The most obvious trade out there right now is to short US Treasuries. With the dollar trending away from being the world's reserve currency, interest rates at what amounts to be 50 year lows, everyone but the Federal Reserve worrying about inflation, and QE2 coming to an end --- what's an investor to do?
Frankly, anyone that thinks buying the iShares Barclays TIPS Bond Fund (AMEX: TIP) is going to protect you from inflation is a joker. If you want to protect yourself from inflation, you have to buy commodities. The problem with TIP is that the way they measure inflation is designed to understate true inflation. The best way to protect yourself from inflation is to buy the ELEMENTS Rogers Intl Commodity Index - Metals Total Return ETN (NYSE: RJZ).
One of the easiest trade is to short US Treasuries as the Federal Reserve is expected to pull of QE2. Helicopter Ben is already pointing out that he will continue to purchase US Treasuries even past QE2. This makes the ProShares UltraShort 20+ Year Treasury ETF (NYSE: TBT) trade a short term trade.
Odds are that we see some global monetary powers start to sell some of their US Treasuries to finance things. I'm looking at you Japan. I'd expect to see China start to sell as well as they realize that after a certain point, the additional future cost of buying US Treasuries is not worth the present value of stimulating their exports for a short while.
So, if you're long TLT or TIP --- you've been warned. I'd even go as far as to look into Warren Buffett's comments on them. I figure, if you're not going to listen to me or one of the best investors in the world, you're on your own.
Disclosure: I am long TBT.