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And what does he think will happen when Gore doubles the size of Government?
JH
----- Original Message -----
From: "Dennis L. Conn" <dennisconn@xxxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Tuesday, October 03, 2000 5:11 AM
Subject: [RT] Re: FW (James Smith): The Debates and their effect on bonds
> JW,
>
> While the value to traders of this is debatable, it deserves comment.At
one
> time, I thought PEI produced some pretty fair analysis, but this one line
in
> Smith's piece is proof to the contrary:
>
> "Many on Wall Street worry that Bush's trillion dollar tax cut would
herald
> a return to deficit financing."
>
> Does anyone really believe that deficit spending ever ended? Does Smith
> believe it has stopped??!! I wonder what he thought when the Grace
> Commission concluded that if the income tax were abolished, it wouldn't in
> the least affect the government's ability to provide services. The FRB
> printing presses are all that's required to fund Congress' grandiose
> schemes, since there's no legitimate backing for the currency - it's all
> counterfeit money anyway!
>
> The Smith quote only demonstrates the truth of another quote: "You can
fool
> all of the people some of the time, and some of the people all of the
> time..."
>
> I wonder if he actually believes that there's a surplus as well...
>
> DC
>
> ----- Original Message -----
> From: JW <inbox@xxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Tuesday, October 03, 2000 05:59 AM
> Subject: [RT] FW (James Smith): The Debates and their effect on bonds
>
>
> > James Smith's latest.
> >
> > Note: I do not have any association with his service. Go to
> > http://www.pei-intl.com for any info desired.
> >
> > JW
> >
> > -----Original Message-----
> > From: James Smith [mailto:JSmith@xxxxxxxxxxxxxxxxx]
> > Sent: Monday, October 02, 2000 9:15 PM
> > Subject: The Debates and their effect on bonds
> >
> >
> > Politics has been known to play a role in the markets at times.
> > Conventional Wisdom has it that Bush will NOT do well in Tuesday
> > night's debates. But if he holds his own or actually beats Gore
> > in the debates, it could very well send a chill thru the bond
> > mkts. Ironically, Wall Street may be happier with a Gore win
> > than a Bush win. Many on Wall Street worry that Bush's trillion
> > dollar tax cut would herald a return to deficit financing. The Bond Mkt
> > won't wait til Nov 7th to discount the worst fears. This could
> > be one factor in explaining why the Sept High in Bonds is likely
> > to hold. The other factor may be another spike in oil as Winter
> > approaches. Can you imagine the effect on bonds if Bush wins
> > the 1st debate at the same time oil begins a move to $40??
> > Why do you suppose foreigners are selling their bonds?
> >
> > Europeans holding US bonds for the last year are sitting
> > on huge foreign exchange profits, not to mention the capital
> > gains due to the Treasury Dept Yield Curve Manipulation.
> > Smart Money may be taking money off the table now, before
> > the election. Afterall, there is no great need for the Treasury
> > Department to continue buying in old bonds once the election
> > is out of the way. The Treasury Dept focused their buy backs
> > on the old bonds, which are closer in maturity to the 10 years, in a
> > transparent attempt to lower the 10 year bond yield off which
> > mortgages are priced.
> >
> > As you know, the housing market is a key sector of the
> > economy. The administration could not afford to allow
> > higher rates disrupt the housing market.....at least not
> > until the election is over. What this means is that no matter
> > who wins in November, bond yields are likely headed
> > nowhere but higher.
> >
> > Bond market mavens will have noticed that the yield curve
> > has been steepening of late. Typically bonds should
> > rally as the economy slows down, but because the bonds
> > have already seen such a tremendous rally, astute investors
> > have come to realize that the risk outweighs the reward.
> > With the 30 year bond yielding 5.95%, why risk a move
> > to 7.00% or higher, for a potential rally to 5 1/2%--if that.
> > It is extremely unlikely that bond yields will again move
> > below 5.00%. It can't be ruled out completely, but the
> > chances are slim, especially with oil already having started
> > a longerterm bull market. But even if bonds were to rally strongly,
> > we do not see this rally as "sustainable." Bonds can
> > rally to tremendous levels, as they did in 1998 after the
> > LongTerm Capital Ponzi scheme came undone, but note
> > that such rallies are "short-term" in nature. If stocks
> > were to go into an absolute freefall, no doubt Greenspan
> > would cut rates aggressively, but it would take a real
> > threat to the economy, not just the stock market, for
> > the FED to get involved. The chaos so far in tech stocks
> > does not qualify. Lowering rates before the election
> > would be viewed by many as a political move.
> > Remember, Greenspan still has over 3 years left to his term.
> > He is very unlikely to do anything that will be remotely
> > viewed as "politically motivated" in front of the election.
> > He might try to talk the market up by standing on the
> > Titanic and telling people there is nothing to worry
> > about, but he is not going to rescue your sinking
> > portfolio.
> >
> > It is entirely possible that both stocks and bonds go
> > down together. Many investors have been and will
> > continue to, run to cash. Cash is King when all others
> > are reduced to paupers.
> >
> > Technicians will also note that bonds (expressed in yield
> > terms) broke out above a 20 year downtrend line
> > some time ago. After breaking out above the trendline,
> > bond yields can move aggressively higher at most
> > any moment. That moment may not be far off.
> >
> >
> >
>
>
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