Was stopped out of GDXJ position earlier this year. Not sure what to think about the miners anymore. Obviously cheap but are they just an EM play with a lot of hair? If so, just buy China. Are they just correlated to Materials theme? If so, then just buy XLB or SLX or COPX.
Question is when will they diverge, because they have had 10 years in which they haven't?
That being said, did pick up some CEF recently. But it's more a hedge to my beta as opposed to having some crazy bullish view on gold at the moment. Need stagflation to come and need people to sell off bonds.
It's coming sooner rather than later, which is a key difference to prior views. I am throwing in the towel on US treasuries - with the 30 year under 3%.
A major back up in yields could now be coming. The bullish scenario for gold comes is if the Fed is forced to end or taper QE due to $5 gas.
I am super close to getting a tactical buy signal on treasuries. A few more equity down days and you all should consider the rotation trade. The environment looks a lot like 2011 or dare I say 2008.
Everything in the past articles stands. Other than credit conditions, things aren't getting fundamentally better at the top line and it's hard to imagine people wanting to take on more risk at these levels. It's possible and we'll be ready for it.
But at some point, the malinvestments are too great and the whole house of cards unwinds.
Mike is correctly looking at the price of key inputs to global growth. They are breaking down and sectors exposed to global growth will be especially hard hit.
The "mistake" - so far - is to be overly bearish on the U.S. I believe he will ultimately be proven right.
Investors' focus would be better focused on bearish positions in EM such as India, Brazil and Russia. Personally, I am more sanguine on China based on valuation.
The Death Of QE Has Been Greatly Exaggerated [View article]
QE continues because growth stinks. Growth stinks because there is too much debt. Investors, whether they are Japanese or American are quite aware of this and hence this is why they will not pay more than book value for most multi-national banks so long as this continuum is in place.
Overall, a world awash in debt, with poor prospects for Return on Invested Capital, is not long-term good for many of the banks you mentioned. In fact, I would conclude opposite and say they are shorts - big time shorts.
The world is seriously underestimating the possibility of a sovereign debt shockwave.
No Growth, No Inflation, No Earnings [View article]
Here's where my model stands.
Right now I am still not "all in" treasuries and am playing, lower duration safety bonds. Based on my backtesting (I've been systematizing my strategy to be more rules based), the last all in signal I got was in 2011 and it kind of looks like it's shaping up like 2011 in many ways.
You have a concurrent rolling over of global growth and it's affecting credit. Investor sentiment is very high too. Corporate fundamentals with respect to earnings are worse.
Gayed uses alot of the same stuff I do although he is much more technical. I had become increasingly pessimistic last year because of the data while he's had multiple views on the fundamentals based on the technicals. I've stopped listening to his views. The fundamentals just plain suck and the technicals will catch up accordingly.
That being said, he's had a better run than me so better to make money than be right.
No Growth, No Inflation, No Earnings [View article]
Ok, SA really needs to filter out Joe 6 pack dimwits and so-called mutual fund analysts (WTF is that anyway) who link to fear and mongering and non-factual sites.
I am glad to see your wages are going up in this hyperinflation and I am glad to see the TIPS market is being suppressed by the Fed.
The Bear Who Cried Wolf: Everything Is Fine Until It Isn't [View article]
I loved the article, especially the defense of the maligned bears, but I didn't understand the conclusion. The Fed is intervening because of deflation - that doesn't magically cause inflation. All your charts point to that. Stag-deflation at best is what we're going to get.
The 'Great Rotation' And Other Nonsense [View article]
I am looking for a bifurcated credit market. US corporates can easily refinance and banks are very willing to do so since they can borrow for free.
The yield on Investment Grade is about the same as a 25 year equivalent UST but the duration is much lower...just a safer way to express a risk off view in case I am wrong (I am probably not).
In Japan the spread between Investment Grade and JGB's is about 40 basis points and the yield is 65 bps or so. In the U.S. the spread is 150 basis points and the yield is 2.8%.
Going All In [View instapost]
Going All In [View instapost]
Was stopped out of GDXJ position earlier this year. Not sure what to think about the miners anymore. Obviously cheap but are they just an EM play with a lot of hair? If so, just buy China. Are they just correlated to Materials theme? If so, then just buy XLB or SLX or COPX.
Question is when will they diverge, because they have had 10 years in which they haven't?
That being said, did pick up some CEF recently. But it's more a hedge to my beta as opposed to having some crazy bullish view on gold at the moment. Need stagflation to come and need people to sell off bonds.
It's coming sooner rather than later, which is a key difference to prior views. I am throwing in the towel on US treasuries - with the 30 year under 3%.
A major back up in yields could now be coming. The bullish scenario for gold comes is if the Fed is forced to end or taper QE due to $5 gas.
No Growth, No Inflation, No Earnings [View article]
Making A Case For U.S. Treasuries [View article]
Everything in the past articles stands. Other than credit conditions, things aren't getting fundamentally better at the top line and it's hard to imagine people wanting to take on more risk at these levels. It's possible and we'll be ready for it.
But at some point, the malinvestments are too great and the whole house of cards unwinds.
NYSE Margin Debt And The S&P 500: A Sign Of Vulnerability? [View article]
Meanwhile, Transports Fool Nouveaux Bulls [View article]
The "mistake" - so far - is to be overly bearish on the U.S. I believe he will ultimately be proven right.
Investors' focus would be better focused on bearish positions in EM such as India, Brazil and Russia. Personally, I am more sanguine on China based on valuation.
Meanwhile, Transports Fool Nouveaux Bulls [View article]
The Bear Who Cried Wolf: Everything Is Fine Until It Isn't [View article]
The Fed cannot create growth and given the many market divergences we may be seeing the initial stages of investors realizing that.
The Death Of QE Has Been Greatly Exaggerated [View article]
Overall, a world awash in debt, with poor prospects for Return on Invested Capital, is not long-term good for many of the banks you mentioned. In fact, I would conclude opposite and say they are shorts - big time shorts.
The world is seriously underestimating the possibility of a sovereign debt shockwave.
No Growth, No Inflation, No Earnings [View article]
Right now I am still not "all in" treasuries and am playing, lower duration safety bonds. Based on my backtesting (I've been systematizing my strategy to be more rules based), the last all in signal I got was in 2011 and it kind of looks like it's shaping up like 2011 in many ways.
You have a concurrent rolling over of global growth and it's affecting credit. Investor sentiment is very high too. Corporate fundamentals with respect to earnings are worse.
Gayed uses alot of the same stuff I do although he is much more technical. I had become increasingly pessimistic last year because of the data while he's had multiple views on the fundamentals based on the technicals. I've stopped listening to his views. The fundamentals just plain suck and the technicals will catch up accordingly.
That being said, he's had a better run than me so better to make money than be right.
No Growth, No Inflation, No Earnings [View article]
Best of luck.
No Growth, No Inflation, No Earnings [View article]
I am glad to see your wages are going up in this hyperinflation and I am glad to see the TIPS market is being suppressed by the Fed.
The Bear Who Cried Wolf: Everything Is Fine Until It Isn't [View article]
The 'Great Rotation' And Other Nonsense [View article]
The yield on Investment Grade is about the same as a 25 year equivalent UST but the duration is much lower...just a safer way to express a risk off view in case I am wrong (I am probably not).
In Japan the spread between Investment Grade and JGB's is about 40 basis points and the yield is 65 bps or so. In the U.S. the spread is 150 basis points and the yield is 2.8%.
Thank you, I have an idea for my next article.
Marc Faber: Get Ready For Decade-Long Low Interest Rates [View article]