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  • XLF back to pre-Lehman level [View news story]
    could'nt agree more with user353732. Profits are up and valuations look cheap on a relative basis as the brunt of earnings have come by making the middle class more destitue than ever before. Quality of products we consume have detoriated ( cheaper labor and materials) and standard of living will keep eroding. Fed's cheap money clearly helps the banks, ceo's and traders and not the average guy on the street.
    Nov 18, 2013. 02:05 PM | 2 Likes Like |Link to Comment
  • Why The S&P 500 Will Likely Fall By 40% [View article]
    Stocks are rising as companies are firing people, getting more effective at keeping fixed costs low and hence meeting profit margins for investors. Stocks will continue to stay afloat unless global consumer demand shows a sharp fall . Most companies have already announced weak 2013 guidance and if they hit EPS targets , stocks will stay afloat.
    However from a Macro point, your assessment is right. Fed has done all it can to keep home prices for coming down and preventing another liquidity crisis. However, its not going to buy real growth and fuel inflation in both stock and housing market. Fed easing and National debt are here to stay for a while and Uncle Sam and Fed will do everything to keep rates low along with their ECB friends for a few years. My hunch is that in due time they have to decided b/w high inflation vs. settling for a weaker unemployment target. That’s the time we will see VIX jumping around and trading opportunities.

    So owning some bonds and stocks is still not a bad idea. Not yet. Wait till Q1 data starts coming out.
    Jan 30, 2013. 04:52 PM | 2 Likes Like |Link to Comment
  • What Record Low Treasury Yields Tell Us [View article]
    Treasury yields are depressed due to two reasons. First, Fed holdings for Treasury's have never been higher and realized Inflation has been low and this is reflected in Treasury breakevens ( spread between TIPS - Nominal yield) at around 2.5%. As the global demand outlook is weak, inflation outlook has been tempered keeping TIPS yields conservative. Its quite remarkable how US dollar is able to maintain is purchasing power compared to EUR and emerging markets by printing more money and yet keeping dollar competitive.
    Second side of the story is deep risk aversion amongst investors. They are more happy to invest in US debt than any other asset. In the end we have to relaize that US with its open immigration policy , great schools and hard working workforce will retain its dominant spot in world economy.
    May 31, 2012. 04:57 PM | 1 Like Like |Link to Comment