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The Cry of the Bond-Shorting Trader

Someone is being taken apart by the long bond, but we just don't know who yet.

All of us have been there, the professionals among us. We have all been on the wrong side of a trade, on the wrong side of a short. I had it happen in Noxell, something you can find in the archives if you look hard enough. My head trader had it happen in the old First Interstate Bank.

Someone is short the bonds, and they are taking that someone apart.

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numbers were strong, the average workweek was too high, so to speak, and bonds should have sold off after that ramp. They didn't. They didn't because when you are short bonds, everybody knows it and the market is determined to take that someone apart. And they will because the market is a brutal, vicious animal when you are wrong. And boy, is this guy wrong.

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First, we won't find out who it is until after the account is executed. That is how it happened with

Long Term Capital

. We had a run in the bonds like this during the demise of that firm. It started like this, where bonds kept running and running and running and nobody would admit they were on the wrong side. Nah, nobody. Everybody in the cognoscenti knew that LTCM was blowing up but nobody would talk about it. LTCM wouldn't because that would be suicidal. The people who were pressing the short wouldn't; they were making too much money.

And then it unraveled.

The same thing is happening now to somebody. I can taste it and smell it. I don't have to know it or see it. Someone is being taken apart by this long bond, and it won't stop until "uncle" is cried.

We will all hear it when it happens.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at