9/27 1900 weeks data _ 10 yr yield vs. SP500

Written on September 27, 2010

Hey-

I heard them say, “I dunno, just seems like supm’ aint right…I’m not saying nuttin’…I’m just sayin’…ya know?”

Mr. Hull, (Cherokee Elementary sixth grade math teacher) was known to say things like “the shortest distance between two points was a straight line” and “the equation of a line is y=mx+b”

If this red dot makes a bee-line back to the best fit trend line it might get kinda ugly…

The question is what kinda ugly?

If my math is correct and the SP500 stays put at 1148, yields would wander up toward 3.99% from 2.59% now.

If Yields stay put that makes 513.50 on the SP500 from 1148 now.

Mr. Hull might asks, “Would you rather?”

1. own stocks?

2. own bonds?

3. short bonds?

4. short stocks?

5. start a business so you can pay more taxes?

6. buy a home?

7. buy another home?

8. sell everything convert it to gold put it in a suitcase, leave the country?

9. take a new job and get paid in dollars?

10. have one of your front teeth removed…slowly?

You may pick 2.

Leon

PS Final answer…

Shortest route looks like 3.75%, up 116 bps in 10 yr and 1080, -5.9% in the SP500.

PSS No apologies for NYC/Chicago/ethnic accuracy… mostly just traders I worked near that I referred to collectively as “deez and doze” guys… amazing Wall Street lasted as long as it did.