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5 Reasons Not to Short Bonds

Fast Money Portfolio
Fast Money Portfolio

Common sense tells you the march higher in bond prices should be nearly over, doesn’t it?

After all yields are at or near historic lows.

Considering yields and prices are inversely related, the next big move should be higher yields and lower prices.

The trade is short bonds, ahead of the decline in prices, right?

Although the thesis sounds logical, CNBC’S senior analyst Ron Insana tells us it probably won’t play out that way.

He says there are too many mitigating factors that will put a bid in the bond market. They follow:

Insana’s Top 5 Reasons Not To Short US Bonds

1. Thick as a BRIC
BRIC countries are not doing well

2. Spanish Flu 2
Spain is infecting Europe.

3. China Hitting a Wall
The Street doesn’t realize how serious the slowdown is

4. Sell in May and Go Away
This happened both in 2010 and 2011

5. Big Ben isn't Ringing
Don’t go for the big short in bonds until Ben Bernanke, Janet Yellen and William Dudley all say QE3 is off the table.
Source: Ron Insana, CNBC Senior Analyst

According to Insana, these five factors will put a floor under prices. As a result, he does not advocate a short position.

Now you know what not to do – but what should you do?

Insana says scale into equities. He likes stocks such as Microsoft, IBM, Intel, Starbucks and McDonald’s – companies with a strong global franchise.









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Trader disclosure: On Apr 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Tim Seymour is long FCX; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long HPQ; Karen Finerman is long CF; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Dan Nathan is long AAPL JAN 450 PUTS; Dan Nathan is long BAC APR 8/MAY7 PUTS; Dan Nathan is long XLF APR 15 PUTS; Dan Nathan is long IBM APR 200 PUTS; Dan Nathan is long WIMT APR 60 PUTS; Dan Nathan is long RIM JAN 20 CALLS; Dan Nathan is long IWM APR 78 PUTS; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long PRST; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA

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