hausenpepper

Waiting for the Inverse Treasury ETF's Glorious Day

On a sidenote, there has been much talk about how these leveraged ETF's deteriorate over time. If your worried about ETF tracking and willing to abandon the leverage, you can actually SHORT the TLT where the deterioration over time helps rather than potentially hurts you.

Waiting for the Inverse Treasury ETF's Glorious Day

Don't forget PST also, PST is the 10 year inverse short. The FED has specifically targeted 10 year rates since the 10 year is what most mortgages are pegged to. Once that artificial reduction in rates goes away, that should pop.

Long Treasury Bonds vs. Short (Deflation vs. Inflation)

The issue here is that the FED has shown they will continue to PRINT BORROW and BEG for more money to push so much cash into the system even though the velocity has slowed.

When capitalizing the banks doesn't work, they will continue to be the buyer of last resort for nearly all assets. This fed isn't like the fed of the 1930's or other deflationary periods, this is a highly proactive fed which would rather see inflation than deflation.

The last major depression we went through we had a fed who was less willing to debase the dollar and let us take our medicine we had coming. This fed is willing to continue to fund zombie institutions, deficit spend, and do everything in its power to CREATE inflation. If deflation is going to be as bad as Hoisington has played out, you will just see unprecedented government intervention to artificially stave it off.

When things get traction, we will have so much liquidity in the system, it will take time to get that money out - and that period will result in the nominal price of real goods rising dramatically as velocity grows and there is SO MUCH money floating around.

This also makes sense for the government who has spent its heart out. Our debt to GDP ratio ( not counting off balance sheet liabilities like Social Security and medicare ) are all at historical highs? We will have to grow GDP at a ridiculously high rate over the next few decades to meet these liabilities, or we can just inflate our way to cover these debts in the future without cutting benefits or raising taxes.. ( The benefits will be cut in real buying power dramatically, but in notational dollars not so much. ) Which strategy with the monetary gods employ? Raise taxes or just inflate? What is going to have less of a political fallout?

Also, with personal balance sheets wiped out through the loss of home equity, some nice inflation solves that problem too. Although savers are punished, and the spending power of these upside down homeowners is diminished, they now have incentive to keep their homes and stem the foreclosure problem.

I think continued deflation for the next 12-24 months is likely as the spending packages take effect, but my opinion is that inflation will be the problem for the medium term ( greater than 2 years ).

Treasury Bonds: The Short of the Century

I think finally your short time has came. 0% yield on 30 day and 2.1% yield on the 10 year

Pep Boys: Insanity Dominates the Share Price

I have went ahead and looked at PBY. I got caught in a value trap like this in Circuit City. Problem is that the company hasn't posted a positive profit in over 3 years. Sure, they have 445m on their books to continue to burn through, but add in an artificial dividend ( paying a dividend when the P/L is red ) and you don't have a business which is that impressive. I agree that its way oversold. Liquidation value should be better than this market cap, but I digress - this is not some amazing company. Get a cost cutter in there with a plan for profits then its a strong buy, else you might have a value trap...