Equities get smoked by leverage - but this is not the "Trade of a Lifetime" that is being promoted

As I have indicated before, the issue of our time is the definition of actual philosophical and practical unit of money and what it symbolizes. We treat our money with the same respect we do our entire civilization, why should we expect positive results. The reality is that the short of equities has been a big trade and as you may have noted, something that I have pretty much accurately projected on this pages with my few recent posts. For those who feel like they missed the trade - for the record, I want to state THIS IS NOT THE TRADE OF A LIFETIME YOU ARE MISSING. No trade is the trade of a lifetime in reality. And additionally, I generate significant positive alpha for me and my clients, not only by generating powerful results when I trade, but by trading sparingly and remaining unemotional regarding economics and the markets - even when I want to strangle amateurs like BURNanke. Yesterday was no exception, I have been lightly short to mostly flat for much of this trade rather than invested...or worse long. I do not have the feeling that I missed anything. My buying power is significantly increased and I am not focused on equities anyway.

The fact is that the dollar has not performed at this moment. The next fact is that economics and government activities did not cause this collapse - over leverage, speculation and greed have. Moreover, the collapse in equities has a long way to go, however, the trade I am focused on is the emerging short of the EURO and long setup in the dollar...The euro has created a highly overlapped and symmetrically constructed bullish falling expanding diagonal. These are termination moves, so a breakout up out of this pattern for the EURO will be an ending construction. It will also, likely portend one of the largest trades in history...the complete collapse of the EURO and the historic rally of the dollar. My primary focus will be the dollar, though initially I do believe the EURO will outperform the dollar on a relative basis as it will likely be weaker than the dollar is strong. However, I still see the dollar falling into the 70ish range and the EURO making an attempt at the 1.47 or above range. Once this blow-off is established, similar to the trade in equities people will have fully leveraged themselves and suffer the consequences of that action. My belief is that the results will be relentless.

Secondarily, I believe that one of the big trades for this market cycle will be in the energy complex which has continued to leverage up and to distort its exponential bell curve - not to mention the GoldmanTax long posture on the sector. The reality is likely that anything energy related will produce similar results to the "anything financial related" approach of 2007 and 2008. I, also would suggest that you read my posts regarding Oil and the middle east. These countries will be nearly totally obliterated in this collapse and the banks and people who lent them vast sums of money to leverage their economies up to the point where it costs over $90 a barrel to get oil to market in Saudi Arabia will be too. The commodities shorts in energy are a big deal and so are the inflationary and real-asset currency plays such as gold and silver. I am not that motivated by gold, but guys like Eric Sprott should be placed right next to BURNanke in my opinion in the lineup of amatures who demonstrate a commitment to a campaign of irresponsible and duplicitous prognostication. Silver is an asset and a consumable, just like the equities, energies and softs that are currently imploding to cover overleveraged market commitments. SILVER IS NOT MONEY - it will never effectively function as such and it's a cornerable market - a key characteristic that real money should not have. These people have lost their minds and understand nothing about monetary reform, systems or economics. As I have consistently said, the key symbol of our time will be the definition of the monetary unit - there will be many charlatans who try to use half baked theories to promote their schemes.

So, there you have it, the biggest trades are yet before us. If you are not in this short of equities, well you generated quite a lot of positive alpha. However, if you are long, my heartfelt condolences - I really don't have much input there other than I do not think the deleveraging is over...and will go on for an extended period. I hate seeing people lose large amounts money and I have done my best present a dynamic non-consensus view on these pages. My philosophy is that "...less is more"...especially with regard to investments and markets. I think that allocation is key - proper allocation means you can survive mistakes. Most people approach risk management with precisely the wrong approach especially for these types of markets. I try to remain clear...which means I don't watch news, look to follow advisors or analysts or read many blogs. Believe it or not, independent thinking, a simple and unconflicted adgenda and clarity are a big part of my allocation and risk approach. This is why I do not charge any management fee for any of my trading products. Think about it, by definition, if you are susceptible to thinking and doing what everyone else is, you are likely going to underperform. Even if you are completely wrong, as long as you are not following the consenus, you stand much higher odds of performing than one would expect. How can you get paid when you are trying to get something free? These are subjects which I will discuss much more in the future. In fact, I would be happy to do an interactive webinar discussion on the subject if there was such interest. Please feel free contract me at m3analytics@gmail.com if you wish.

