being bought, too.) Fed is never really in a box, they can do whatever they please. IMO, bond investors more important than Fed. As to consumers, I’ve written in the past that if it looks like they will slow, then Tsys likely to rally and refis will surge again. Looks like we got that again today, as we crossed that 4.60% level that makes a chunk of the mtge mkt refinancible. ====================================================================== And my response back to him: Thanks for that explanation. I think I did not fully understand your position. I think I asked this before but do not remember the answer. What is the best way to watch corporate bond spreads? If you have not done a post on it, could you? Couple more questions if I could. This is a chicken and egg kinda question. Do bond spreads widen because of falling equities or do equities fall because of widening corporate bond spreads? Either, both, it depends? Under what circumstances would you see us "losing" the corp market? Finally, when and how much of that debt that corporations managed to get refininanced at the junk bond market will be coming due? Are we going to face a mammoth need to refinance debt in 2005? 2006? If so do you have thoughts on the implications of that.