From Aug to Oct

The new low for the currency of the United States of Quantitative Easing against colored paper of other nations was ushered in with more buying of "stuff." The Treasury bond market, the only vote that matters, took a nap. The summer of 1987 comes to mind. Risk markets cheered the falling currency and slowly bonds began to trade off with every dollar sale. Pundits explained that bonds were merely adjusting to the new dawn of the never ending expansion and thus "a good thing."

I, the floor broker for Dean Witter Government Desk, was told to buy FI futures nearly every day starting in August. The economics said either bond yields would ruin the party and/or the Shocking SP rally would end from currency flight. By Oct. we were well over our skis and management was holding many a meeting behind closed doors. Traders would call me to buy 500m in T bills and not report the fill so the phone would not light up. We all know what happened in the third week of Oct. and we made our year in 72 hours.

Where we are in the cycle is the question. No one thought the Thai Baht move was an earth shaker either, until it was. Here's my favorite analogy: There is an episode of the X-Files where a serial killer who could see the future was killing all the charlatan fortune tellers. Right before he killed them he would say, "You should have seen it coming."

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