Bond Futures

[3dog]

Here's a chart of the Dec 1987 Bond futures. They had peaked about 6 months earlier in March, and were crashing into the October period. Then note the spike rebound as the Fed pumped money into the system in response to the '87 stock market crash.

I'm not saying that it's the same this time -- actually it might be worse for equities, since the Fed has already been priming the pump for the past 2 years -- but it's noteworthy that the bonds crashed over 22 points (99 to 77) before they really bounced.

 

[3dog]

Quote from bone:

Look at the COT Index.

The commercials are long in a big way. The big speculators are short.

It looks to me that the small specs got long big time last week. The commercials covered and reduced their exposure but are still net short.

see: http://www.softwarenorth.net/cot/current/charts/US.png

 

[3dog]

in the 10 year the commercials are LONG!!!!

http://www.softwarenorth.net/cot/current/charts/TY.png

 

[stocon]

in the 10 year the commercials are LONG!!!!

http://www.softwarenorth.net/cot/current/charts/TY.png

 

[Pabst]

Keep in mind that commercials, i.e. dealers, are engaged in a myriad of positions. Yield curve trades, basis between cash and futures, corporate or mortgages vs. futures, hedging either exchange traded or OTC options position against futures, ect. As one guy unwinds it may just create the opportunity for someone else to take his place. The fixed income world is so big that the futures are not necessarily the tail that wags the dog. IMO the best use for the weekly COT report is in the analysis of agricultural commodities that have under utilized and less sophisticated pricing mechanisms in the cash markets.

 

[m22au]

It's not that they are proven wrong, it's just that they probably have a longer-term view than you.

Sure, prices of equities, bonds, real estate and the US Dollar can all go higher in the next few days, weeks and maybe months, but in the next few years to a decade, the realistic bears will be proven right.

Quote from trade4succes:

I notice that the bears on the economy are prevailent most of the time. They seem to be proven wrong most of the time too.

 

[trade4succes]

Quote from m22au:

It's not that they are proven wrong, it's just that they probably have a longer-term view than you.

Sure, prices of equities, bonds, real estate and the US Dollar can all go higher in the next few days, weeks and maybe months, but in the next few years to a decade, the realistic bears will be proven right.

The bears have been proven right only in the thirties..

 

[m22au]

What constitutes the proof of being right in your book?

Quote from trade4succes:



The bears have been proven right only in the thirties..

 

[trade4succes]

Quote from m22au:

What constitutes the proof of being right in your book?

That it actually gets as bad as they try to get us believe it will.

"But you still have an economy that is not borrowing, and you can't make people borrow. Going to get wild. If we don't have a depression caused by enormous debt defaults, the other side is gold at $3,000 an ounce."

These claims are just outrageous. Even in the late seventies/early eighties gold never approached $3000.

There might be a good reason too for making things look worse than they are. Ask some farmers how's business and they probably will understate it. They don't want to lose their precious subsidies. As Fleckenstein's hidden agenda could be to keep the politicians sharp.

Allthough I enjoy the discussion, I'll try to refrain from this discussion. I admit I am not nearly as knowledgable on the subject as some others here are.

 

[m22au]

Quote from trade4succes:



That it actually gets as bad as they try to get us believe it will.

That varies from commentator to commentator. Your comment suggests that you are stereotyping the various bears, without actually reading what they have to say.

As I have said before, the bears probably have a longer timeframe than you do. They may not be proven correct in 12 hours' time, but that doesn't mean they are wrong. Just give it a year or two or five.

"But you still have an economy that is not borrowing, and you can't make people borrow. Going to get wild. If we don't have a depression caused by enormous debt defaults, the other side is gold at $3,000 an ounce."

These claims are just outrageous. Even in the late seventies/early eighties gold never approached $3000.

I will agree to disagree with you about the 'claim' about gold going to $3000 per ounce being outrageous.

However, you have not been proven correct yet. The commentator (I think it was Fleck) didn't give a timeframe for gold at $3,000 ... but for argument's sake, let's say it was 10 years. We'll see who is right then. Until then, neither of you have been proven correct.

You haven't really explained in full why gold can't reach $3000, just because it didn't do so in the 70s or 80s ... care to elaborate?