Slaughter In The Bond Market

The Daily Reckoning
Weekend Edition
December 8-9, 2001
Paris, France
By Addison Wiggin

MARKET REVIEW: Slaughter In The Bond Market

For the first time in months, wondering what the Fed will do at their next meeting. is actually interesting. Why?

Well, according to Lance “Crash” Lewis, over at the Prudent Bear booth, “The last 3 or 4 weeks have been absolute killers in the bond market. Bond managers have given back their entire year in a matter of a few weeks.” Friday, saw new lows in the 5-yr, 10-yr, and 30-yr notes. And the yield on the 10-yr soared to 5.14%.

Lewis: “All the confetti Uncle Al is printing up in order to levitate the stock market is killing the bond market (along with a whole host of other factors), and he can’t turn around and try and bail out the bond market without killing stocks. Meanwhile, the economy is still showing very little (if any) signs of a recovery.”

It’s no foregone conclusion that we’ll see lucky rate cut number 11. Nonetheless, Easy Al and Co. will meet on to decide which buttons to push…which levers to pull… and what spin to send consumers into the Holiday buying season with.

Alas, even the Fed, we suspect, gets what they deserve …and not what they expect.

Enjoy your weekend,

Addison Wiggin
The Daily Reckoning

by Bill Bonner


“…In 1941, Axis military power had been in a bull market for nearly a decade. People don’t think clearly in a bull market, and their imaginations are dull. They can only see ahead of them what they’ve just experienced. It wasn’t until 1942 that Axis power peaked out. Then, the thinking began and imaginations began to work again. But by then it was toolate…”


“…Stock buyers who bought for the right reasons undefined because stocks were cheap undefined in 1982 have already made their money. Unless they are greedy or stupid, they have already taken the money off the table. Those who buy for the wrong reasons now undefined because they think stocks always go up undefined will get what they deservetoo…”

Guest Essay by John Mauldin

“…In the last decade, a rising tide lifted all boats. Now things will start to be a little different. As always, new innovations will bring rewards to investors. But the “winners” will be investments that focus on absolute return strategies…and value basedinvesting…”

12/04/01 SUGAR PLUMS

“…Investors are getting ready for Christmas… The big bottom of their dreams has come and gone – they believe. Visions of sugar plums dance in their heads. Sadly, the more the candies twist in their minds, the less likely that investors will get what they want from Santa…”


“…Mr. Greenspan has everything he needs to get the economy back on track…except theessentials…”

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