'Respected posters' please post here

[nonlinear5]

Quote from atticus:

I assume nonlinear believes the index markets will rise, which lowers yield. Parity with current 10-year rates would require a > 300 point rally on SPX. This assumes static $earnings [and $TYX] based upon year-end 2007 projections.

S&P earnings yield: 6.4%
10 yr bond yield: 5.2%

If the 10yr (and everything else) stays the same, SPX will have to rise 23% to reach parity.

The best way to play this, in my opinion, is to hold the spread: short ZN, long ES, or the cash equivalent of those. Effectively, it is a bet on the spread to narrow.

 

[atticus]

Quote from nonlinear5:

S&P earnings yield: 6.4%
10 yr bond yield: 5.2%

If the 10yr stays the same, SPX will have to rise 23% to reach parity.

The best way to play this, in my opinion, is to hold the spread: short ZN, long ES, or the cash equivalent of those. Effectively, it is a bet on the spread to narrow.

Right, we're using the same numbers, simply different conclusions. I wish you luck with the trade -- perhaps we should schedule a prearranged trade?

 

[nonlinear5]

Quote from atticus:

Right, we're using the same numbers, simply different conclusions. I wish you luck with the trade -- perhaps we should schedule a prearranged trade?

I don't follow. You think the spread will widen?

 

[makloda]

Quote from Brandonf:
Is there such a thing as respect on ET? I thought any dream of civility was lost here long ago.

Instead of good old disagreeing, it appears to be more fashionable now to call each other "fvcking moron", "idiot", "baby", "dipsh1t" in every reply.

Some reading for the 2% who are interested in the actual topic:

"How Much Do Interest Rates Affect the Fair Value of Stocks?"
http://www.hussman.net/wmc/wmc070521.htm

Yale Database: Historical PE/Inflation/Interest Rates
http://www.econ.yale.edu/~shiller/data.htm (Download the Excel, play around one can see that in the past - in many instances - we had to see the spread to become NEGATIVE before the market finally tanked for good, i.e. PE yield 1-2% below bond yield.)

 

[kiwi_trader]

Quote from makloda:

"fvcking moron", "idiot", "baby", "dipsh1t" in every reply.

OK. Someone's got to do the spelling corrections:

fucking dip-shit

 

[SiSePuede!]

Quote from makloda:

Instead of good old disagreeing, it appears to be more fashionable now to call each other "fvcking moron", "idiot", "baby", "dipsh1t" in every reply.

Oh, you mean instead of posting DISGUSTING pictures of people committing foul acts?!

 

[makloda]

Quote from SiSePuede!:
Oh, you mean instead of posting DISGUSTING pictures of people committing foul acts?!

Read before you speak http://kim.biyn.com/Linux/how_to_prevent_hotlinking_images_on_apache_server_using_mod_rewrite

This part:

The "Fun" Solution: using mod_rewrite and .htaccess to seek revenge

Now that you understand how to forbid access to your images, we can provide an example with an image substitution and you will be able to follow along.

 

[makloda]

Quote from freakentweak:
Yeah we should all post photos of the space shuttle blowing up and the caption NO RISK underneath it like Makloda does

I am amazed you managed to put together a post without foul language. Good job, keep it up!

 

[makloda]

Quote from freakentweak:
Yeah we should all try to emulate a pathetic worm like you that denigrates dead heroes

It's hard to emulate you on the other hand since you keep changing your name every other week

 

[SiSePuede!]

Quote from makloda:

Read before you speak http://kim.biyn.com/Linux/how_to_prevent_hotlinking_images_on_apache_server_using_mod_rewrite

This part:

Denial runs DEEP in your blood. You know what I mean I'm sure.