Negative Yield, Selling in the Dollar and Equities...continues playing out as expected

I have not been posting much. I have not had much reason. Most of my managed accounts are up well over 150% or better at this point for the last year and there have not been a lot of new issues to discuss. In addition, I am in Europe for a funeral which took place this week for a family member and have spent a lot of time traveling recently for work, including the current trip.

Lets review, however, where we stand. Today was a very important day and has confirmed, nearly to the letter, my assumptions regarding the global markets.

I expected an overall move towards weakness in both the dollar and equities. That has occurred. I expected an overall move towards negative yield in US Treasuries and we have made that huge leap, one which should not be taken lightly, to ultimately enable the US to fund deficits and borrowing with negative yielding Treasury bonds in a much more significant way that most may be expecting. As I have indicated before, as people begin looking for return of their money as opposed to return on their money we will likely get a huge boost to the reserve status of the US Dollar...much to the chagrin of people who do not understand that Gold is not money, Silver is not better than gold and Real Assets are of little value whem people don't have the purchasing power to obtain them.

Ultimately, the real question is, "Who can be trusted to give you your money back?". Can the US be trusted to return your capital? Can China be trusted to give you your money back? Can the European Union? Russia? South America? Well, there you have it, the only country willing able and practically capable of returning your money of that group is the US. Additionally, like most investment decisions - the objective is to choose the least worst option. There is NEVER a perfect choice. China may seem credible enough, but in a credit contraction, they are seriously over extended, have unreliable numbers and reporting (just look at the level of china fraud listings for stocks - fraud is rampant there when dealing with the rest of th world) and in addition to all that, they have been secretly continued buying tons of US Treasuries while promoting the exact opposite. Now all they need to do is downgrade the US to cover their track even more. This, however, is common practice among the halls of leadership and is not unlike the 180 degree misdirection that has been going on in the US regarding the debt ceiling, deficits and non-existent budget/spending cuts. China does not want its own money in its own currency or even its country for that matter...and neither would I want my money in China if I thought I might be concerned with the very basic issue of a transactional return of said money. I am rather sure that Mr. Putin, for all his recent remarks, has a substantial amount of his money - atleast - in US Treasuries too.

I think that we are on track to see the dollar index move lower to the lower 70's or 69's and I think that we will see general predisopostion towards continued weakness in risk assets. I think the EURO will likely make it toward the upper 1.40's...1.47 to 1.49ish. Its my impression that these instruments will setup massive trades when they do reach these blow-off points. In addition, the Silver and Gold markets will likely setup catastrophic reversals when the dollar and euro complete their blow-offs - which I will likely once again short as I did with Silver near $50. My target for Silver is still below $4.39.

There certainly is the possibility that the dollar could continue straight up from here...but I think that its overall action and the EURO's states to the contrary today - so I am not really focused on that. The EURO has made a symmetrical zig-zag retracement that held firm today. Additionally, it is important to understand the macro flows here. Many large institutions and significant market participants do not understand the macro events that are going on...they are using the EURODOLLAR interest rate contract to trade yields, however, those trades are failing miserably, in some cases catastrophically, and causing a significant liquidity issue. This issue will likely continue into the near future and exacerbate conditions that are underpinning the futile and ridiculous blow off moves - up in the EURO and down in the Dollar.

Meanwhile, back at the ranch, can anyone get more out of touch than our leaders in Washington DC? Obama and Boehner clearly do not understand economics...

Everything playing out according to plan

So, we are about to default, ehhh? I guess that's why rates, as I suggested would happen, are making new lows on the US 30 year bonds. But they don't talk about that in the media...instead they talk about the catastrophic interest rate hikes that will happen after Aug 2...sometimes its really hard to believe this is not just one big conspiracy. What's more we had a nearly 2% revision to GDP today...I question the motiviations behind that number both as previously reported which had to be known by officials to be highly inflated and the one published today. A 2% change in GDP is not a little accident that happens in a revision...but I guess with all the highly reliable smoke and mirrors going on with the employment numbers BURNanke and his buddies think they have this smoke and mirrors, data revision, data deception scam down to a science already.

The dollar is selling off along with the equity markets which I also suggested would happen...and the EURO is struggling to remain in its bounce...I expect that it will be able to make some new waves higher on this bounce. However, I can not imagine that it makes the ideal targets. Therefore, I would not be surprised to see the EURO make it to between 1.47 and 1.5.

