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

To: ild who wrote (16200)	11/18/2004 11:00:13 AM
From: zonder	Read Replies (3) \| Respond to of 116555

Isn't there overwhelming consensus that long rates are going much higher? Stick around a little more and see for yourself just how far from "overwhelming consensus" we are :-) IMO flattening of the interest rate curve is bad for the banks and they are not able to hedge for it. I just told you a very simple way to position oneself in anticipation of a yield curve flattening - short the short end and go long the long end. Or do just one of the above, if you feel sure about exactly how the flattening will occur. It is not rocket science, and if the banks say in their 10Q filings that they expect to make money if rates rise and lose money if rates fall, then I suggest you assume that they have figured out a way to benefit from this phenomenon. Also doubling of short rates is bad for the economy and the banks are part of economy. I disagree. Short rates that are negative in real terms doubling and STILL remaining negative in real terms is not bad for the economy. Actually, the return of more rational investment criteria (rather than "Hey I will rather spend than put the money in the bank, if I'm gonna get NEGATIVE real returns!") is good for the economy. I don't disagree that banks are part of the economy, of course, but that cannot be an argument why a certain sector should be shorted, imho.