Sorry I haven't had much time to post. Last week and this week are very crazy so don't expect much over the next few days.
I wanted to put up two charts tonight that I thought were interesting. First let's start with the dollar trade over the last few weeks:
Ouch! Surprisingly, treasuries(which are priced in USD) have been catching a bid despite the violent sell off we have seen in the dollar:
What this tells me is that there is a lot of fear out there. Investors continue to gobble up bonds on the long end of the curve despite huge increases in inflation combined with a weaker dollar.
This makes no logical sense of course. That being said, nothing really has in the few weeks!
As we continue to print money via QE, the hopes and dreams of a strong USD continue to disintegrate.
The way I see it: The only reason treasuries are catching a bid is because people basically have no clue what to do in this choppy/crazy market. This market is tough right now folks. All you have to do is look at the huge drops in trading revenues on Wall St in Q4 if you want to see how tough it is out there.
The Fed has created total financial chaos with their "funny money" policies. Investors are taking enormous risk as they speculate on everything from commodities to junk bonds as Ben's "cheap money" continues to slosh around the system.
This is not going to end well folks. In fact, if the market continues to stall here things could get rather ugly in a hurry.
I see no confidence among investors right now. The fact that rates are steady tells me people are so scared right now that they are willing to buy 10/30 year treasuries at a 3% yield despite huge inflationary risks.
If inflation rises to just 5% annually this paper will be guaranteed annual losers and let's face it folks: Inflation is already here. Just look at food and gasoline prices.
Things are starting to look very grim. I am expecting a pullback here shortly and I plan on buying some resource stocks after a nice correction. Everything is still too expensive right now after the recent rally we have seen.
Folks IMO,It's time to start investing against the dollar and placing all of your bets on gold is not a smart way to do it after it's recent run. Gold looks very sick to me right now and I wouldn't be surprised to see a pullback. I still plan on holding what I have left..
I think you need to spread your risk around in a variety of hard assets via resource stocks and other metals. I am working on a list of ideas. More on this later.
Have a great weekend.
Let's go Steelers!