Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Crimson Ghost who wrote (70123)	9/22/2006 4:12:13 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

I think this bond rally is about giving messed up homeowners a chance to refinance into low fixed rates. If i am correct then it has ways to go. It is ironic that both bond bulls and bond bears will be wiped out. How ? Bond bears will be wiped out when CB and Fed buying will push bond prices higher. Bond bulls will be wiped out eventually because coupon is well below inflation rate and inflation will decimate the value of their principal. Insane, but true !

To: Crimson Ghost who wrote (70123)	9/22/2006 4:38:55 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

I think it was John Hussman who pointed not long ago that treasuries have traditionally rallied hard only after credit spreads had widened sharply and stocks and commodities had dropped markedly. Commodities have indeed eased considerably in recent weeks, but the senior stock averages are at or near cycle highs while credit spreads remain near record lows. Good observation. Something doesn't add up. This bond rally looks very disorderly, almost like a panicky flight-to-safety buying that one would see in some kind of a crisis. But stock indexes are near highs. And why would bonds react to lower oil prices when they never were reacting to higher oil prices, at least directly.