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

To: gregor_us who wrote (19869)	12/29/2004 10:52:17 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

but also with a mindful eye towards what the US Dollar may do in 2005, would it be correct to speculate the safest bet of all is in European Bonds, Canadian Bonds, Aussie Bonds, and NZ Bonds? Would be curious to know how you intend to play it. I agree that one of the safest ways to play it is what you mentioned. No that is not what I am doing. I am loaded to the gills in a combination of Short Sterling, and Eurodollar calls. I also have short sterling futures and have been in those for quite some time and holding. ED calls are speculative but I really believe the FED will pause. LSS futures are not that speculative at all. It should be obvious that the UK is near the end of this hiking cycles, even if they do not cut. June and sep 06 futures look like a bargain to me. Mish

To: gregor_us who wrote (19869)	12/29/2004 11:01:46 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Where I find Heinz a tad lacking, however, is that while he makes a beautiful case for where the US bond market stands today--and what may happen in a economic downturn here in the US--he has been more sparing with his analysis of how the US T-Bond market is hugely propped-up. Surely even the reasonable man concludes the US T-Bond market is artificial now, and has been stripped of its historical role to forecast well the future. Propped up by what? Foreign buying? So what? Did the world end today when they bought fewer treasuries today? There is ENORMOUS pent up demand for treasuries in my view of things, in Heinz's view of things, and in the view of both Brian Reynolds and John Succo on Minyanville. Never was an asset class so universally hated as treasuries. Brian Reynolds thinks that foreign support has added 15 bps to treasuries. Big deal, for all that holding. If stocks start plunging and housing starts plunging, 4% on treasuries will start looking pretty damn good, not to foreigners perhaps, but to those here. Heinz has acknowledged to me the possibility that a US$ blowup or some sort of panic results in a mammoth selling of treasuries, but has that risk very low for now. Both of us see that as a possible endgame quite some time from now (as in not next year). I will clarify this but I think I am not misstating his position. Mish