No Country For Old Men II
A follow up to last Saturday's No Country For Old Men...
The biggest bear market in Treasuries since 2004, may get worse.
Investors have lost 2.9% on average since March, including reinvested interest, according to Merrill Lynch & Co.'s Treasury Master Index.
That's the worst performance since the second quarter of 2004, when they tumbled 3.1%. In the second halves of 1994 and 1999, U.S. government debt returned less than 1%.
As recently as June 23 Treasuries were down 3.27% for the quarter, the most since the three months ended Sept. 30, 1980, when they tumbled 5.1%.
Even with the recent rally, managers overseeing $1.37 trillion cut their holdings of Treasuries to 30% of assets on June 27 from 34% two weeks earlier.
Investors like Thomas Atteberry of First Pacific Advisors, are less optimistic than Fed officials:
"I'm not convinced they're going to see the sort of inflation moderation they're hoping for. You will continue to see the upward drift in Treasury rates."
The Commerce Department said last week the economy grew at a 1% annual pace in the first quarter, capping the weakest six-month expansion in five years.
Consumer prices climbed 4.2% in the 12 months to May, while producer prices jumped 7.2% during the same period.
The Reuters/Jefferies CRB Index has gained 48% in the past year, compared with an increase of 14% in the 12 months ended June 2004.
Richard Schlanger at Pioneer Asset Management "The Fed will talk tough but actions speak louder than words and they're not going to act.
I just can't see the Fed tightening at this point. The economy's too weak, the financial system still is in jeopardy, you've got unemployment rising."
The Nattering One muses... The 19 commodities in the Reuters/Jefferies CRB Index jumped 29% through June 27...
the most since 1973 and more than any second-half gain in at least fifty years.
Yet, gold purchases in India, the worlds biggest buyer, plunged 50% from a year earlier.
And while you weren't looking... the Federal government deficit for just the month of MAY; exceeded the total annual deficit for FY2007.
For all of FY07$162.8 billion; the MAY 08 monthly deficit = $165.927 billion.
Adding insult to injury... Gross domestic investment in machines, houses and inventories has fallen by $200 billion since their 2006 peak.
Domestic consumption will soon be $300 billion short of what's needed for any kind of economic recovery...
And the perfect storm is upon us...
Speculative housing bubble pops, outsourced emasculated soft service economy based on housing tanks, profits decline...
unemployment rises, wage growth is negative, commodity speculators run rampant,
over leveraged debt masquerades as "ample" liquidity, mortgage backed securities go toxic,
the multiplier effect starts working in reverse, credit markets and carry trades unwind, easy credit disappears...
housing price declines accelerate, debt servicing failures go exponential, debt ratings decline and all forms of debt become toxic...
stagflation runs rampant, real consumer spending goes negative, equities slide into bear market...
despite central banks lowering rates, interest rates rise, bond & commodities bubble markets tank and the great deflation of 2010 is upon us.
Bill Gross expects housing prices to fall a further 10% by January, by then a "Japanese-style deflation will be in full stride."
This part of the cycle turns into a self reinforcing economic death spiral or "liquidity trap".
With asset prices falling steadily and consumers convinced that they'll keep falling,
and despite rates being lowered to zero, there's no incentive to borrow today to buy today; because prices will be lower tomorrow.
With consumer demand slumping, businesses also have no incentive to borrow, even if the money is effectively free,
Why would business borrow more with future consumer demand projected to decline?
Cut rates to zero; craft bailouts and print all the money you want, this will only exacerbate and prolong the problems...
Its a fait accompli and there is nothing that can stop this train wreck in progress.
The helicopter drop of economic stimulus checks and running the printing presses overtime simply encourages more overcapacity...
further debauches the currency, and exacerbates speculative stagflation, while doing nothing for real wages.
The bottom line... No safe harbors will be found with the exception of certain agricultural supply chain necessities because even homeless people gotta eat.
The Grapes of Wrath... Thank you terror, thank you consequence, thank you disillusionment, thank you nothingness, thank you clarity.
Thank you globalism, thank you corporate America, thank you India & China, thank you whorish government for sale; with taxation and no representation.
Thank you those stupid enough to have voted for Shrub Jr., thank you religious imbeciles, thank you seven sisters, thank you neo con fascist republicans.
No real jobs, No real benefits, No real pay, No economy, No country for old men with no future. Happy Independence Day! Enjoy it while you still can.