All in all, there is no possibility of default for the US and the relative choices people have are not very good. So, here we have it, the US will not default - no question...Greece, Spain, Portugal, Italy, Ireland and a host of others will default. Emerging markets will be dramatically impacted by this instability and their financial systems and infrastructure will be compromised...where are you going to put your money when you hope to get over 98% of it back? Its not going to be silver, gold - its going to be US dollar Treasuries and a few other domination's of government debt not associated with Emerging Markets or the Euro.

Update

I apologize for my absence. I have been travelling a lot, working on a monumentally complex release and have had a death in the family at the end of the week last week. I will be travelling to Europe this week because of that...so, I am not really getting a break from travelling quite yet. The reality is also that I see that my last post is the only one necessary to understand this market. I see the debt ceiling issue triggering a sell-off in both equities and the dollar and the result setting up one of the best trades in history. In any case, for reference, given where the dollar is trading...the EURO should be at 1.475, the SP500 Futures should be at 1,368, the Russell futures should be at 870 and the Oil should be at 114. As you can see that is not the case. I indicated in my previous post that I did not believe that the euro would make its maximum projection of 1.52...That is playing out according to plan. The dollar looks set to reach 70ish...eaking out a new low. I see the EURO as a better short than the dollar is long...however, either will be an awesome trade. As you are most likely aware...we closed our dollar longs at the 77 area for a very nice profit. The only chart worth watching in my opinion is the inverted dollar chart that I posted a few weeks ago...all the attributes in that chart are playing out to a tee. The EURO is continuing to under perform relative to the dollar as are all risk markets and the dollar trade is turning into a highly emotional and debilitating trade for most. For those who are currently loving their dollar shorts, I would recommend taking profits aggressively as the dollar reversal will likely be brutal and highly persistent.

I am travelling...

I apologize for the lack of posts this weekend...I usually try to do a weekend overview, however, between major software releases that I have been rolling out and a business trip to New Port Rhode Island...I will begin regular updates soon.

Sell-off, Disconnection and Negative Yield?

The way I see it, we are setting up for a sell off in the equity markets and that any event driven dollar volatility will end up reversing hard and crushing the EURO. The reality is that the EURO is trading at 1.4236 right now versus the dollar at 74.79...given recent relative prices the EURO should be trading at 1.4486 right now to offset with the dollar here. That is  HUGE under performance. These markets are coming unhinged and the central planners are planning something ugly indeed. It looks to me like there could be an event driven move selling both the dollar and the markets off...followed by a mammoth reversal in the dollar and a disconnect in the risk asset markets...ironically, it seems to me that the world does not have a lot of great choices...and that makes negative yield on US treasuries look better than a hell of a lot of the alternatives...and it sounds to me like a reasonable way for the US to reduce the whole politcal theatre regarding the debt cieling and default...anyway you cut it, the 5, 10 and 30 year bonds all made new highs (lows in yield) over the last few days as I had indicated I thought would happen in precious posts.
So, at this time, I have less than two hundred short contracts on the index futures left right now in my portfolios and am nearly flat - just waiting for systems to trigger new entries in the currencies and indexes. Right now, after a very rewarding two months, watching from the sidelines and awaiting any event driven volatility seems just fine to me.

A relook at our long-term pattern potential...

I want to be clear, this is an option. My personal view is that when a continuation pattern reverses and goes the opposite direction we will likely continue in that direction. However, the triangle pattern that the dollar and the EURO made turned out, more or less, as anticipated for a first move. They produced A-B-C patterns that were very symmetrical. One of the things about these kinds of zigzags is that the three wave patterns show a high level of stress and a lack of commitment to a move...given that the moves out of them are less probabilistic...this is why I trade extreme price movements and not wave patterns. But they are a good guide and I am putting this one up because it is nagging me. The fact that the upper trendline (black) is an exact symmetrical distance away from the bottom of the "b" wave of this zigzag is highly curious and something that everyone should pay attention to.

No matter if this pattern were to play out there is no where else to go but the dollar. Kamakazi Ben BURNanke can not change that no matter how he tries and the moves in Gold and Silver are an extreme reaction that has officailly escalated into a rediculous consenus that make absolutely no practical sense. Additionally, silver is trading within the patterns as presented in my last Silver chart.

The world has officially disconnected...

