Wednesday, May 18, 2005

Gross on 10yr Yields and Buffett on Non-Proliferation

Damn interesting day I would say. First Bill Gross pulls a Kirk Kerkorian and reminds the electronic herd and the news media (and myself), who all thought rates had only one way to go, that they don't. 3-4.5% predicted near term for the Ten Year US Bond. Go figure.

If we had to forecast (and we do), we believe a range of 3 - 4½% for 10-year nominal Treasuries will prevail during most of our secular timeframe and that yields on Euroland bonds will be slightly lower due to their structural unemployment problems, disinflationary incorporation of new Central and Eastern European countries into their existing family of nations, and more growth-inhibiting demographics.

Maybe Sam Zell is right on Monday night at
Gleacher Center when he said he didn't think there was necessarily a property bubble. There is just too much damn money swishing around. One thing though I know is that most of that money isn't brave, isn't sticky, and is already a bit nervous. Read Gross's comments here. Then, Buffett and Koppel do nightline and Buffett suggests that a nuke in America is a virtual certainty over next 60 years. He supports NTI, an advocacy organization run by Sam Nunn working to stop nuclear proliferation. They have made a movie that Buffett recommended seeing at the Annual Meeting. You can get a free copy here. Buffett called it the "most important issue facing mankind". Then, his summation comment, a classic, went something like this:

"Paying whatever sum to stop the proliferation of nuclear weapons would be the deal that makes it look like we overpaid for the
Louisiana purchase."

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