Thursday, January 24, 2008

Want Some Cake With That Icing?

Attention investors: I understand you are feeling a bit dazed and confused by the recent volatility, warnings of imminent apocalypse by eminent persons, but please comprehend that you cannot have it every which way. Stagflation is decidedly BAD for equities. Stagflation is BAD for bonds, and even worse for bondholders who buy and hold bonds at HIGH prices. SO...please make up your mind: return equities to their path of converging towards equilibrium in deeply-recessionary environment, OR sell the shit out of the bonds to correct their panic spike over fears that said deep recession would cause them NEVER to see a "five" handle ever again.


James said...


You've stated many times before that asian mercantilism is responsible for currency and interest rate manipulation. Has anything changed out of china or the land of the rising sun? no.

"Cassandra" said...

Your language is stronger than mine. I would like to think what I've said is, in the way Donald Rumsfeld used to describe the Iranians during his press conference when he'd say in that whiney voice "Well...let's say that they their actions are not very helpful..." to the adjustment process as foreseen by the architects of Bretton Woods, floating exchange rates, and more or less free movement of capital.

Anonymous said...

Hey Cass,

Not sure how fresh this info is, but the underlying value of the positions blown out by SocGen on Monday was 75bn Euro. Small wonder Trichet passed on a joint cut, as was planned until he was advised over the weekend that there'd be a spot of selling on Monday.

Happy Friday.