...people are actually thinking that bankrupting shorts by eliminating the capability to borrow shares will keep the markets up again...that one worked really great in 2008. But that harebrained idea not being enough, they are pushing even more credit onto over burdened people and economies and think that will work too...

While there may be a forced deleveraging here of shorts as central planning plans its own demise...however, it is incumbent on the shorts to have conviction in their positions, allocate position size with the awareness that these idiots are going centrally plan a disaster for eeryone and to take profits prudently so that there is plenty of room in their book as an overleveraged system will seek to bankrupt everyone - long or short.

We had a tremendous week covering big shorts for big profits on Monday and Tuesday...the currencies as always appear to be the key to the unwind that I have been talking about...with the focus on the Euro and the Dollar. The Euro is setting up a idealized zig-zag bounce and is near the target zone. Perfect symmetry occurs at the thick horizontal target line on the chart...though we do not have to make it there.

Short-term pattern on the EURO...

This is the minimum of what I am expecting from the EURO...and inversly the dollar. It could get much uglier, but they can also attempt to rally hard from the measured target and the support at the trendline.

A detailed analysis of the Dollar and the Euro

I will be adding charts to this post over the weekend...please check the post for the additions.

Below is a very large and detailed chart of the dollar index full history daily bars inverted. This means up is down. In this view the dollar is at it highs right now which just gives us a different vantage point for its posture.Please click on it for a detailed view.

To download a very high resolution file of this chart click here.

To download a very high resolution file of this chart click here

This time its different...the popcorn has butter, salt and cheese and what's more its good for you

A nearly 100 point move in the Russell 2000 in a matter of days is an absolute anomaly especially when it is on relatively innocuous news flow and thin participation.  TF is up 9 days in a row and that represents a panic and hysteria to get into this market long - or as is more likely the case, to get out of it short (remember everyone was trying to short the end of QE) and then flip long for the elusive huge miracle trade is just astonishing and at the same time patheric. All in all, as has been confirmed over and over in our market...momentum trading does not work. The realities are most likely the same now as they have been for a long time...prices will take out the maximum stops and entice the maximum buyin and then close the trapdoor. This is why retraces of 88.6% and 112.8% are the most common spot for reversals in our markets over the last few years. Insolvency, or fear of it, seem to be the primary conditions driving our markets, and you can expect anyone stupid enough to be trapped in that psychology will be a good candidate to be trapped in this one.

Several points that significantly undermine this popcorn move:

1. 5, 10 and 30 year bonds are not confirming this move in equities
2. The Dollar is not confirming this move in equities
3. Most commodities are not confirming this move in equities
4. EURO is not confirming this move in equities
5. The Australian dollar is not confirming this move in equities and is about to trigger short
6. Oil is not confirming this move in equities and is about to trigger short
7. VIX is not confirming this move in equities

Points supporting the market:

1. All in all thin support from names like AAPL, Netflix, Priceline and a not too large assortment of other names that are confirming the move in equities
2. News flow has been interpreted positively

And yes...this time its really different...that's why my systems will be adding shorts today and likely into tomorrow if the opportunity presents itself.

Below are the transports:

Popcorn is popping...and the butter is VERY VERY hot

If you recall 2007, you will remember that the world had been shocked by the disorderly unwind of the internal Bear Stearns hedgefund and numerous negative events related to the credit markets...this took the markets on a signficant drop...not all that different from the one we have recently had. Now what was interesting to me was that people got really scared on that drop, but when the market rallied to subsequent highs in the Dow and S&P500 they lost that fear and a last dip was an all out party when it was bought. Every second, third and fourth rate name was bought and if you recall mostly Solar and China names were the absolute epitome of the rage. I recall a solar stock that I traded for a few bucks in a single day that I was quite happy with that ended up rallying something well over 200% in that day (and I only got a few points). I recall quite a few popcorn names in the china space rallying sometimes over 300% in a single session. Below is an esample you may remember of a company hyping china hyperbole and you can see how that turned out:

Well, the attitude that "there was no risk that was not worth taking" in those types of names ended up demonstrating just how disconnected the markets became and how toppy and flimsy the basis for attitudes attempting to levitate the markets. What I see right now reminds me of that period exactly. People are popping popcorn and having a party...the feeling that risk can endup being dangerous is a "subject for another time and definitely not THIS market" - according to the current market collective. The important thing is to understand that "IT IS NEVER DIFFERENT THIS TIME" and the results of this hysterical, manic behavior I am seeing via the deleveraging and momentum crowd seeking to participate in hyped names seems to be fever pitch...so, it looks like we are Dec 2007 all over again, except this time all the problems are much to big to fail. Right?

