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

To: Skeeter Bug who wrote (103748)	6/24/2009 7:35:58 PM
From: Think4Yourself	Read Replies (2) \| Respond to of 110194

I see TWO forces at play in the Treasury markets. One is the inflation everyone knows about, and understands fairly well. I do not see inflation as an imminent threat but when it does come it is going to be VERY nasty. The other force is simple supply/demand issues, which are totally independent of the inflation issue. For one thing, China and Russia are no longer the eager buyers they have been, and China is now a seller. The Treasury is going to sell extra trillions worth of Treasuries for each of the next few years. Where is this money going to come from? The excess cash willing to settle for 2% interest will soon be gone. After that the remaining investors will want higher yields to buy them. Unless the Fed wants to try buying ALL of those Treasuries, yields are going to rise and prices are going to fall. The Fed may continue trying to hold rates down, but will not succeed for much longer without losing all credibility. The sheer amount of Treasuries needing to be sold/renewed guarantees this is going to blow up in their face. If the Democrat's National Health Plan passes, it's all over.

To: Skeeter Bug who wrote (103748)	6/25/2009 12:05:11 AM
From: TH	5 Recommendations Read Replies (2) \| Respond to of 110194

SK, I agree with a number of your observations. I've been saying watch the 10 year ever since it touched up on 3. It is the key to everything and will continue to be so. I also agree that another deflation scare (or depression if you prefer) will come into play before the real inflation wave starts. That is why I'm still short (profitably, btw) miners, the S&P (since June 10), but of course holding the precious, unprintable, forged in a supernova, 79 proton, accept no substitute, gold bullion. I like my positions as I'm protected by the bullion on the off chance we get a massive melt, but positioned to capture weakness as the game players push clownbucks from equities into treasuries. Seasonal weakness is also in favor of the short-side, as well as growing awareness that all the green shoots nonsense really is just bullshit. Ben concerns me, for I wonder how far he will go to satisfy political pressures. Maybe he will be replaced, but I think that unlikely, as such an action will have a tremendous negative impact on markets. I listened to Buffets comments today. I stand by my previous statements that Buffet has lost it. His brain is getting mushy and he is (incorrectly) fighting the last battle. He comment about no risk of deflation is rubbish. Of course Buffet, just like Bill Gross, is ALWAYS talking his book, even when he tells you he is not. Buffet's folksy approach is disarming, but he always has an agenda. I do not trust him. GT TH