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Q3 tnt at 3%,Economist fig. a run on the dollar?

San Fran Sam

Maybe my math is crude. and someone can provide a better back of the envelope formula but...

If a note has 2.05 coupon and is selling at par, ie 100, to ge me a 2.05% yield. then if the yield goes up to 3%, then that same note withe same 2.05 coupon must drop to 68 to yield 3%. For a loss of 32% on the cost of the note.

Sounds like a good return for a short T-bond ETF.

Good News Economist

Did the consensus get rates right last year? Let’s just say the *majority* did NOT. Why? Because the “majority is always wrong.” It’s the famous quote from John Kenneth Galbraith, economic adviser to JFK and others… a famous Keynesian…

Here the concept is applied to 1975 market conditions:

But I’d argue that you could also apply it to the majority of “experts” last year.

I’d also argue that you can apply it today. Given most of what I read currently, the consensus is more gloom for 2009 and “the worst is yet to come” mantra.

I believe the majority is wrong again this year. And I think Galbraith would agree.

John Adams

As of today 4/02/09 I see this thing starting to bottom out, and it may pick up steam sooner than anticipated, say by the last quarter.

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