10-Year Notes At 10%? Read On…
Navarro’s Broad Market Outlook: The VIOXX
“Rallyâ€
So an
FDA panel agrees — by a single vote margin! — to allow Vioxx back on the
market, both Merck and Vioxx rally to lift the Dow and help the S&P 500 eke out
a small gain and the bulls proclaim that the rally is still intact. How dumb is
that?
That
PPI number cutting like a red hot knife through bully, bully butter was the real
February marker — one which suggests that like Julius Caesar, both the stock
market and long end of the bond market should “beware the ides of March.†  Add
to that, consumer sentiment is falling and incomes are flat, businesses are
burning their cash on mergers rather than new equipment, Bush’s fiscal policy is
now shifting into contractionary reverse, exports are not rising anywhere near
as fast as the dollar has fallen, and the Fed’s interest rate death march
continues. Q: How do you get robust GDP growth out of that? A: You don’t.
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Aloyan’s Technical Take: A Conundrum!
The
“Fed†rocked the bond market, which then caused stocks to sell-off, when last
week Greenspan coined yet another bubble (this time in the bond market) with the
deadly word “conundrum!â€Â
I have been warning for quite some time now of the masked inflationary pressures
that exist, and the huge financial leverage that exists in the bond market,
coupled with an inevitable supply which will hit the market as the overseas
holders of our debt seek diversification away from long dated U.S. treasuries,
while the U.S. seeks funding for its budget problems.Â
My research continues to show reasons why the 10-year note yield will approach
the 10% level—