Euphoric Faith in the Fed

May 11, 2015
Calling the death of bonds (and missing) again

"If—when—we have another recession, those long-term Treasurys will be a very important part of your portfolio, zigging when your stocks zag," Calhoun said.

If we have another recession? If?  Seriously? We now need if/when disclaimers? There's a reasonable chance that the Fed has actually put an end to all future recessions? Is this what some people actually believe?

Okay. I'm game. Disclaimers are us!

It's the last game of the World Series. It's the 9th inning and the bases are loaded. I've just been asked by the person sitting next to me what I think will happen. Here is my heavily disclaimered response.

If/when the pitcher throws the ball then it will be up to the batter to swing. If  the batter swings, the ball may or may not be hit.

1. The ball may be missed entirely. If/when the catcher tries to catch it, things get interesting. Let's assume for the moment that he does try. Does he catch it? The odds say yes but many things could prevent it, not the least of which would be a 7.0 magnitude earthquake.

2. The ball may be poorly hit in which case it could be a foul ball. If/when someone tries to catch it, then many of the cameras may zoom in on that person. Will it be caught? Your guess is as good as mine.

3. The ball may be hit solidly and in a direction the batter intends. Let's assume that it is hit up into the air. If/when it starts falling to earth again, someone may try to catch it. If/when somebody tries to catch the ball, expect the cameras to follow that person.

But what if the ball is hit so hard that nobody on the field can catch it? Then what? That is the most interesting thing about the sport!

Once the batter hits the ball he has a decision to make. If/when he decides to run towards first base, many in the crowd begin to cheer. If/when he reaches the base, he may opt to turn 90 degrees towards second base. If/when he chooses to do so, many in the crowd will cheer even harder. If/when he reaches second base, he may opt to turn another 90 degrees and head for third. Once again, it is entirely his choice. The crowd will reward him for choosing wisely. If/when he reaches third base, he may once again choose to make a 90 degree turn. One thing that could stop him is what the other runners have been doing up to this point though. If the third base coach opted to barbecue some chicken then there may be a problem. It's been a long game and all the runners may therefore be hungry. If/when they finish eating then perhaps the game can end. No hurry though. Victory is assured. Some spectators may wait around to see if/when any of the runners eventually saunter down to home plate. Or not. Like I said, it's been a long game. ;)