Thoughts from the Frontline

Contradictions: The Fed vs. the Bond Market

By John Mauldin

October 17, 2003

Fannie and Freddie Distort the Market
The Fed Hits the Brakes
Contradictions: The Fed vs. the Bond Market
Where’s the Market Discipline?
Even More Contradictions

Two weeks ago we examined the changes in our lives. Last week we looked at imbalances in the economy. This week the theme that I see in my daily reading is the large number of major contradictions apparent in the markets. There are so many contradictions we will not get to them all, but let's start, as it will make for some interesting and controversial analysis.

Fannie and Freddie Distort the Market

The main contradiction we will deal with starts with a lunch conversation I had with bond market analysts and guru Jim Bianco two weeks ago in Chicago. Jim is one of the smartest analysts I know and is a fascinating font of information.

We were talking hedge and macro funds, and he asked me what I thought was the best "trade" I saw. I…

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