Gekko

YOU can do pretty well by betting against economists, as I’ve proved in these pages before. Right now, they’re all telling the fixed- income community that the weak economy means the bond swoon is baseless and temporary. But they seem to forget that the economic world lives in a political one, and that any person who hasn’t had his common sense carefully excised in the course of getting a PhD in econometrics knows that the political risk to securities has risen sharply in the last few months. Right now, the extra basis points in the curve measure political risk; later they will represent an inflation premium. Either way, sell the rallies in the bond.

■ On that point, by the way, Jim Bianco at Arbor Trading reminds me that the last time we were in a recession that wasn’t preceded by a stock-market correction was 1929. Which doesn’t sound good—the first two quarters of this year are teetering in the direction of a decline in the GDP.

Featured Tags

YOU can do pretty well by betting against economists, as I’ve proved in these pages before. Right now, they’re all telling the fixed- income community that the weak economy means the bond swoon is baseless and temporary. But they seem to forget that the economic world lives in a political one, and that any person who hasn’t had his common sense carefully excised in the course of getting a PhD in econometrics knows that the political risk to securities has risen sharply in the last few months. Right now, the extra basis points in the curve measure political risk; later they will represent an inflation premium. Either way, sell the rallies in the bond.

■ On that point, by the way, Jim Bianco at Arbor Trading reminds me that the last time we were in a recession that wasn’t preceded by a stock-market correction was 1929. Which doesn’t sound good—the first two quarters of this year are teetering in the direction of a decline in the GDP.