02-04-2013 07:55 AM
Risk can come off like switching off a light.
02-04-2013 08:35 AM
The always entertaining Jim Kunstler on the matter.
02-04-2013 12:57 PM
hardnox, thx for the article.....sobering indeed...i thought the "lights out" was prophetic, as well (in general sense of technology overload, incl ag)
intuitively, i know $$ flowing from bonds - equities.......looking back 40 yrs on charts - only been a few periods (short) when this occurred, one being the Jimmy-Ronald transition.......who buys the bonds as they become cheaper?
02-04-2013 01:23 PM
The good news, I think, is that this stock rally probably doesn't have a lot more legs wich means that money will rotate back to bonds or at least enough to keep a bid under them for now.
But let's think about this in the very simplest terms: (for the less technically inclined, as Kunstler says, bonds trade inversely to interest rates and thus when rates go up the value of the bonds go down.
So here we are printing massive amounts of government, corporate and junk bonds, all of which have nowhere to go invalue but down unless governments go further in the unconventional direction (i.e., negative nominal rates).
Ayeeh! talk about WMD. But if there is to ever be an exit then most of the paper is going to have to have been moved to the short end in order to eliminate principal exposure. So I guess the game is about duration? Issuers want suckers to risk huge amounts of principal in order to loan them money at very low rates for a very long time, investors want to stay as short as possible in order to avoid that but get no yield.
Headache time, I have to think about this.
02-04-2013 02:20 PM - edited 02-04-2013 02:22 PM
yes, i understand, i get lost in the rabbit hole of deciphering the Houdini code, as well---aka fog, smoke'n mirrors
don't know if you look @ charts--very interesting on monthly SP---BIG expanding triangle...top (A) - 2000-then down to-(B) 2002--then up to- (C) 2007 -back down to (D) 2009---now, almost testing 2007 highs - I expect a "hang out" period here. Then, a pure technician would say we're blasting on (continuing) this impulse to the stratosphere----but, with all the hanky panky going on it may take a few years (2017) of rangebound.......