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

To: UncleBigs who wrote (56822)	3/25/2006 2:35:51 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

The whole apparatus is totally dependant on maintaining non-existant credit spreads, and implied volatilities, as well as markets that never sell off for more than a few days. In otherwords an impossible situation. Fed funds levels, words, and expanding money by 5% or whatever, now will have little impact on that. In fact, I feel this next meeting will be the last rate hike. But then what about Europe, Asia and about every CB in the world? They are just getting started, and once the spreads start to narrow and the economy weakens on a high deficit nation like the US, then the carry trade currencies rally, and upset the leveraged apple cart. That's the outcome I'm expecting. Ironically, these carry trades exist because of a false sense of security about the USD. So a pause or even worse a loosening in the US at this stage, will impact that. I think the Fed is trapped into a phony strong economy, raise rates stance, leaving it with few, if any, policy options.