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  • Deflation risk? As Treasurys plummet (TLT -2.4%), inflation-protected bonds (TIP +0.5%) move in the opposite direction. Michael Gayed tracks the ratio of TIP to the 7-10 year Treasury ETF (IEF) as a way to gauge inflation expectations, and it's spiked higher of late, suggesting far higher inflation fears. [View news story]
    Take look at this:

    http://bit.ly/RSk1Ra
    Sep 14 06:12 PM | Likes Like |Link to Comment
  • Deflation risk? As Treasurys plummet (TLT -2.4%), inflation-protected bonds (TIP +0.5%) move in the opposite direction. Michael Gayed tracks the ratio of TIP to the 7-10 year Treasury ETF (IEF) as a way to gauge inflation expectations, and it's spiked higher of late, suggesting far higher inflation fears. [View news story]
    http://bit.ly/RSk1Ra
    Sep 14 06:11 PM | Likes Like |Link to Comment
  • The Fed Stimulates Inflation Expectations [View article]
    The FOMC decision presented one of the easiest and potentially most profitable trading opportunities in a long time. The FED had been telegraphic its decision for quite some time and Mercedez Ben (I like the moniker) practically spell it out at Jackson Hole.

    Since my job is to be pragmatic and make money, instead of arguing economic theory with the FED, I loaded up to take advantage of the decision several different ways: buying near term SPY calls and closing the short legs of the Iron Condor hedges; buying emerging markets and Europe (a risk on trade as a result of reverse fly to safety); buying materials, housing and homebuilders; and finally, shorting even more bonds through TBT.

    Why shorting bonds? Well, I agree with the author in that the risks of deflation have now almost disappeared and the FED stimulus will push inflation somewhat higher and cause Treasury yields to rise (they have risen the last two times around after the FED’s easing). Here, it also helps that PIMCO sold 50 billion worth of Treasuries in August. That should tell us something.

    So, it has been a couple of unusually easy and profitable days. My point is not to brag, I am perfectly aware that these were unusual circumstances and successfully trading and investing is quite difficult. My point is to show that one ought to be pragmatic and try to profit from the circumstances presented regardless of one’s own particular points of view of what should be economically right or wrong. Argue all you want about the FED’s decision but even if you completely disagree with it, turn around, forget the argument, be pragmatic, and profit from it.

    In short, one should never forget this dictum: You should never be more invested in being right than in making money!
    Sep 14 04:37 PM | Likes Like |Link to Comment
  • Deflation risk? As Treasurys plummet (TLT -2.4%), inflation-protected bonds (TIP +0.5%) move in the opposite direction. Michael Gayed tracks the ratio of TIP to the 7-10 year Treasury ETF (IEF) as a way to gauge inflation expectations, and it's spiked higher of late, suggesting far higher inflation fears. [View news story]
    There was a deflation risk but such a risk has practically now almost disappeared. The FED stimulus will push inflation higher and cause Treasury yields to rise (they have risen the last two times around almost immediately after the FED’s easing).
    Sep 14 04:31 PM | 1 Like Like |Link to Comment
  • Mercedes Ben [View article]
    The FOMC decision presented one of the easiest and potentially most profitable trading opportunities in a long time. The FED had been telegraphic its decision for quite some time and Mercedez Ben (I like the moniker) practically spell it out at Jackson Hole.

    Since my job is to be pragmatic and make money, instead of arguing economic theory with the FED, I loaded up to take advantage of the decision several different ways: buying near term SPY calls and closing the short legs of the Iron Condor hedges; buying emerging markets and Europe (a risk on trade as a result of reverse fly to safety); buying materials, housing and homebuilders; and finally, shorting even more bonds through TBT.

    Why shorting bonds? Well the risks of deflation have now almost disappeared and the FED stimulus will push inflation higher and cause Treasury yields to rise (they have risen the last two times around after the FED’s easing). Here, it also helps that PIMCO sold 50 billion worth of Treasuries in August. That should tell us something.

