MM and T-bond while

the debt markets are imploding...	ray_heritage	NEW 1/26/2008 11:31:56 AM
This weeks conference call by Don Coxe shed more light about how grave the situation is becoming. Despitetreas yields being negative, all across the board, there is burgeoningdemand for high quality debt. Part has to do with the fact that, in theUSA, 71% of all corp debt is now of junk quality. Treasurys have becomesafehaven bets mostly because of the debacle in derivatives mart. Inoted that Coxe views the mm sector as particularly vulnerable. That'sbecause they're restricted to only buying trip-A quality, but way toomuch of such has derived its trip-A under false pretenses. They'reloaded up with shit, and there will be even more problems withstruggling mm funds trying not to "brake the buck", thereby making themlikely candidates for continued bailouts. Coxe sees hugedownside risk with the financials. And he notes that every bear markethas been led by the financial underperforming first. Now they aretotally broken down and you can't bid up stocks when financial areplummeting. The reason you buy high quality bonds, despite theirneg yields, is primarily fueled by the desire to minimize risk. Thuswhat the bond market is saying is that there are literally huge minefields out there waiting to explode. Wall Street knows this and are begging to be saved.