Loading ...
We are saved (for now) as far as I can tell. The IMF/G7 will come up with a plan to restore secret bank lover trust between banks, maybe forcibly, and lending will resume at lower marginal costs. Everybody and their retarded brother will figure out that this is going to cost way more $$$ than anyone (mainstream) thought, and it will lead to inflation, which will lead to higher interest rates to restrengthen the dollar. Commodities will do well once the velocity of $ speeds up again. Gold, in particular, will go up in increments every time CPI numbers come out, surprise bailout numbers are announced, and/or as things get more expensive.
Just watch, days to weeks from now we will hear about ugly inflation as the sheer amount of $ involved is going to be staggering (6- 10T globally?) – so get long Gold, TBT and have fun in this little rally. Whatever they do now, they are going to come out with language that appears to minimize inflation. In other words, listen to fly, but pick up some real gold and silver too just in case they mad max us. My gold trade is to blend ETFs and physical, and the plan is to shift into more physical if it gets ridiculously high (and incrementally sell half back into dollars).
I guess my question is, when does the market get long the inflation trade? During, or after the upcoming “intrinsic value” play? Does it overcome the value trade as the market goes up?
We are going to run up hard and fast (baby) if nothing BAD happens over the weekend and next week.
(bad things: major US bank or insurance co. failure, major European bank or insurance failure, geopolitical incident, fatcat party, palin mauled by a bear, etc.)
I really like the TBT play, thanks Fly (and Bruce the Juice).
While the market chops around and assholes on the internets try and figure out what the next chop is (good news vs. bad news), the invisible hand is going to put on a rubber glove and forcibly clownfist the credit markets into functioning again (maybe a 2 year nationalization of the banks at the expense of shareholders?). Horse heads will be sent to homes of CEOs of auditing firms and anyone else in the game, and their kids will have exploding chips implanted into their brains if they fuck around.
We could see super high interest rates within 4 years, like in the early 80s. Inflation will be present everywhere in the world relative to commodities, and I bet that participating nations in these coordinated monitary actions will move forward with a unified global interest rate policy (maybe at the cost of the Euro?). Then they will regulate commodities amongst participating nations, as needed, to maintain the purchasing power of the currencies of this new syndicate.
Keep short on the yield curve… we may enjoy locking in rediculously high interest rates on good paper if we hyperinflate. Imagine 15% per year for 30 years in one trade? $100K becomes $6.6 Million! Even if inflation averaged 5% for those 30 years, your inflation adjusted gain would be $1.7MM.
Top pick for a short term scalp: EVM under $8 locks in a tax free 9-10% for CA residents. Could pop back to at least $9-10/share on any implication that the sky isn’t falling. The risk in this trade is that the inflation play will overwhelm it, or that the machine really stops in CA and other at risk states, in which case we have much bigger problems.
DISCLAIMER: If you buy EVM, Romanian goat belly futures might tank, and you may lose money.
I heard gold is cheaper to buy in Mexico, hey Danny, you have any contacts there?
Nice post. I like it all, except that EVM thing, as I think all California municipalities will be financed via gladitorial Thunderdomes in the next twenty years.
Point of clarification. Whilst Fly has endorsed it (to his credit) since, the original TBT recommender here was Bruce the Juice.
______
You will see LT Treasuries rise- for no other reason than the simple fact of doubling of our debt. I’ve been buying puts on TLT for the last few weeks and also stocking up on TBT. This truly is a generational play… Think about it for a minute- over the course of the last 60+ years the average 10 year Treasury rate is 4.84%. Where’s it at now??? exactly. Where was the 10 year in January 2000? 6.5% In July, TLT was in the low 80s- where was the 20 year Treasury, which it tracks? 4.5%.
This is a no brainer…
Jake,
Thanks, and I appreciate the clarification regarding TBT (see above). The EVM play is a bounce off the contrarian-doom trade (inverse doom?), which should kick off next week if all go well over the weekend with the G-Unit and the IMF. I’ll take principal out at 10 and let the rest ride to 12. I’m betting that they won’t let states go bankrupt, and that any hint at backstopping munis will be enough.
They have to backstop munis in at risk states, or it triggers insurance and reinsurance contracts. When those can’t pay, it will be derivatives and pension fund mayhem. The gov would rather inflate us and chase it with rate hikes with a forced credit market resumption, than let the states default.
buylo,
All my contacts lost their heads.
I want to load up on TBT here.
Good Post DSB.
Also, while we’re at it, I went long on Friday afternoon by buying Nov puts on SMN… If we’re in for a rally next week, the drop in SMN should be steeeeeeep. Last week went from low 60s to low 100s in 3 days.