When will we be shepherded out of risky assets and into treasuries?

If we are no longer worried about deflation and if the NFP numbers look stellar soon, QE2 could end on schedule or even early. So who will step in and buy the treasuries that the Fed has been buying? I'm not convinced that foreign buyers will increase their buying (but love to hear your argument if you do). I think American citizens will be encouraged to buy (like Japan). The encouragement, imo, will come in the form of an unfriendly stock market.

 

There will not be enough buyers at some point. I wonder how long buying our own debt can last until a "currency event" occurs"?

 

Could this be the beginning of our being herded out of the stock market and into treasuries? I think not yet, and I will be buying the dip. Soon.

 

Many will step in to buy the dip until they figure out that it's not a dip

 

Hasn't the Fed already been making noises about being able to ratchet down their Treasury buying spree?

 

I reserve the right to change my mind daily, but my new theory is that bond yields have to get more attractive first. So we dip then rally, then comes the BIG dip.

 

Although as an old man I have given up on predicting -- I did it in my youth to excess and my consternation -- What you say is reasonable. It surely will take some time, and the Fed will be slow to reduce their balance sheet and reduce the money supply. That's probably coming sometime in 2012. Surely, that has to be coupled with fiscal restraint. I do so agree with you that we will have to see bond yields becoming more attractive as a first step.

 

some insights about bonds:

http://www.oftwominds.com/blogjan11/Zeus-two01-11.html

Quote:

When the stock market should crash, it won’t… until some time frame far longer than even the most generous fundamentals would dictate. I said as much to Charles Hugh Smith in an October 17, 2010 email entitled Stealth Monetization Keeping Market Up With Stock Buybacks, and so far I have been right on the money:

I've seen different parts of this puzzle in various articles, but here is why the stock market will remain artificially boosted until the mortgage fraud mess really gets cranked up. Just like the Fed lends to banks at 0% interest as a way to funnel money back to purchasing low-interest T-bonds, creating an artificial demand (and guaranteed profit), and goosing the market there (and staunching the exodus of foreign money), so too can money be funneled through banks from the Fed to corporations who use it to buy their own stock, effecting the same scenario. I believe this is happening now, and will likely happen more if there is a QE2.

Corporations will love it, because CEOs know that stock increases, no matter how you get them, mean big bonuses. [T]hey will, if anything attempt to hyper-accelerate low-interest money flow into their books and on to the stock sales block. How long that charade can persist is anyone's guess, but if you can have insolvent, zombie banks making "profits," and handing out, what, $144 billion, just in bonuses...

The more extreme the hubris, the more ridiculous the momentum, and the more spectacular the crash. These guys think they can defy gravity, and so far they have [been able to] with a lot of help. When the natural laws of finance kick in is anyone's guess, but I see (the Dow Index) as I originally predicted, to be 11,000 to 12,000 (un)til at least March (2011), a shakeup, and some panicked back door bailout to obscure the fundamentals again until September/October (of 2011).

These guys are too arrogant, too insulated, and too single-minded to do anything other than attempt to force the world into their boxes. At a certain point it will quit, but that only happens when things get very unmasked. The mortgage fraud cases are the key, but those will be stonewalled. These guys are tenacious because they are hanging by a thread of testosterone. Tick, tock.

Analyses that try to predict near term market moves based on Laffer curves, Elliot Waves, and historical cycles will almost definitely fail. We don’t have a “new era”, but we definitely have unprecedented coordinated global intervention dedicated almost solely to the fortunes of the top 1%. That is the new rule that will govern until there is a serious breakdown. Warren Buffet got this insight after the financial crash in 2008. He knew the government was going to step in to save and subsidize the big banks so he swooped up their stocks, garnering himself a hefty tax break in the process.

In the near term, independent shorters will be routinely and consistently routed through market manipulation and collusion between large corporations and their government policy clerks. JP Morgan allegedly manipulates the silver market for its own profit, but also does so to keep fiat currencies stronger. Feeling they benefit, major world governments will refuse to prosecute and, indeed, actively collude for reasons of “monetary security.” However, if you happen to be JP Morgan, holding massive short positions on silver, and you get challenged by a coordinated democratic effort to “crash JP Morgan, buy silver”, then you simply offload your short positions into unregulated institutions and buy up the copper market.

 

I wanna be called Zeus as well...

 

It's actually his real name...