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Bond Market to Bernanke: Take Your Foot Off the Accelerator

The bond investors fight Fed and won for the first time. Hence don't tell any one "Don't fight Fed" anymore.

10-Year Hits 3.5%

This time, the Fed had lost, and has no more option.

Inflation Expectations: A Primer

Deflation?

If China has 100 apples, and we have 100 dollars, so we can buy one apple with one dollar.

If we inflate our currency to 1000 dollars, you think they will sell one apple for one dollar?

We print a lot money during WWII, remenber the war bonds? We paid with post war inflation, 30% in a few years.

Forget China printed 10 trillion a day in 1948? the inflation rate was 1% every hour.

U.S. Treasuries: China's Dilemma

During a starvation period in China, there was no grains, the King said, "Why don't they eat meat?"

You want us to pay off our debt? How about our people on welfare to pay more taxes?

China is a developing country, people in any developing country, like Japan in the 70s, Taiwan in the 80s, they save more. China now is doing the same. They would save less when they became developed like us.

How Low Can This Market Go?

The PE was 7 in 1982 while long bond yielded 16%.
The PE is 12 today, will go higher when Co earning is down. But long bond rate is 4.5% today. If we sell stocks, we have no place to hide. Please tell if we may not go down to 5000.