This is BOND MARKET WEEKEND around the world.
I would like to be a fly on the walll this weekend at the BOJ. They
must have lost tens of billions yesterday during the BOND CRASH!
Additionally, ALL INCOME INSTRUMENTS CRASHED WITH THE BOND!
REITS! MUNIS! CONVERTIBLES! PREFERREDS! JUNK! THEY ALL CRASHED
YESTERDAY!
Indeed, the puny wages that those 300,000 jobs put into the economy
was off set by BILLIONS AND BILLIONS IN LOST WEALTH IN THE BOND
MARKETS!
While the NAZZ small cap hotties rejoiced, THE HOUSING BUBBLE MAY
HAVE BURST BEFORE OUR EYES!
AND IT'S THE HOUSING BUBBLE THAT HAS BEEN SUPPORTING MUCH OF THIS
ECONOMY!
SO, IS IT TIME TO SAY BYE-BYE TO REFI?
Well, there is always the possiblity that the jobs number was a
fake. After all, the nabobs of positivity like Greenspan, Snow and
Dubya were absolutely desperate for a good jobs number on Friday.
Indeed, failure of the jobs number was really not an option.
So, was the jobs number just another "ad buy" by Dubya & Chums? We
shall see. There was a lot of "odd trading" prior to the release.
Hmmmmm.....where big contributors told in advance that the "fix was
in" on jobs? Well, let's hope not! The last thing we need is more
insider trading scandels, and Ms. Trial rogue juries.
ANYWAY HERE WE ARE, WHAT TO DO?
Clearly, Greenspan has been under pressure to "normalize" interest
rates. It's rather embarassing to be running around with your "one
percent solution" hanging out for too long. And, the jobs number is
just the thing to give the Fed "permission" to raise rates ASAP. I
would hope that they would go for 1/2 percent straight away,
too "just get it over with." But, there is the massive bond carry
trade to consider, and the huge housing bubble too.
KNOW THIS; MONDAY MORNING WILL BE MORE IMPORTANT TO THE FUTURE OF
THE MARKETS THAN LAST FRIDAY.
IT WOULD BE GREAT TO BE A FLY ON THE WALL....IN THE HALLS OF HIGH FINANCE OVER THIS WEEKEND.
My hunch is that the markets will normalize on Monday.
The bond will rise. Stocks will fall. And, what passes for
the "normal" equilibrium will be restored; albeit temporarily.
If, on the other hand, the bond falls big. The question will be: Is
it another "headfake" like last July. Income has been getting TOO
pricey lately. And, three or four days off "sell off" might do the
trick on the over-bought condition. But, if you sell on the fourth
day, all you'll probably do is screw up you taxes for '05, and
probably miss the bounce back.
So, I seriously doubt that Mr G wants to upset the carry trade, the
derivatives market and the housing bubble all at one time. Perhaps a
time-out is in order?
Still, there is no time like the present to correct these
persistance "bubbles" in bonds, housing, debt, and the various carry
trades and derivatives.
Because, these things will not "go away" on their own.
