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January 21, 2011
Inflationary Fears Hit Markets Across the Globe
Yesterday’s TIPS (Treasury Inflation Protected Securities) auction was lackluster, at best, with the lowest bid to cover ration (demand) in nearly two years.
Inflationary fears caused investors to not want "inflation protected" securities. Who knew? As a side note, I have never heard of a bid to cover "ration". It does sound like something I might hoard though.
The acrid smell of inflation is starting to spread around the world and likely is behind these rate increases as the “bond vigilantes” flex their muscles.
Something "likely" smells fishy.
As seen here, yields on long-term treasuries without inflation protection rose much more than treasuries with inflation protection over the past week. That means treasuries with inflation protection were less desirable than treasuries without inflation protection. Just which muscles were the bond vigilantes intending to flex?
Perhaps the putrid smell of deflation is overwhelming the acrid smell of inflation over the long-term? It is a wonder the bond vigilantes have any sense of smell left at all. Perhaps they have packed their sinuses with bid to cover rations as a defense, lol.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
12 hours ago
9 comments:
Bond vigilantes have grown balls and are going for real inflation hedges like corn, sugar, cotton, APPL, etc.
They know as most others that events like the 2008 crash are outliers and only occur every 30-50 years at best.
Besides with our Prez embracing the mantra of making and inventing "stuff" what could possibly go wrong?
jshaef1
"If you want to invest in China and you own cotton, they are going to be very nice to you Justin. They are going to pay the bills, they are going to take you to dinner, they are going to pay you on time."
http://www.bbc.co.uk/news/business-12235196
Better get in on the ground floor before the train leaves the station. :) jshaef1
Your sort of guys.
http://www.telegraph.co.uk/finance/comment/liamhalligan/8276130/Our-currency-has-gone-West-and-stagflation-will-soon-be-upon-us.html
http://www.telegraph.co.uk/finance/economics/8275945/Britain-in-battle-over-stagflation.html
>>January 21 - Bloomberg (Maria Kolesnikova): "Cotton and wheat are leading agriculture product price gains this year and outpacing metals as frost in China, floods in Australia, rains in India and dry weather in Brazil hamper crop prospects... Cotton more than doubled and wheat futures climbed 47% in 2010 while silver jumped 83% and gold rose 30%."<<
Remember, when investing keep your eyes firmly glued to the rear view mirror!!! Don''t worry about what lies ahead :) jshaef1
jshaef1,
"If you want to invest in China and you own cotton, they are going to be very nice to you Justin. They are going to pay the bills, they are going to take you to dinner, they are going to pay you on time."
China? Never heard of it. No wait. Come to think of it I do have something in my house with "Made in China" on it. That China? Wow! Sign me up! I want to invest before someone else figures out that they make stuff! ;)
Just one more question. I can't be there for the free "dinner". Can I get a free "lunch" instead? I'm already loving this investment!
dearieme,
Thanks for sharing that.
I wish we knew the duration.
Google Trends: Stagflation
I locked in my stagflationary name in August 2007. As seen in Google Trends, that was before all the cool kids were doing it, lol. Sigh.
Right or wrong, I'm still leaning deflationary here in the USA. I only lean that way though.
I am going to buy Muni Bonds, next bailout bonanza!
GYSC,
Here's an investment idea. Minibonds! If they are good enough for "Yu" then they are good enough for me!
London Suicide Connects Lehman Lesson Missed by Hong Kong Woman
A month after their meeting, Yu said Chow called her to say he had a new product that could return as much as 20 percent a year because it was linked to the stock performance of three large Chinese companies -- China Communications Construction Co., China Merchants Bank Co. and Ping An Insurance Co.
Yu said she didn’t read the fine print, trusting Chow when he told her she couldn’t lose her principal. Had she looked at the prospectus and understood it she would have discovered that she had essentially bought three call options -- contracts that would capture gains if the shares of the three companies rose by a certain amount -- coupled with the equivalent of a Lehman corporate bond. If Lehman defaulted, her money would be gone.
Want proof that minibonds are great for retirees aged 65 and older?
99% of Lehman minibond holders ok settlement deal
However, under an agreement struck by the Securities and Futures Commission and the Hong Kong Monetary Authority with 16 banks in July, banks offered only to repurchase the notes at 60 percent of the nominal value from investors aged below 65 and at 70 percent of the nominal value from investors aged 65 or above.
See! You lose less! It's like a senior citizen discount discount.
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