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10/25/10 Midnight Report: Show us your TIPS!

|Includes: BAC, Datalink Corporation (DTLK), RSH

And now it has come to this.  With the Fed set to print more dollars than there is available rag paper (though they will soon be able to use the tattered clothing of the homeless and long-term unemployed to make up for that shortage), the US Treasury issued TIPS at a negative yield for the first time in history.  Wow.


Just think about that, Investors are willing to earn a yield on their fucking INFLATION PROTECTED securities that is below indexed fucking INFLATION because either they believe in the delightful French interpretation of inflation which means they are happy to avoid protection to get it, or they realize that QE2 (and its successors QE3, QE4, and QE holy shit we've run out of paper) is coming and thus they are willing to give up some of that inflation protection to get any protection at all and not figuratively be left standing completely exposed and merkin-less.


Buying a negative yield TIPS to protect your portfolio for the coming hyperinflation (and of course, hyper inflation is coming because of the aforementioned QE2 and not because it googled Alaina Huffington) is like buying a can of mace filled with visine to protect yourself from muggers.  It may stun a bit, but in the end, what was in your wallet is going to be gone.  So do as the Fed wants and hurry up and get your money in to the market because shortly the dollar isn't going to be worth anything, but just be sure to pull your money out before people realize the dollar isn't going to be worth anything because that won't end well either in the least fun absurdity since the Simpson Paradox (and Money McBags is not talking about this, but about the fact that the gloves didn't fit, and yet they still shouldn't have acquit).


Speaking of currency issues, the G20 met this weekend in an out of the way, yet highly rewarding spot that could only be reached with the help of a little man in a boat.  At the meeting, the G20 decided to try their best to avoid a “competitive devaluation” of currencies, to avoid letting trade balances get too out of whack, and most importantly, to avoid fat chicks.  The problem is that what the G20 actually committed too is looser than a diarrhetic's stool after chugging a six pack of metamucil as members refused to be tied down to any precise metric to avoid further currency issues.  As the WSJ pointed out, the strategy to avoid currency wars simply relies on peer pressure.  So to put that in perspective, avoiding a global currency clusterfuck now comes down to reminding China that they look fat in those jeans and telling Japan that all of the other cool kids are doing it.  Seems like a plan to Money McBags.


Aside from currency issues, the only macro news today was relatively positive as sales of existing homes rose by 10% which is the biggest rise on record (no word as to whether it was also the biggest rise on tape cassette or 8-track).  The number destroyed analyst guesses thanks to a 2.4% decline in prices, record low mortgage rates, and 35 fucking percent of all sales being distressed or foreclosed upon houses.  Not including shadow inventory and shadowier data, there remains ~11 months of inventory on the market so even though the relative jump in existing home sales prices seems jizztastic, we can't forget that the absolute sales were still more fuckawful than John Meriwether's track record or non-rhyming poetry, as they were the 3rd worst in history.  So while the relative is nice, we need to keep abreast of the forest through the trees (or the adam's apple through the make-up, if you will) and not lose sight of the absolute.


Finally, Ben Bernanke was out today....READ MORE...

Disclosure: No Positions