Pecos Jack

Government Intervention: A Vision for the Future

Well stated. Harrrrummphhh! Harrrummphhh!

TED Spread Update

The Fed doesn't transfer to treasury because they need paid back, so they buy a note. If the Fed were part of the federal government, your suggestion would have worked. It is not.


On Apr 23 08:44 AM Long John Silver wrote:

> I don't see how normal price signals in the market can work, when
> the Fed is buying Treasuries via Q.E. If Treasury Bond supplies
> start pushing rates higher, why wouldn't the Fed just take the next
> logical step and transfer cash directly to Treasury without going
> through the meaningless exercise of buying Treasuries on the open
> market? That will keep the whole process underground.

Weaker Dollar, Stronger Equities?

To ArkansasAngie's questions:
The question I've been pondering -- what is the relationship between devaluation of the dollar and inflation? Doesn't devaluation of the dollar directly translated into price inflation IF our trading partners DO NOT devalue their currency?

YES. Devaluation of the dollar is equivalent to price inflation. Even if trading partners do devalue their currency, we can ALL end up with inflation. The relative extent of devalution will impact the relative inflation, but there is enough inflation for all to share.

The Tide Has Turned

Thanks for the upbeat report. I love hearing the worst is behind us. To celebrate, I made a few carefully selected shorts.

The Mark-to-Market Myth

When I saw the market jump on the M2M rules change, the contrarian in me wanted to short. It's just wrong, not a reason to buy.

We Had a Nice Run There, But Is the Bounce Over?

I have been waiting for signs of weakness during this run-up, and when we opened down this morning, I pulled the trigger and bought DXD which double-shorts the Dow 30. So far so good...

Mortgage Rates Drop to Record Low of 4.85%

Lock in all the low rate borrowing you can while you can. If inflation does return, these rates will be history.

Inflation or Deflation: Choose Your Poison

The fed is so scared of the prospect of spiraling deflation they are willing to impose inflation - which also solves a couple of problems. Inflation boosts the real estate values to "fix" the over-leveraged under-collateralized loans, and reduces the cost of paying off all this government debt with inflated dollars. It's time to be a borrower, not a lender.

How Do You Buy Spot Oil?

Great explanation of the fundamentals of oil futures vs. spot market and the wild ride we have been on. Now if we can just figure out when oil will "come back" from economic demand or inflation (dollar devaluation), or more likely, a combination of the two. I am hoping we don't repeat the stagflation of the 70's!

This Is Not Your Grandfather's Stock Market

That chart tells a great story. Volatility creates opportunities. Up or down, there is money to be made. Options premiums grow. Short-term trading becomes "normal". Let's just hope this doesn't go the way of the other "this is not your father's..." since Oldsmobile is long gone and the rest of GM may follow. Unless the government nationalizes everything, there should always be a market - even with increased volatility, capitalism continues and ultimately prevails.

PIMCO High Income Fund: Look to Swap Out

I was able to short PHK just before the Fed announced their liquidity bomb late last week, and although it had a 50% preimum at the time, it has one up significantly to now trade at 66% premium to NAV. Although I am seriously upside down now, I think I will hang with this to see how long it takes to unwind.