The butter that may get poured on this popcorn poping fest is likely to be scalding hot...

Bill Still says it EXACTLY like it is...

Charts

Everyone is so focused on not getting short and run over by a truck again that there virtually no credible talk regarding the head and shoulders pattern that is clearly setting up. Instead any excuse to look higher is the theme of the day. Of course rising wedges have been the theme for the market for the last several years...and I show one of these diagonals on the S&P500 weekly linear scaled chart below. However, there are two things to note, advanced diagonal patterns rarely make it to the extreme trendline on the last wave, especially when a huge breakout maybe setting up out of such a pattern. This is a whacky market, so nothing can be ruled out entirely...but the pattern is not my preferred because everyone is looking for new highs - they are NOT looking down. When everyone is looking one direction they are likely to get the very thing they are not looking for - stage left.

Secondly, the resistance that we ran into is formidable and the price patterns indicated a major deleveraging was taking place...most likely either a large institution in Europe or some more central planning intervention. I believe that a (or several) large European institutions is (are) failing and were required to liquidate their US Treasury assets and the equity hedges against them. As I said earlier, I think this is a trap and that the results of the highly leverage financial system are that people are not chasing good investments they are chasing momentum caused by liquidation and insolvency due to leverage. Market participants are chasing other peoples misfortune whether they realise or not. Once that entity or individuals misfortune is liquidated the pattern will stop until a liquidation cascade develops in the other direction. This is what credit and leverage accomplishes - the exact inverse of what we feel is happening. It feels like buying...but is it? Certainly short-covering qualifies as buying...but a liquidating short-seller does not qualify as a strong hand...and a market with strong momentum needs strong hands to keep it going. Sadly that is not the case here and you can squarely blame the over leveraged financial system and its promulgators at the central banks for it.

With China actually on a US Treasury bond buying spree over the last couple years, they have been significantly benefited by the fear was it was otherwise. In fact, China is still accumulating more US debt than published in secondary markets and foreign markets intermediaries. So, the question is, just who was selling Treasuries last week? It certainly was not the Chinese.

Just when you are not expecting it...a tale of two trades and one result - pending fireworks

Trade A

Well, well, well...that was an interesting maneuver. Somebody desperately needed or wanted to get out and/or get most people looking short treasuries and forced money out of the bond market yesterday and they did so again today. (I smell a significant leverage induced european banking insolvency which needed raise cash and close its leveraged bond positions and corresponding hedges including equities...I am sure we will find out more about that over the next few weeks) Of course the technical patterns in bonds had been weaking for a while now...but regardless of that, there is not a direct reallocaton that should directly drive equity prices or risk assets due to that occurrence...however, when you are leveraged trading other peoples money, who cares about things making sense or being rational... Got money...spend it, why don't you...or so it goes. The reality is that, given the looks of things, this is abut to get VERY interesting...although "interesting" may not be the right word exactly. The 30 year bond is about to trigger long and may likely follow through on my post from earlier today and take the yields much lower than the previous lows. I am, at this point, more intruiged by this scenario than I have been before largely due to the radical behaviour of market participants which in the end amounts to what I think is a trap.

Trade B

Then there is the other trade. Every trader and their mother has been preparing to short the end of Q/E. Q/E ended if you did not recall yesterday. Is it really like market participants in the know, to allow a bunch of rookies to short the end of Q/E without testing their metal? So, this week amounted to the required "gut check...market approved" stamp often required to make money. I think a lot of people bailed. As I indicated, my system added back sizable new short positions this yesterday and today...so, I can not be accounted in that group though I am certain to be counted in some other marginal group somewhere for this trade. However, I think that it is entirely ridiculous to think that the end of QE would allow so many traders to short on anticipation of it without having their conviction tested.

The results

I certainly "misunderestimated" the prospects of the 200 day moving average for a bounce. However, I did not have equities short exposure since I had covered earlier. I felt like Friday last week and Monday this week were make or break times for the market and highly precarious. I was wrong and I wish that I had not been. However, it is better to be careful or and considered than to be oblivious.

