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

To: mishedlo who wrote (9028)	7/10/2004 12:06:28 PM
From: glenn_a	Respond to of 116555

Hi Mish. (( Then what do you make of the EXTREMELY tight correlation of stocks and bonds for the past 1.5 years? That correlation is finally ending now. Virtually every asset class rose vs the US$. Stocks, bonds, treasuries,, oil, metals, soybeans, housing. ... Is it possible the K-Winter is just now starting or was disrupted (temporarily) by mammoth reflation efforts for 2 years?)) Yes, that would be exactly my contention. As Russ was very astute in explaining, a classic Misis credit-driven "crack-up boom". However, systemic economic and financial system instability has only grown IMO, and the pricing mechanisms have become ever further distorted as (a) real interest rates have gone deeply negative, and (b) there has been enormous central bank accumulation and sterilization of US$ - so similar to sterilization of gold flows out of Great Britain in the 1920's. IMHO of course. :) Regards, Glenn

To: mishedlo who wrote (9028)	7/11/2004 1:38:21 AM
From: Perspective	Respond to of 116555

< EXTREMELY tight correlation of stocks and bonds for the past 1.5 years?> Huh? Have a gander at these: finance.yahoo.com^SPX&t=my&l=on&z=m&q=l&c=^tnx finance.yahoo.com^SPX&t=5y&l=on&z=m&q=l&c=^tnx Looks to me that, starting in exactly 1982, stocks and bonds began moving in lockstep. Stocks up, interest rates down. Then, beginning in 2000, they became anticorrelated and have remained there ever since. Stocks down, bonds up through 2003, then stocks up, bonds down since then. Perhaps you are zooming in closer than I am; you're not going to find these longwave relationships under a microscope, more like a telescope. BC