The biggest bear market in Treasuries since 2004, may get worse.
Investors have lost 2.9% on average since March, including reinvested interest, according to Merrill Lynch & Co.'s Treasury Master Index.
That's the worst performance since the second quarter of 2004, when they tumbled 3.1%. In the second halves of 1994 and 1999, U.S. government debt returned less than 1%.
As recently as June 23 Treasuries were down 3.27% for the quarter, the most since the three months ended Sept. 30, 1980, when they tumbled 5.1%.
Even with the recent rally, managers overseeing $1.37 trillion cut their holdings of Treasuries to 30% of assets on June 27 from 34% two weeks earlier.
Investors like Thomas Atteberry of First Pacific Advisors, are less optimistic than Fed officials:
"I'm not convinced they're going to see the sort of inflation moderation they're hoping for. You will continue to see the upward drift in Treasury rates."
The Commerce Department said last week the economy grew at a 1% annual pace in the first quarter, capping the weakest six-month expansion in five years.
Consumer prices climbed 4.2% in the 12 months to May, while producer prices jumped 7.2% during the same period.
The Reuters/Jefferies CRB Index has gained 48% in the past year, compared with an increase of 14% in the 12 months ended June 2004.
Richard Schlanger at Pioneer Asset Management "The Fed will talk tough but actions speak louder than words and they're not going to act.
I just can't see the Fed tightening at this point. The economy's too weak, the financial system still is in jeopardy, you've got unemployment rising."
The Nattering One muses... The 19 commodities in the Reuters/Jefferies CRB Index jumped 29% through June 27...
the most since 1973 and more than any second-half gain in at least fifty years.
Yet, gold purchases in India, the worlds biggest buyer, plunged 50% from a year earlier.
And while you weren't looking... the Federal government deficit for just the month of MAY; exceeded the total annual deficit for FY2007.
For all of FY07$162.8 billion; the MAY 08 monthly deficit = $165.927 billion.
Adding insult to injury... Gross domestic investment in machines, houses and inventories has fallen by $200 billion since their 2006 peak.
Domestic consumption will soon be $300 billion short of what's needed for any kind of economic recovery...
And the perfect storm is upon us...
Speculative housing bubble pops, outsourced emasculated soft service economy based on housing tanks, profits decline...
unemployment rises, wage growth is negative, commodity speculators run rampant,
over leveraged debt masquerades as "ample" liquidity, mortgage backed securities go toxic,
the multiplier effect starts working in reverse, credit markets and carry trades unwind, easy credit disappears...
housing price declines accelerate, debt servicing failures go exponential, debt ratings decline and all forms of debt become toxic...
stagflation runs rampant, real consumer spending goes negative, equities slide into bear market...
despite central banks lowering rates, interest rates rise, bond & commodities bubble markets tank and the great deflation of 2010 is upon us.
Bill Gross expects housing prices to fall a further 10% by January, by then a "Japanese-style deflation will be in full stride."
This part of the cycle turns into a self reinforcing economic death spiral or "liquidity trap".
With asset prices falling steadily and consumers convinced that they'll keep falling,
and despite rates being lowered to zero, there's no incentive to borrow today to buy today; because prices will be lower tomorrow.
With consumer demand slumping, businesses also have no incentive to borrow, even if the money is effectively free,
Why would business borrow more with future consumer demand projected to decline?
Cut rates to zero; craft bailouts and print all the money you want, this will only exacerbate and prolong the problems...
Its a fait accompli and there is nothing that can stop this train wreck in progress.
The helicopter drop of economic stimulus checks and running the printing presses overtime simply encourages more overcapacity...
further debauches the currency, and exacerbates speculative stagflation, while doing nothing for real wages.
The bottom line... No safe harbors will be found with the exception of certain agricultural supply chain necessities because even homeless people gotta eat.
The Grapes of Wrath... Thank you terror, thank you consequence, thank you disillusionment, thank you nothingness, thank you clarity.
Thank you globalism, thank you corporate America, thank you India & China, thank you whorish government for sale; with taxation and no representation.
Thank you those stupid enough to have voted for Shrub Jr., thank you religious imbeciles, thank you seven sisters, thank you neo con fascist republicans.
No real jobs, No real benefits, No real pay, No economy, No country for old men with no future. Happy Independence Day! Enjoy it while you still can.
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