I am watching Asian Squawk Box and Barry Hyman just said the Alan Greenspan diffused a lot of what Richard Fisher said last week.
I heard Greenspan say some things along those lines but it looks like the bond market does not believe it. I have now heard Greenspan say something twice in the last week that I do not believe and I hope you do not either. He said that if the yield curve inverts it may be different than the other times and not signal a slow down. The process here is that foreign buying, dislocated GM and Ford debt holders and foreign demand is what is causing the, for now, flattening.
I will not be betting my clients money on this time is different. Inversion makes accessing capital, for those who need it, much more difficult. How we got inverted does not matter once/if we are inverted.
Intel had a great mid quarter update but the stock isn't doing much. I meant to write about this before but after the run the stock has had there was no way good new was going knee jerk the stock higher. Great news might have, but not good news.
Oil has been strong as you know. I think it goes higher short term but it may not be a problem for stocks until $56.
I think the ten year bond being below 4% for several days is significant. I believe the last time it was this low was just for a day. One of my favorite technicians, Nicole Elliott has been calling for lower yields for months. She has been right and thinks we will make all time lows in yield, all time lows.
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6 comments:
"all time lows"...on what timeframe? In reference to the 30 year bond?
the ten year bond sometime this year.
Hmmmm, this time is different. If I seem to recall, that's what everyone was saying in the late 90's regarding the nasdaq.
Boy. How times change. And to think this is greenspan himself saying that.
If I hadn't lived thru the 90's myself, I'd almost agree with him. Then again I did. So I guess I'll just have to disagree with the professional economist.
What would rand think?
It can't happen here?
http://www.idorfman.com/Charts/10yrUSTJGB060105.png
If you don't want to link over to see the chart that Jill lift it shows a similar chart pattern on the Japanese ten year bond from 1990-96 and the US ten year now.
My own opinion on these comparisions is they don't add up. Japan does not write down losses and bad loans, has a peculiar cross ownership of equities, is being stunted by a huge savings rate (cultural thing) and produces none of the natural resources needed to function.
THIS TIME IS DIFFERENT!
It is different from almost any other time except the summer of 1982! In the summer of 1982, real earnings yields on the S&P 500 exceeded the real earnings yield on the long bond. If once in the last 23 years is different, then this is different.
What Fisher said is that because of the soft spot, chances are there will be only one or two more fed fund rate increases. What Greenspan said is the soft spot is over.
I thank you Roger for the good topic and good discussion. By the way, the stock market exploded in value starting in August of 1982. In hind sight, the "inversion" in stock and bond yields was not a bad thing in the summer of ’82.
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