Reviewing the Rubin genius theory

Reviewing the Rubin genius theory – Off The News

Recently, TIE happened to sit in on a fascinating dinner conversation. The scene: the annual gala on May 28 of the Robin Hood Foundation, the hot new New York charity geared to the younger financial market participants who made it big in the 1990s.

Enter the well-known manager of a large global hedge fund who sat down next to a powerful trader from Goldman Sachs. “We had all proclaimed Bob Rubin a genius, but I’m beginning to wonder if it was all media hype,” said the hedge fund investor. “The Rubin theory was to talk ‘strong dollar, strong dollar, strong dollar’ to rally the bond market. Cut the deficit and the bonds would rally some more.”

“So where are you going with this?” asked the Goldman trader.

Responded the global money manager: “Well, the current Treasury secretary–whatever his name is–just talked the dollar/euro [exchange rate] down all the way to 1.18 and the bonds are rallying. Bush is out of control with his tax cutting and the bonds have rallied even more. Looks like all along, the bonds pay little attention to the dollar and basically fixate on what the Fed’s been doing. So much for the Rubin genius theory.”

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