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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (80294)	9/25/2011 7:28:11 AM
From: elmatador	1 Recommendation Respond to of 217739

'cash is pulled out of B financial assets' to cover gaps elsewhere.

To: Haim R. Branisteanu who wrote (80294)	9/25/2011 11:38:50 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217739

just cleared from tray From: W Sent: 2011 09 24 1:43 PM Subject: RE: Comments - Week of September 19 H hits the nail completely on the head. This is our fundamental message to clients: interest rates are not only the cost of capital, they are a signal about the future. We have seen this consistently in Japan for most of the last 15 years. They signal to everyone, when stuck at zero, that there is no growth coming. Which company, in its right mind, would re-invest its profits in expanded capacity or expansionary diversification or expansionary acquisition when it is being told that the outlook is bad? There again, which company, having done the right thing in the face of recession by cutting costs and improving profits/cash will not continue to invest in labour saving and competition reducing acquisitions/investments in response to such a signal. Not only has Bernanke denied the sector of the economy that requires to adjust its balance sheet the most (households) a source of income to do so (interest on savings) he ensures that corporates will not expand their workforces (and hence household income) by sending this awful signal. He further depresses real incomes, and therefore any likelihood of recovery, by expanding the central bank’s balance sheet with gusto and unleashing inflation in precisely the areas that households cannot avoid (the fact that he could not see that his loose money would spill over into US dollar-hugging emerging markets and their commodity equivalents is testament to his dimwittedness). In fairness though, the Bernanke has made us tons of money (and hopefully our clients). He gave us the opportunity to ride US 10-year treasuries all the way from 4% to 2%. We were never in the trade for yield, purely for capital gain. Some months ago we called the switch into 30-year Treasuries because there was more capital upside. That has been a 25%+ call to date with Operation Twist being the cream on the cake. Now the capital upside game is almost played out on the 30-year (target is 2.5% but tempted to succumb to profit taking now). Barbelling treasuries with gold has been wild. Got to hand it to him, for Austrians this guy has been a PA Godsend. Still, I will be happy to see a reversal of personal fortunes were they to replace the Mad Hatter with Hoenig. We are long overdue a sensible hand on the monetary tiller. From: H Sent: Friday, September 23, 2011 4:45 PM Subject: Re: Comments - Week of September 19 There are many aspects the merry pranksters haven't thought about when they decided on 'OT'. One of them I have discussed on the blog: experience shows that in the fiat money system, a steepening yield curve is associated with inflationary growth, rising asset prices and growing economic confidence. A flattening yield curve does the opposite: it is associated with growing deflationary psychology, falling asset prices and a decline in economic confidence. In other words, the reaction of the markets to 'OT' was perfectly logical, although I suppose it has 'puzzled' the helicopter pilot once again. On Fri, Sep 23, 2011 at 9:06 AM, M wrote: I know that Operation Twist is a disaster for Pension Funds and Insurance Companies. But being conspiracy minded, I'm wondering whether or not this was done intentionally. Why? They would have to know that rates would go down further on this announcement. But, they also talk to the US Treasury and one of the problems that the US Treasury has is that the average duration of US debt is actually quite short. So if you really want to crank up the printing and inflation, wouldn't you want the US Treasury to lock in as much very long dated debt as possible at extremely low rates before cranking up the presses? It will be interesting to see if the US Treasury substantially increases the amount of long dated 10's & 30's and perhaps reopening the old 20 year bond auction and perhaps 50 year bonds to be auctioned in the next 6 months? The next notice of US Treasuries being auctioned with a 10-year and 30-year tenor is to be announced on Thursday, October 6th.....