Pendulum Swings to ‘D’

By -

Anxiety is rising… I know this from the emails I am getting.  If I
have to hear the words "treasury bonds" one more time, why… :-)  But
of course we are going to hear about T Bonds… just look at the yield. 
It is now the 'in' thing and it feels okay.  Time for the big D
to hit the airwaves.  Step right up and dance everybody, just like you
used to do in the discos when that awful music compelled you to get in
line and shake yer thang.

Tyx

Back in the spring I was taunting the inflationists
with the chart that showed bullish ascending triangles and symmetrical
triangles in various treasury bond funds of varying durations (TLT, IEF
& IEI) after the long bond failed to break the "line in the sand" at
the monthly EMA 100.  The i Boys (and girls) largely took this in
stride or ignored it in favor of chasing down the dreams of rising asset
values into perpetuity.

Now, the input is about deflation, 24/7 and it generally comes from some
very smart people (I have always contended that the average d Boy is
more financially astute than the average i Boy – and I'm an i Boy!) and
cites some very smart sources.  But sorry d Boys, you will not sway me
until my own analysis sways me.  How can you sway someone who has been
awaiting your event for so long?

It still says here that your 'event' – regardless of how destructive it
may be for the US and other entities that are levered off the balance
sheet without the reserves to help compensate -is a lever in its own
right.  Your treasured T Bond is what Bernanke needs.  I did not and do
not know how he got his gun reloaded and got intellectuals and the herd
alike into the Bond, nor do I care.

Anyone who could read a chart and maintain an independent viewpoint
(from the respective I & D dogma) could see the bond was going to
rise.  Now, on cue we have the mini hysteria.  It's Prechter
time!  Personally, I have short, middle and long term plans on how to
use Prechter time, beginning with being aware of what this smart man
recommends and as I have done over the years, actually implementing some
of it.  But it does not end with that.  No, not by a long shot.

The last time I was scolded by a d Boy was over at SeekingAlpha in early
2009, as I forecast bullish on copper and oil.  They are scolding again
and while things could be very tricky and difficult in the coming
months, they are just getting cooking my friends.

Also for reference:

Suddenly Treasury Bonds Are Not So Bearish, Are They?  April 27, 2010
D Boys Coming Out to Play  May 20, 2010

And there were plenty more.  All I ask is that readers resist the
compelling urge to herd.  Whether one case or the other (i or d) is
right or wrong ultimately is not the issue so much as the proven
destructiveness of allowing one's market stance to be whipsawed around
by very smart people with very persuasive arguments.  These are the
markets, and they go to their own  beat.

Edit (1:30)  You are a stout and savvy reader of this blog and
have not yet turned me off with a contemptuous "screw you".  Therefore, I
need not put any of my own words to the inherent meaning of the MSM
blurb below:

A big beneficiary has been bond funds, which offer regular fixed interest payments.

As
investors pulled billions out of stocks, they plowed $185.31 billion
into bond mutual funds in the first seven months of this year, and total
bond fund investments for the year are on track to approach the record
set in 2009.

Charles
Biderman, chief executive of TrimTabs, a funds researcher, said it was
no wonder people were putting their money in bonds given the dismal
performance of equities over the past decade. The Dow Jones industrial
average started the decade around 11,500 but closed on Friday at
10,213. “People have lost a lot of money over the last 10 years in the
stock market, while there has been a bull market in bonds,” he said.
“In the financial markets, there is one truism: flow follows
performance.”

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