What Does It Mean ?

By "it", I refer to the rise in the yield on ten year US Treasury notes to nearly 4%. This is so easy, yet oddly, the doomsayers and pundits on Toshvision and Blabberg seem not to grasp it.

It's a harbinger of a return to normalcy. It means the "panic premium" on US Treasury debt is going away - gone. Buyers want a rational, real return, not just "safety" at any price. If a buyer doesn't get the expected core inflation rate [i. e. 2%] plus a real return of 2% on those notes, then he's either stupid or panicked. For the US 30-year bond, he should get about 3% "real" in my opinion.

The marginal buyer of 10 to 30 year US Treasury debt is now a "real" buyer, not a speculator or a panicked investor or even a Central Bank needing dollar investments. Real buyers mean normalcy in debt markets. This is good.

FT says stock funds got positive cash flows again last week for the twelfth straight week. The accompanying chart was interesting. During the three week Obama panic, cash flows were hugely negative. Otherwise, the flows are positive for many weeks.

Obama Fund is performing well. Yesterday I flipped bits of AKS, SPAR and SSCCQ. Their position sizes had gotten too large. This is just portfolio management. I still like all three stocks. [Beware: SSCCQ is ultra-risky as a stock.]

Word of the Day

"Descry" - verb, transitive [$10] literary
Descry means to catch sight of, discern.
Sentence: Bunkerman descries the return to normalcy.

Le Mot du Jour

"En" - this is a ubiquitous word in French with many uses as a preposition, an indefinite pronoun and in expressions. For today's Le Mot du Jour, I've picked one usage which was the subject of a French workbook lesson last evening. Which I did imbibing a glass on fine French wine - an excellent 2005 Pomerol.
En means (indefinite quantity) 'of it', 'of them'.
La Phrase: Les Fonds d'Obama ont cinqante actions, mais les Fonds d'Fido en ont juste neuf.
Sentence: Obama Fund has 50 stocks, but Fido Fund has just nine of them. [NB: The 'of them' is often not translated or expressed in English, but the 'en' is mandatory in French.]