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  • Bill Gross Wrong as Always [Edit or Delete]0 comments
    Jun 14, 2011 1:37 PM

    Today's reality report:

    Despite these huge deficits, end of QE2, booming stock market, blowout profits & earning quarter after quarter, and record high commodity prices those treasury yields simply refuse to go up. For the so called experts like Peter Schiff and Bill Gross who have been predicting hyperinflation, this bifurcated, two-tiered inflation is vexing.  You got all the ingredients for a plunge in treasuries (end of QE2, record deficits, surging living expenses) but the 1, 10, and 30 year just refuse go up!!! Sometimes you  have a day of so called ‘bad’ econ data and stocks fall, but treasuries rally hard. Then on a day like today you have a massive ‘risk on’ rally with gas prices, oil, gold, stocks in a frenzy but  treasuries (ticker:  TLT) fall just slightly.


    Because we’re still in the era-of two-track inflation designed to squeeze every last penny out of the middle class and retirees ,perpetually low yields for  corporate borrowing to fund buybacks and merger and acquisitions, super high borrowing costs for small biz and consumers, and an era of infinite wealth creation, hypercapitalism, globalism, smartism, spendism,  and consumerism.

    There’s an economic boom in the BRIC countries that is lining the pockets of S&P 500 exporters while at the same time depressing treasury yields. These massive surpluses act as a de-facto QE program. That’s why debt default won’t happen. The bond market it saying there is enough incoming money to finance limitless spending. The low 10 year yields DON'T, however, mean low projected growth. I'm still predicting more blowout earnings and profits, 3% GDP, and the 10-year to remain between 3-4%.

    With stocks up a lot today it means facebook is worth another $5 billion on paper, I suppose.  It means twitter worth another $1.5 billion. Groupon add another $3 billion. No job creation…congress wants the market to go higher , they want more profits, pro-growth policy, huge earnings. Palinism is here to stay; more Palin coverage in the news, more pain at the pump, more lame excuses used by employers to fire employees , more expensive healthcare, no COLA, more expensive education, more fox news, more potholes, more wiretap, more skool crowding, more preemtive war.

    I’m still long stocks with a DJIA end of year target of 14,200 with no plans to sell. 


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