News No. 1. Aug. 23 (Bloomberg) -- Housing led the U.S. out of seven of the last eight recessions. This time, it may kill the recovery.
Home sales collapsed after a federal tax credit for buyers expired in April. Since then, the manufacturing-led expansion, which began in the second half of 2009, has been waning, with jobless claims rising and factory orders falling.
News No. 2. Treasury prices have risen too high, perhaps even to bubble proportions. The thinking goes that investors could dump Treasuries as quickly as they bought them on even a whiff of inflation. Inflation is bad for bonds because it eats into principal.
My point. The two sets of news above are closely related, in my humble opinion. Probably there is a reason why yields are declining. I follow trends, not levels. And the trends are obvious for those who read my book, (Chapter 9 in particular) Profiting in Bull or Bear Markets.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
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