Posts
Til Tuesday - Voices Carry
They've got a loss, they'd like to read Ben's mind
Banks are frightened of the cash they can't find
Oh, are there more bailouts he's thinking of
To fund them today-a-ay?
Does he still think that inflation's the rub?
Why does he say-a-ay?
Flush flush, can't drop cash now, trades don't carry
Flush flush, can't drop cash now, trades don't carry
Oh oh
We try so hard not to dump assets
Even though we may have some future regrets
But he tells us risks are to the downside
It's something we hear, oh yes
So we try so hard to sell as it slides
And there's so much fear
Flush flush, can't drop cash now, trades don't carry
Flush flush, can't drop cash now, trades don't carry
Oh oh
He drops cash, but only part of the time
He drops cash, but just to keep "it" in line
Rush rush, he might drop some, the trades carry!
Rush rush, he might drop some, the trades carry!
Rush rush, as banks fail, the trades carry!
Rush rush, choppers flying overhead!
Rush rush, the trades carry!
He screams, "DROP NOW!!!"
He screams, "DROP NOW!!!"
"OH GOD WE MUST DROP CASH NOW!!!"
The trades carry!
Oh yes! The trades carry!
How we wish he could drop some more!
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
-
At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
7 comments:
Stag,
http://www.youtube.com/watch?v=qb5Ii0iIcXo&feature=related
With interest rates zero bound and retirements VAPOUR(ising) I just couldn't resist.
MAB,
"OH GOD WE MUST DROP CASH NOW!!!"
I got that song in just before the bell. Whew! The central bankers of the world turned Japanese last night it seems.
The market dumped my TIP fund in a major way today. Down 3% on very heavy volume. Wow. Inflation is apparently dead. I'm fine with that, assuming the market is right. If it is, I'll have less money but things will cost less.
The good news continues. If this keeps up we could all care less what the capital gains tax rate is. There won't be any gains to tax.
There are just two Japanese flies in the ointment though. If deflation is setting in with a vengeance, why is the 10-Year non-inflation protected treasury note being sold off too? Why is gold back over $900?
Inquiring/cringing stagflationists want to know.
With real rates so high on TIPS now I can't even dream of putting my money anywhere else. The 20-Year now yields a whopping 2.81% over inflation. Never saw that coming. Real yields that high are normally reserved for dotcom era type prosperity and/or deflationary Great Depressions.
The Dow was roughly 10,150 when I got out over four years ago. It's now 9,258. I didn't see that coming either. I did think we borrowed that last recovery though. Pay back time's apparently a @#$@#.
I too was bitten by the optimism bug it seems. At this point, I'm left with the continuing realization that as bearish as I was (very!), I "still" wasn't bearish enough. Go figure. I'm not alone.
Everything's changed now -- for the worse
http://articles.moneycentral.msn.com/Investing/JubaksJournal/everythings-changed-now-for-the-worse.aspx
If you've been reading Jubak's Journal faithfully, you know that I've been pretty pessimistic about the economy and the stock market for more than a year now. I've been beating out a gloomy beat since the turn of the year in columns like "Don't count on a 'normal' recession" (Jan. 25), "Is the U.S. entering Japan's nightmare?" (Feb. 1) and "A double-dip downturn? Wait and see" (May 2). Jubak's Picks has been better than 30% in cash since the first quarter of this year. And I stacked the portfolio with dividend-paying stocks, hard-asset gold and natural-resources stocks, and utility and pipeline stocks.
Turns out those steps weren't enough. It wasn't so much that I wasn't gloomy enough but that I thought the gloom would lift sooner than now looks likely. I persisted in thinking that we were facing a garden-variety bear market and a business-as-usual economic downturn.
Even the "pessimists" are taking damage now. Heaven help the heavily leveraged optimists.
They say that the goal during a bear market is to simply lose less than the next person. Mission accomplished.
Stag,
The recent pricing of TIPs is hard to figure. During the Bear Stearns collapse, the five year TIPs had a negative yield. Take the ten year spread for instance - 0.99%! Looks like a sale on inflation insurance to me - on top of a 2.64% real yield.
Maybe it's some kind of forced unwind. A levered hedge fund strategy gone bad.
Here's what the Chinese should do. Move to Tips then allow the yuan to appreciate. Use the stronger yuan to forward purchase commodities that will be needed in the years ahead. The Chinese could then get paid for the inflation they exported to the U.S.
It would also be a hedge against a falling dollar.
That aside, I really think the Asians are going to think twice before sending us their work in the future. We clearly don't know what to do with money.
MAB,
Maybe it's some kind of forced unwind. A levered hedge fund strategy gone bad.
Possibly. That being said, I think it is a good old-fashioned deflation scare combined with active trading mindsets.
There's absolutely no way I'm going to remove inflation protection when the government is back to printing money in earnest. I've been waiting for a 1970s-style 1974 recession/depression. It brought tempoary disinflation. That didn't help the rest of the 1970s much though.
I also don't need to use disclaimers on where my money is parked. I don't "still" feel comfortable. I don't "still" feel okay with my decisions. I'm actually salivating. The next auction is in January and I've got some cash in reserve for it.
With 2% plus real rates backed by the government's printing press, I'm actually more comfortable than most should be. Yeah, we might actually get deflation for a few months or maybe even a year. Then what though?
MAB,
Here's what the Chinese should do. Move to Tips then allow the yuan to appreciate. Use the stronger yuan to forward purchase commodities that will be needed in the years ahead. The Chinese could then get paid for the inflation they exported to the U.S.
It would also be a hedge against a falling dollar.
Yeah, no kidding.
Forget Cramerica. Think Chimerica!
Stag,
There's absolutely no way I'm going to remove inflation protection when the government is back to printing money in earnest. I've been waiting for a 1970s-style 1974 recession/depression. It brought tempoary disinflation. That didn't help the rest of the 1970s much though.
It's deflation, inflation or stagflation. I just don't see prosperity and real yields. In that sense, TIPs seem like a long term safe haven. In the short term, anything seems possible (except the perception of prosperity of course).
We are witnessing a grand experiment -how best to maintain ficticious wealth!
Clearly, it's harder than many thought. Personally, I don't think it can be done. In any event, I'll continue to heckle those that try.
MAB,
We are witnessing a grand experiment -how best to maintain ficticious wealth!
No joke!
Here are my only two concerns as a TIPS investor.
1. Hyperinflation could wipe me out. The inflation protection I'm getting wouldn't be enough.
2. Hyperdeflation could wipe me out. The government might actually default on their obligations and choose not to pay me what it owes me.
I'd like to lock those two concerns in using a fixed rate fear, but this is an adjustable rate fear environment.
Further, the recent hypervolatility of the hyperstimulated markets makes me hyperaware that leverage had been hyperextended.
Post a Comment