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Don't disagree that employment and wall to wall deficits (government
spending ex SS and trade) are of concern to all bond holders. As an aside,
there was an interesting piece in Barron's on declining state employment tax
collections. As a point of clarification, I keep an eye on copper, lumber,
and oil for signs of economic strength/weakness rather than commodity
inflation. Historically, copper is probably the best of the lot ... in
recent history it's interesting to note that the Sumitomo copper scandal and
resultant crash in copper prices very nicely preceded the debacle in Asia.
Earl
-----Original Message-----
From: Ira <ist@xxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, November 22, 1998 4:05 PM
Subject: Re: Bond Prospects
>You are looking at the commodity sectors for signs of inflation which at
this
>time are not seen. Everyone is talking about deflation at this time. No
one
>seems to be paying attention to the split between the rapidly rising costs
of
>services and the decline in commodity costs. The is a botoom to commodity
costs
>and it isn't zero. If we have become a service economy, then rising costs
in
>that area would effect the economy greatly. Commodity prices are falling
and
>yet companies are having a hard time finding employees (I should state,
>Qualified employees). The US is still a major debtor nation and we are
printing
>money like it is going out of style. If the ECU is successful, a big if,
then
>it will become the currency of choice and there will be a major dollar drop
and
>bond yields should skyrocket. There are two sides to every coin and
sometimes
>the bottom side is just as interesting as the face up side. Just something
to
>think about. Ira
>
>Earl Adamy wrote:
>
>> Sat down this morning with the bond charts to decide whether to scale
back
>> on bond holdings which have appreciated nicely over 18 months. A couple
of
>> years ago I had targets of 5.0% followed by eventual decline to 3.8-4.0%
and
>> began loading up on long maturities as we did not want to get caught
having
>> to replace short maturities at very low rates. The nasty reversal in
early
>> October has been giving me concern along with the failure to rally
quickly
>> off 5.3% area. On the fundamental side, I've been looking for a recession
>> running well into 2000, however the fiscal stimulus of 3 Fed rate cuts
may
>> well counter any significant slowdown.
>>
>> After reviewing the monthly, weekly and daily charts, I think for now,
bonds
>> still look healthy but bear a close watch. The monthly and weekly bond
>> charts seem to be pretty much intact in terms of both channels and fibs.
The
>> daily suggests that a rally through 130 would seem to negate much of the
>> reversal unless/until a second failure occurs below the 11/6 lows.
Looking
>> elsewhere, I see nothing in utilities, copper or oil which suggests
danger
>> for bonds. The only major danger signal I see is coming from lumber and
the
>> housing sector.
>>
>> Earl
>>
>> -----Original Message-----
>> From: swp <swp@xxxxxxxxxx>
>> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>> Date: Sunday, November 22, 1998 11:13 AM
>> Subject: Re: Fwd: GET: A useful tool
>>
>> >Actually, I had a downside target on bonds for 126-20 and had recs for
>> >my clients to get long from 127-00 on down with targets for last week at
>> >128-20. Pull back this week, then 130/131. For anybody working at firms
>> >with reuters, I will be on Reuters TV at 2:00PM eastern on Monday.
>
>
>
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