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Front page of NY Times

 

We told you so, but the solution of one economist is even more FEED easing!

 

Surge in Rates May Hurt Pillar of the Economy

 

A little more than a month after the Federal Reserve reduced its overnight lending rate to just 1 percent, mortgage rates have shot up as investors have soured on the bond market ? in part because of confusion about the Fed's intentions in managing the economy.

 

This has abruptly stalled plans by thousands of homeowners to refinance their houses at even lower rates than they already enjoy. The pace of home loan refinancing has fallen by half the last several weeks, according to bankers and anal cysts.

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Don't know how it is in this 'new era,' but there used to be an enduring pattern in the 20th century where the long bonds would sell off into the big refundings in Feb. and Aug. (that's when they used to sell the 30-years), and then rally from the auction forward.

 

We've certainly had the pre-August sell-off. All the boo-hooing and hysterics (such as the New York Times article linked by Hiding Bear above) seem overdone. Long-term, bonds have probably entered a 20-year secular bear market. But short-term, I would fade these people, particularly the New York Times. When the poopular press starts putting financial subjects on the front page, whatever trend they're writing about is usually over for the time being.

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Jerry, Wyndy, check out my long lost love LNUX up 15% premarket. This has become a good MSN virus play for sure it seems. My small play of LNUX in my Roth is a good long term gamble I think because MSFT viruses are getting more complex and taking longer to fix. Good trades can be made in LNUX immediately after. Today of course has nothing to do with MSN but just watch next time .....

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Bob Carver predicting one last jam job during OpEx week. Says the pros are not finished distributing to the schmoes. Time cycles call for a final top on August 15, which would allow sufficient time for the McClellan and the stochastics to correct itself to the upside and top out.

 

Perfect time to use light summer trading volume to push things up and provide the illusion of a new leg to the upside.

 

Sounds about right.

 

In the meantime, blowups are accelerating. COST and EXPE getting hit.

 

But XING is up 45% in the PreMarket.

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Early signs of liquidity problems.

 

AMR pulls $250m convertible bond deal announced on Monday. MWD & MER (co-managers) were only able to find $150m in demand and most of that was marginal. To get the deal done the managers estimated the bonds needed 60% more yield. AMR walked away, "to pursue other options"

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Don't know how it is in this 'new era,' but there used to be an enduring pattern in the 20th century where the long bonds would sell off into the big refundings in Feb. and Aug. (that's when they used to sell the 30-years), and then rally from the auction forward.

 

We've certainly had the pre-August sell-off. All the boo-hooing and hysterics (such as the New York Times article linked by Hiding Bear above) seem overdone. Long-term, bonds have probably entered a 20-year secular bear market. But short-term, I would fade these people, particularly the New York Times. When the poopular press starts putting financial subjects on the front page, whatever trend they're writing about is usually over for the time being.

Corporates bouncing for awhile I think.

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When the poopular press starts putting financial subjects on the front page, whatever trend they're writing about is usually over for the time being.

I absolutely agree. Here is an example form germany's weekly magazine "Der Spiegel":

 

- from mid 70s to early 80s they didnt have a "stcoks section", nothing was re?prted about stocks, they do this the tim before and since the early 80s.

 

- in 1987 they had a cover "stock mania" or something, same in 2000

 

- in 1980 they had many adds about gold, gold funds, miners, bullion and so on.

 

 

pretty good indicator. :)

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