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I'm sure Bill Gross is thrilled. Wonder how much he lost today?

 

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Guest soup1

perhaps someone can enlighten me as to why bonds getting decimated is bullish for stocks? And I really do not want to hear the myth about asset allocaction.

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Soup, what has changed?

 

Well, for starters, there is now a Republican-controlled congress.

 

For another, they may be a lot more desperate now -- people may have been appalled and chagrined to see their brokerage statements, but very few have been panicked. People still think it's going to come back. So, we may be experiencing the next level of news/statistic manipulation, government "investor" incentives, secret bailouts of JPM-type crap....

 

Which is not to say that I think they'll necessarily succeed. But has the government done everything is could? I doubt it. Don't forget the psychological value (to individual investors) of government feel-good announcements.

 

My own opinion is that there is currently zero event risk factored into the market. Even disregarding cycles etc. that's just plain stupid.

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soup- that's the way it has been working the last few years. At the markegin a few hedgies sell stocks to buy bonds and vice versa. But as yields rise the relationship will flipflop. Just don't know when. There is a tip point somewhere. Be interesting to come up with a theoretical model for where it might be. Probably where bond yields are more than x% of perceived future earnings yield on S&P.

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I also recall reading (Precther?) along time ago that right before the big wave 3 dump (aka final descent into the abyss) there would be a temporary disconnect btwn bonds and stocks but that eventually they all go down the crapper together.

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Are ten year rates in a bear rally?

The weekly chart says 'yes'.

Should roll over concomitantly with the 'end of the beginning' for equities.

post-3-1038421759_thumb.jpg

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I have no doubt that desperate men in control of the biggest economy on earth can reflate financial assets and end up in some sort of profitless/jobless stagflation. But how long does the rest of the world continue to take worthless paper in exchange for real goods. I understand foreigners have a vested interest in continuing the game, but not forever! What happens when the 38 billion dollar trade deficit becomes 50 or 100 billion each month.

 

Point is, they can do it, but surely they see the endgame as coming quicker if they do. I guess the answer is they don't care about tomorrow if they can get away with it today. The inevitable result of an amoral faithless self absorbed culture.

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Guest soup1

drano: the point is the govt/fed can not continue to bail folks out for making iditioc investments. Liquidation of the malinvestment and the debt has to take place. Unless of course either it is different this time, or I need a lobotomy.

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Guest soup1

drano: the fact of the matter the gig was up when the fed facilitated the asset and credit bubble. Never the less they have pulled out all the stops trying to bail out the masses, it has not worked and it will not work. To every thing there is a season. We are presently in Winter, and it is going to get a hell of lot colder.

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