    So, it has been a couple of unusually easy and profitable days. My point is not to brag, I am perfectly aware that these were unusual circumstances and successfully trading and investing is quite difficult. My point is to show that one ought to be pragmatic and try to profit from the circumstances presented regardless of one’s own particular point of view of what FED actions are right or wrong. Argue all you want about the FED’s decision but even if you completely disagree with it, turn around, forget the argument, be pragmatic, and profit from it.

    In short, one should never forget this dictum: You should never be more invested in being right than in making money!
    Sep 14 04:28 PM | 4 Likes Like |Link to Comment
  • The conventional wisdom amongst Street economists is Bernanke will not use his Jackson Hole speech to signal additional QE, reports Bloomberg. This doesn't mean no more easing, contends JPMorgan's Michael Feroli, it means Bernanke doesn't want Jackson Hole to become a policy change event, preferring that to be reserved for FOMC meetings. Too late for that Mr. Chairman. [View news story]
    "We could see some serious inflation and higher interest rates on the horizon."

    Fair enough. This may be the case regardless who wins. So, then you need to act accordingly and profit from your forecast (with which I, coincidentally, happen to agree). What to do? I suggest you short bonds. The easiest way is to but TBT. Good luck!
    Aug 27 01:43 PM | 1 Like Like |Link to Comment
  • The conventional wisdom amongst Street economists is Bernanke will not use his Jackson Hole speech to signal additional QE, reports Bloomberg. This doesn't mean no more easing, contends JPMorgan's Michael Feroli, it means Bernanke doesn't want Jackson Hole to become a policy change event, preferring that to be reserved for FOMC meetings. Too late for that Mr. Chairman. [View news story]
    An investor's job is to make money by pragmatically assessing the situation and acting accordingly. Regardless of one's own personal political preferences, the truth is that, as of today, the most likely next president is Obama not Rommey. Hence, you owe it to yourself to act accordingly to profit from it until this fact changes. Frankly, from an investment point of view, everything else, including one's own biases, is utterly irrelevant.
    Aug 27 12:41 PM | 2 Likes Like |Link to Comment
  • Why A QE3 Won't Be Good For Bonds [View article]
    Very good post. Thank you.
    I have been short bonds for what it seems like a long time now. Too long, perhaps, if you ask John Paulson. Unlike Paulson, I believe that, short of a complete economic meltdown, it is inevitable that interest rates move up higher. As you eloquently put it, the very policies that the FED implements to help the economy, if successful, will, directly or indirectly, help restore confidence and help economic growth, which will, in turn, stock inflation and push interest rates up. So, the question is not whether interest rates will go up. They will. The question is when and how much.
    Aug 24 11:20 AM | Likes Like |Link to Comment
  • Significant Upcoming Market Event: It's In 'The Hole' [View article]
    If you are correct, Mike, and the intention is to telegraph in advance further policy easing to be cuasi-officially announced at Jackson Hole, then, at the very least, we will have a couple of safe up trading days coming up (probably the 29th, but surely the 30th). Cynical or not, a rational and pragmatic investor would take advantage of the short term trading opportunity. Wouldn't he? We'll do.
    Aug 21 03:36 PM | Likes Like |Link to Comment
  • What Happens If And When The Interest Rate Rises? [View article]
    Nice article, Cullen. I must confess that I was a bit deceived by the title as I was expecting an article about the implications of a rate rise in the U.S. Perhaps you would like to tackle this topic next. It would make for interesting discussion.
    Jul 12 09:08 AM | 3 Likes Like |Link to Comment
  • Fallacy Of International ETFs [View article]
    I am sorry, Michael, but this is not very relevant. If one looks for exposure to Swiss companies the ETF delivers that exposure. The fact that many of these companies are huge multinationals that derive most of the income from outside Switzerland would not surprise anyone. One would face exactly the same situation if one decided to directly invest in the companies themselves.
    Jun 26 04:00 PM | 1 Like Like |Link to Comment
  • A Whimper: What Is All The Calm About? [View article]
    Congrats on you 500th article.

