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James, you better stick to the technical side of your trading, because your
take on the fundamentals is going to cost your clients a lot of money one of
these days. In the message below you have even managed to prove yourself
wrong.
In the last year the cost of oil has TRIPLED, and yet, by your own numbers,
inflation only rose from 1.9% to 2.7%. Do you really believe oil will
triple in price again? You also cite wages rising 6.4%, as if this signals
future inflation. Wages have been outpacing inflation for years now.
Doesn't that seem a little strange to you? It's because employees have
earned these wage increases through PRODUCTIVITY increases, and therefore
the costs are not passed through to the consumer.
Here's the best part, though. You claim inflation is "sky high and
climbing," yet offer no evidence. Let's assume for a second that you're
correct. In the Doomsday scenario you keep portraying, the US is going to
sink in a sea of debt. What you don't seem to understand is that inflation
is a debtor's best friend. It erodes the value of the underlying principal
of the debt while increasing the value of tangible assets. Inflation causes
problems of its own, but it dilutes the debt issue.
In other words James, even if you're right, you're still wrong.
Bruce
----- Original Message -----
From: "James Taylor" <jptaylor@xxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Thursday, December 07, 2000 9:57 AM
Subject: Re: Re: [RT] BONDS
> Is that right ?
> I've been short tech trash heavy thru this whole decline, and having the
> best year ever.
>
> My trading style is to have Fundementals and Technicals make sense.
> Now the fundamentals make NO sense.
> You are buying government debt in a declining economy, a government debt
> that is near $6 Trillion.
> Falling US tax revs, sky high and climbing inflation.
>
> debt amassed by both
> individuals and corporations stands at excessive levels. Corporate
> interest payments in the third quarter of this year stood at $182
> billion, a record. As a percentage of corporate profits 18.7
> percent.
>
> Rampant Inflation example (this is the published numbers, imagine the real
> numbers):
> Hourly compensation costs among
> nonfarm businesses rose at a 6.4 percent annual rate in the third
> quarter, the fastest pace since 1992. And the rise in labor costs
> has been accompanied by an increase in core consumer prices,
> growing at an annual rate of 2.7 percent so far this year, up from
> 1.9 percent in 1999.
>
>
> With corporate debt rates over 10%, it makes absolutely no sense paying
for
> 5.5% long bond rates.
>
> The bottom should fall out on the US bond market before this debacle that
> Greenspan made is thru.
>
>
> One day you will wake up and the trap door will have opened on the bonds.
> IMHO
>
>
> JT
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