In the end what did we accomplish? Well we got all sorts of money losing managers trumpeting BS on CNBC and we got a totally unconsolidated rally that recovered what took two weeks to take down in roughly three days. That is NOT conviction its panic. Moreover, the reality of the situation is that there are a ton of things defective about the panic. Oil is in the middle of a catastrophic breakdown which will likely take it below 20. It is simply retesting the broken resistance right now. Silver and gold are being liquidated as are many other commodities and silver is likely on its way well into the single digits next year with a stop in the teens this year. However, this liquidation condition will spread to all risk assets...While the SP500 rose 100 points on Firda the Russell could only manage around 2 while the US dollar closed flat despite the ridiculous move in the equities and weakness in commodities. As you may be aware, I am long the dollar. You may find this post of interest http://macrostory.com/?p=4863. The Australian Dollar has bounced allot but printed a bearish pattern that will likely trigger a cycle short signal early next week into a trending move down. Put/Call and VIX are reflecting very poorly on the prospects for this move. Additionally, there was precious little volume. A look at the EuroDollar contract (not the currency - the rates contract) shows a failure pattern setting up there too - that could have significant implications coming up. Everywhere I look this thing reinforces the defects. So, just when no one is looking for down - that's precisely what they are going to get. Its not going to be pretty either.

I will post charts this weekend...just wanted to get this update out. Till then the video below is a must see by Miall Ferguson (I posted his Ascent of Money documentary recently) and discusses just why what everyone expects from the US is not likely the real story.



Here is the Ascent of Money - a great documentary

Negative or Positive Yield and US Monetary Policy - Nowhere else to go but the dollar

I have to say, watching the market action this week has been bewildering. I had covered almost all of my equity shorts a few weeks ago when the Russell was in the 790's...I thought that the weakness around the test of that 200 day moving average on the SP500 was high risk and that any bounce would be smaller rather than bigger. While our bounce has not been particularly big, it was big enough to get my new system shorts on the equity indexes once again - which I did not expect. But while watching all of this wacko behaviour, it has become more and more obvious to me that the markets are simply a leverage re balancing tool these days. Like water sloshing around in a bottle, when lots of people are getting blown out of long trades (via margin calls) they tend to think they need to use the precious remaining capital to reverse and then promptly get forced to take another blow out phone call from their broker. Essentially, one of the reasons that the market trades from one idealized extreme to another is because the market is so highly leveraged and people are being taken to max risk on both sides of their trades. Its kind of sad to realise that we really do not have people trading against people, we have debt trading against debt even in the equity and real asset markets. How can we expect reasonable market dynamics when so many people can get over leveraged on every side of a trade?

That brings me to another point. Yesterday, the bond market failed. I had been watching a pattern which generated a "three strikes and your out" move on the upside and was expecting that the very labored rally move in bonds was going to end and possibly reverse. I do want to discuss something that keeps worrying me...just like some of the huge dips (mini crashes even) that we have had in the equity indexes over the last few years...the reality is that people who bought the dips and the crashes did quite well. I can't help but wondering about this gargantuan move in the bond markets. Seems like just enough to get everyone on the take bonds short band wagon...and that bothers me. It bothers me from a technical perspective and it also bothers me because I think that this point, the US and its minions of central planners know that they need to get bonds yielding less than ZERO. This is a great solution for the US especially since the European banks (and many others too) are much higher leveraged and more risky than their already insolvent US brethren. So, people have not place else to go but the dollar. What would it take to make this happen? Well, two things would be ideal:

1. Find a way to get lots of participants leveraged short US bonds
2. Crash the stock market

I think that policy makers have a high probability of taking the above approach. Getting people looking short will get make it much easier to kick the can down the road for an extended trip to below ZERO yield on bonds and crashing equity markets will accomplish two things reflect fundamentals and bail the US out of a debt issuance problem. People will be forced to buy US treasuries whether they like them or not.

I am not playing the rates trade as I have said, because it can go either way...I am slightly favoring this scenario...but I see the trade as a momentum trade. If we break out in on direction or another that trend is likely to stick for a while once its confirmed. If we can sustain higher rates then we very well may get both a crashing stock and bond market. If we can get back to bull moves in government bonds then we will most likely get a sustained foray into zero yield which would be extremely convenient for the US Treasury and Banks.  I am just throwing this out there...as I said, I do not have an edge in this trade but I think its good to think of some of the outlandish possibilities that could be irresistible for the mind of a policy maker.