    "Greece will still leave the Euro. Government or no government, austerity or no austerity - the fiscal math simply doesn't make sense unless Europe wants to pay for Greece forever."

    Alternatively, the bailout conditions are relaxed a bit and some of the growth ideas that have been floated are finally accepted by Germany and implemented. In the end, in spite of the insanely slow progress, there will be more Europe and tighter integration.
    Jun 19 02:30 PM | Likes Like |Link to Comment
  • ...And From Mayday To Mayans [View article]
    "Will central bankers sit by as markets and economies tumble and do nothing, simply because there's nothing they can do that would help?"

    The single most important thing that central bankers can do is change the markets' negative momentum, and with it, give the real actors in the economy, a chance to also reverse the economy's weakening momentum.

    It may be due to my traders mind, but it doesn't cease to surprise me how much most economist and pundits (not saying this is your case Mike) inherently believe that the world's economies are solely a numbers' game. Far from it, economies are akin to living entities whose trials and tribulations, as well as their hopes, are reflected in the markets' movements.

    Hence, in the simplest of terms, central bankers and governments are, first and foremost, the safety net. They simply ought to act to stop the bleeding, to stop the weakening momentum, to reassure investors, to reverse the vicious cycle of bad news and bad numbers, in such a way that they bring back hope. Hope brings back investors, consumers, and trade, and this, in turn, creates a positive momentum, which is self-reinforcing and becomes a virtuous cycle.

    It is really quite simple; it all comes down to whether investors and consumers believe that the future is better or worse than today. Give them a dark horizon and they will act accordingly. Give them instead a bright horizon, and they will also act accordingly.
    Jun 3 05:39 PM | 1 Like Like |Link to Comment
  • A "hyperbolic" sell-off is coming in Spanish debt if the ECB doesn't intervene soon, says RBS credit chief Andrew Roberts. "The Rajoy (administration) will do anything to avoid the slow agony of Greece," says the LSE's Luis Garicano, adding Spain may be tempted by Argentina, which recovered quickly after axing the dollar peg. (earlier on why Spain will exit first)  [View news story]
    I am sorry, I truly do not mean to appear insulting (I really don't mean to be, so please don't be offended), but your point of view is so radical that it sounds like the one held by a Tea Party extremist from The Appalachians who has never lived in Europe and has, most probably, not even visited it. It is only furious theory and no actual practice (I am not saying this is your case but your post certainly reads like that).

    As I said, yours are very radical views, at least in Europe. These views are not shared by the great majority of the people, including the Greek, whom, even though have suffered enormously, still want to be part of the European Union and the Euro.

    I am afraid that our views are so far apart that, I too, will agree to disagree with you. I will be happy, as well, to defend your right to voice your opinion. But, it may surprise you, this is not an issue in Europe, at all, nowadays.

    Unlike the U.S. where two political parties seem to be enough to cover 300 million people (how is that possible?), in Europe it is the norm to have many different parties that encompass millions of people who have widely different points of views. Hence, expressing your opinion, whatever it may be, is not only accepted by expected.

    Speak up, my friend. I may disagree with you, but I am happy you do!
    May 30 08:07 PM | Likes Like |Link to Comment
  • A "hyperbolic" sell-off is coming in Spanish debt if the ECB doesn't intervene soon, says RBS credit chief Andrew Roberts. "The Rajoy (administration) will do anything to avoid the slow agony of Greece," says the LSE's Luis Garicano, adding Spain may be tempted by Argentina, which recovered quickly after axing the dollar peg. (earlier on why Spain will exit first)  [View news story]
    The E.U., like any institution, has many problems, no doubt. Nevertheless, it has proven to be a valuable undertaking. You are, surely, writing this radical nonsense from outside the E.U. No one who has truly experienced the E.U. would make such statements.
    May 30 05:02 PM | Likes Like |Link to Comment
COMMENTS STATS
293 Comments
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