Tuesday, May 4, 2010
But that’s not going to last at the long end of the yield curve, says Marilyn Cohen, president of Envision Capital.
“The fixed income market has been unbelievably embraced by baby boomers,” she says.
“We’ve seen more flows into bond funds than ever before,” she told CNBC. (more)
- 12 days into the oil rig 'accident' events continue to evolve and weather is slowing down efforts to contain things, we have two interesting items to report that are not in the MSM yet...OK, three then.
- 1. We have heard that a supply ship arrived just before the explosions and it was reported to be 'manned by all new people, nobody aboard was from the 'usual supply crew'. This purported industry source continues: there were a total of 14 explosions and these could have been cutting charges. Moreover, the shut off valve below the surface (5000 feet down) on the seabed is not longer controllable. Still, lots of disinfo and speculation scampering around the netosphere. While this is bad, it gets worse. (more) & (more)
“If 2-year note yields keep rising, the Fed may soon have to abandon its ‘zero for an extended period’ policy. This is why most Fed governors will keep playing the tired, industrial-era “output gap” card as long as possible; that is, until investors no longer believe the argument that they should fear deflation in a world of fiat money and “make-up-any-earnings-you-want” accounting in the banking system.
“The risk of a deflationary depression ended in late 2008, once the Fed figured out how to stop the panic in the shadow banking system, which paralleled the banking panic in the early 1930s. The new administration in early 2009 then decided to recruit the big banks as deficit-financing allies, rather than restructure them with new capital and new management. From there, it was necessary to suspend honest accounting in the banking system; engineer a wide yield curve for the carry trade; and, ultimately, claim a ‘profit’ on TARP investments.
“But just because the worst-case deflation scenario is off the table doesn’t mean the stock and real estate markets should be ‘off to the races.’ On the contrary, valuations and hopes are high for an economic rebound that’s based in faith and little else.”As with the Greek scenario, the system of sovereign finance is one of confidence -- a “con game” in the classic definition of the phrase. Agora Financial
Dorfman, founder of Thunderstorm Capital, notes that there is an old stock-market adage advising investors to “sell in May and go away.”
“Unlike some adages, this one has considerable empirical evidence in its favor," he says.
"The average six-month price gain for stocks in the Standard & Poor’s 500 Index since 1952 has been 6.36 percent for the November through April span compared with only 1.58 percent for the May through October period,” Dorfman wrote in his column on Bloomberg. (more)
But like some mystery novels where the ending is telegraphed in the opening pages, the denouement will probably be unsurprising. For all the handwringing, the reality is that the Germans, the French and the rest of Europe have little choice. In the decade since the introduction of the euro, the economies on the continent have become increasingly interwoven. With cross-border banking and borrowing, many countries on the periphery of Europe owe vast sums to one another, as well as to richer neighbors like Germany and France. (more)