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

To: mishedlo who wrote (44828)	11/6/2005 11:11:57 AM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Mish, Remember in mid-2005, you blogged that King copper is being dethroned etc. It seemed that way then. But now, all metals seem to be peaking. Even steel has started to rise in price in recent months!! The thing is - you prediction is purely based on the output price. You are not considering the creditbubble into the equation which is the input component. Also,long rates have just reached the level when fed started tightening!! i.e In the meantime, houses properties have done very good. Your argument is that, we are in the last inning of housing. Again this is an opinion you are basing on the housing inventory etc. And I know you blogged on UK house prices few months ago - where UK house prices were falling. But today (for september), UK house prices are starting to edge up because UK interest rate got lower by 0.25%!! So, now, UK is not in the last inning!!! For some reason, if the yield curve were to invert, it could actually invert sharply, because, global rate differential might pull long term rate down OR hold steadily. Thing could start allover as it happened in june 2004(?). I understand that, today it is trying to catch up with June 2004 rate. But, we might not be in the last inning. Also, if you go back and read 2000/2001, Creditbubble bulleting, he has been clearly saying, only the tech creditbubble has been burst (junk/telecom bond) and not the housing bubble. Lot of people then predicted, housing will go bust because of job losses!! But Doug did NOT!! He saw the credit bubble blowing bigger and bigger!!! So, I believe, you are seeing signs of weakness - but it could strengthen as well. I'm just not seeing security market falling in percentage!! Refi activity is only as low as April 2005 - it is not like it is 1-2 year low. Also, I think, this creditbubble will burst in one big explosion. They dont leak slowly. Whenever, there are slow leaks, the creditbubble can repair itself - by risking even more!!! Only a "shock" can prevent it from take more risk. You are not seeing risk averseness in a meaningful way (because securitization is doing good)....In short, I dont think we are in the last inning yet. But it is my opinion. And I think it is Doug's as well...