Wednesday, February 06, 2013

Talking ourselves into it...  

There's gotta be a bond bubble! If not tomorrow, then certainly within the next 200 years. Bet on it.

Don’t be surprised if someone soon creates an ETF to track the verbiage expended by traders, investors, and the financial press about a bond bubble.
In the trading pits and on fixed-income desks, there’s a general appreciation that bonds today, with their puny yields and vastly appreciated values, seem rich. The press and brokerage firms, having remembered how they (we) whiffed on calling the bubble in subprime and financial engineering, can’t help declaring that bonds at these levels are a ticking time bomb, so run—don’t walk—away!
But bond mania, and the attendant hand-wringing over it, could go on for a while. There’s a lot—institutionally, generationally, situationally—driving that seemingly indefatigable bull.
Look at the (above) chart from Birinyi & Associates, which shows how many cautionary, even alarmist, headlines have overlayed the run of the past six months, amid a record year for bond issuance and buying. [More]
There is nothing wrong with being bearish on asset X, but permanently bearish makes no sense.

Speaking of land prices...

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