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WisdomTree Registers New Inflation-Linked ETF
WisdomTree Trust has registered with the SEC a new exchange-traded fund that seeks to give investors long-term returns above the rate of inflation.
To do so, the WisdomTree Real Return Fund (NYSEArca: RRF) will invest in inflation-linked securities such as U.S. Treasury Inflation Protected Securities (TIPS), bonds and commodities instruments.
RRF will be the newest member in an expanding group of ETFs that seeks to capitalize on investors' rising fears of inflation.
For some strange reason, the contrarian in me is half tempted to start learning Japanese and take some profits in U.S. Treasury Inflation Protected Securities.
I wonder if it has something to do with WisdomTree launching their stock market ETFs shortly before the stock market imploded? And now they want to do the exact same thing with commodities? Call me skeptical of the wisdom.
Stock Market ‘Bubble’ to End, Morgan Stanley Says (Update2)
The commodity-producing nations will be the hardest hit when the current rally ends, Sharma said. The Latin American markets of Brazil and Chile are the most expensive, he said, and Morgan Stanley is also “underweight” on Taiwan, Malaysia, Israel and Russia. Commodity prices are rising even as economic fundamentals are deteriorating, he added, a sign that the rally may be fizzling.
“Commodities are at the centre of this echo bubble,” he said, adding that they are “in substantially overvalued territory, way above fundamentals.”
Inventories of oil, copper, aluminum have risen over the past few months even though demand hasn’t picked up, Sharma said, adding that the price of oil is inversely correlated to the U.S. dollar. Increasing buying of commodities as a hedge against the decline in the U.S. dollar has resulted in the commodity rally, he said.
I am sympathetic to his deflationary arguments. Let's just put it that way.
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
9 comments:
Stag,
I am sympathetic to his deflationary arguments. Let's just put it that way.
I'm CONtinually amazed at how much senseless credit creation it takes to keep prices from falling.
We've had commodity bubbles, stock bubbles, property bubbles, MEW, zero interest rates, quantitative (dis)easing, bailouts, stimulus, war spending, trillions in added government debt, globalization, etc. And yet, prices have only risen ~ 2.5% annually over the past decade (excluding real estate of course!).
What's it going to take, $300/bbl oil? More bubbles?
I think it's time to give up the ghost. There is no point in preserving the value of fraudulent bank credit. We should deflate this sucker back down to 2003 levels, if not further. There's no reason it can't be donne in an orderly manner. Most of the faux wealth that will disappear belongs to the wealthiest 1/10th of 1% anyway. If they lose another 30% big deal.
I'd like Bernanke to re-visit his helicopter speech too and discuss the costs and benefits (and who bears them) of preventing deflation.
Imo, Bernanke is a menace. He allowed greedy banks to issue trillions in bad credit. They poisoned our money supply. Bernanke should be fired immediately and never be allowed to manage credit and banks again. More than anything, the fed is papering over its own incompetence. They can't be trusted.
mab,
Bernanke learns from the wrong crash
http://www.atimes.com/atimes/Global_Economy/KK04Dj01.html
"Federal Reserve chairman Ben Bernanke believes that today's monetary policy should be primarily governed by the lessons of the Great Depression. However, over the centuries, there have been other financial disasters, whose lessons appear rather more pertinent."
Mark,
Is there an aftermarket for your price appreciated trash bags? Maybe we could write derivitives for them and sell them to Wall Street? Are you in?
GYSC,
Heck, I'd even fill the bags and leave them out by the curb! Investors wouldn't even have to pay me! ;)
Hey Mark, I think your TIPS will be safe until Ben Stein crowds in. :-)
Mark,
any opinions on 30 year TIPS?
I do not have a 30 year anything.
AllanF,
THAT's a scary thought, lol. I agree. Unfortunately, based on the number of investors already crowding in, I might only have a few weeks of safety left! ;)
GYSC,
It scares me a bit that TIPS are becoming popular again and the government is willing to offer 30 year TIPS. The more US debt that's linked to inflation, the harder it will be to inflate it away. From what I read, too much debt tied to inflation makes hyperinflation more likely someday (as the inflation becomes self-reinforcing).
That said, the government might just see never ending deflation and therefore sees TIPS as cheap financing. They've done a relatively decent job doing that so far.
I did buy the 20 year TIPS several years ago. 30 years should be mostly covered by my 30 year I-Bond collection though.
A few months ago there was some publicity, at least on the right bank of the Atlantic, when it was revealed that the Bank of England pension scheme was almost 100% invested in Index-Linked.
dearieme,
Fascinating!
http://order-order.com/2009/03/31/bank-of-england-pension-fund-surges-betting-on-inflation/
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