Fed termites to infest bond market - Eric Janszen

[ProdigyofZen]

Re: Fed termites to infest bond market - Eric Janszen

Not looking for an answer directly to me, but I believe this article is of grave importance to the future. A man as powerful as Soros is advocating import tariffs and the complete overhaul of financial markets worldwide to give "periphery" countries a better advantage as he states. An article needs to be written on this.

[c1ue]

Re: Fed termites to infest bond market - Eric Janszen

I think some of the eager TBT buyers are missing a fundamental point:

If the Fed is buying long term Treasuries, the objective of this action is to drive yiels on these securities DOWN.

That means your double short is being attacked by Fed money.

This is why I believe it is MUCH too early to buy TBT or any Treasury short fund.

The time to do it is either when the Fed stops buying because inflation is rearing its ugly head, or the Fed is prevented from buying by some other political reason.

[FRED]

Re: Fed termites to infest bond market - Eric Janszen

Thanks EJ,
I'm sitting in a predominately cash position which has served well, but do not want to be too conservative in getting back into the market. My sense is that the lows of Nov. 20th will hold (at least for the foreseeable future) based on the Feds aggressive actions.

I understand your point that the Feds actions are not healthy for the structure of the system, and that we won't have a truly healthy market until the debt has been deflated one way or another. But since all logical paths lead to inflation and the speed of the collapse subsequent response is so dramatic and fast, it seems we could be in for a prolonged bouce (measured in years) which may or may not turn out to be a dead cat bounce.

Curious if you and others feel Nov. 20th is a solid bottom or are you sticking with your target range of 5000 or 6000 for the DOW? And if you are sticking with your target range, any revised thoughts on timing and trajectory? I recognize the current environment is riddled with variables that make predictions very difficult, but I'm still interested in people’s thoughts.

Thanks!!

Great question! Can you post it to Ask EJ for his roundup of Ask EJ's tomorrow? Thanks.

[FRED]

Re: Fed termites to infest bond market - Eric Janszen

I think some of the eager TBT buyers are missing a fundamental point:

If the Fed is buying long term Treasuries, the objective of this action is to drive yiels on these securities DOWN.

That means your double short is being attacked by Fed money.

This is why I believe it is MUCH too early to buy TBT or any Treasury short fund.

The time to do it is either when the Fed stops buying because inflation is rearing its ugly head, or the Fed is prevented from buying by some other political reason.

We have had a "Time to Short Treasuries" article drafted and ready to go for over a year. Still waiting. Seems to us that only US creditors can spoil the Fed's "buy across the yield curve" plan. But first a catastrophe has to befall US creditors that makes the outcome of the choice to allow the dollar fall less additionally disastrous than the choice to continue to support it. That scenario is difficult to see.

[Slimprofits]

Re: Fed termites to infest bond market - Eric Janszen

We have had a "Time to Short Treasuries" article drafted and ready to go for over a year. Still waiting. Seems to us that only US creditors can spoil the Fed's "buy across the yield curve" plan. But first a catastrophe has to befall US creditors that makes the outcome of the choice to allow the dollar fall less additionally disastrous than the choice to continue to support it. That scenario is difficult to see.

Thanks Fred!

[jiimbergin]

Re: Fed termites to infest bond market - Eric Janszen

we are already shorting it at 40.... the TBT, the time is nigh!

I too am already in TBT, but only in a small way right now.
Jim

[ProdigyofZen]

Re: Fed termites to infest bond market - Eric Janszen

yes at 46 today, it is a good trade for now.... and i stress trade. not investment

[magicvent]

Re: Fed termites to infest bond market - Eric Janszen

TBT has moved from 35 in December to 47 today. Since you don't believe it is time to short treasuries, do you expect TBT to move lower again?

[Chris Coles]

Re: Fed termites to infest bond market - Eric Janszen

Not looking for an answer directly to me, but I believe this article is of grave importance to the future. A man as powerful as Soros is advocating import tariffs and the complete overhaul of financial markets worldwide to give "periphery" countries a better advantage as he states. An article needs to be written on this.

Try Adventure and Essential Freedom - The missing elements of a Rich Cultural Life in a Successful Economy http://www.itulip.com/forums/showthread.php?t=5166

[*T*]

Re: Fed termites to infest bond market - Eric Janszen

I've a new investment thesis for gold: it's the asset that outperforms when everyone else keeps fking up.

exactly why i own it

[strittmatter]

Re: Fed termites to infest bond market - Eric Janszen

We have had a "Time to Short Treasuries" article drafted and ready to go for over a year. Still waiting. Seems to us that only US creditors can spoil the Fed's "buy across the yield curve" plan. But first a catastrophe has to befall US creditors that makes the outcome of the choice to allow the dollar fall less additionally disastrous than the choice to continue to support it. That scenario is difficult to see.

I don't know if this guys' possible scenerio is too textbook or simplistic or out of sequence to hold any water, but he talks about how unintended consequences of an economic stimulus will turn the tide for US treasuries...........

http://perotcharts.com/2009/01/daily...hru-1-16-2009/

In something like a cruel joke, because all the banks are still holding the bad assets that the original $700 billion Troubled Assets Relief Program was supposed to buy, the new “Plan B” may include going back to “Plan A,” this time around forcing the government to actually buy those bad assets.

The same problems exist with the old plan, and no matter how it’s attempted, it will require a lot of money. In addition to this new Plan B, the new stimulus package will require additional outlays for infrastructure investment, as well as for the additional stimulus plans that are still to come.

Here’s where the aforementioned cruel twist of economic fate comes into play. The government will spend trillions of dollars of additional taxpayer money that hasn’t even been collected, yet. Even so, the Treasury Department will have to issue more debt. That means the Federal Reserve will have to print and spend more “worthless” paper money in order to pump liquidity into the failed U.S. credit system.

In spite of all that, of course, the stimulus package should eventually revive the U.S. economy.

And when it does…the hugely inflated bubble in Treasuries will burst.

Investors poured money into safe-haven Treasuries and accepted yields so low that in any normal market they would be unacceptable. When the investing horizon looks more promising, investors will dump their low-yielding Treasuries and venture back into the markets for real estate, the domestic equities, international stocks, corporate bonds, junk bonds, emerging economies, and all the other usual investment nooks and crannies that offer greater return potential.

The cruelest twist of economic fate would be that the Treasury Department will eventually have to raise interest rates to generate demand for the debt they have to continue to issue. And higher interest rates are the last thing our struggling economy needs.

Anyone have a thought on it?

[cobben]

Re: Fed termites to infest bond market - Eric Janszen

"But first a catastrophe has to befall US creditors that makes the outcome of the choice to allow the dollar fall less additionally disastrous than the choice to continue to support it. That scenario is difficult to see."

The financially motivated buyers of US debt have probably mostly already backed off from buying much more. Political pressure on pensions funds, PIMCOs, etc, might help to keep demand up to a certain extent. (This is happening in for example Sweden also.)

It's the possibly sea-changing (or not?) motivations of the geopolitically motivated foreign national buyers of US debt that are difficult to get a handle on.

[vanvaley1]

Re: Fed termites to infest bond market - Eric Janszen

I don't know if this guys' possible scenerio is too textbook or simplistic or out of sequence to hold any water, but he talks about how unintended consequences of an economic stimulus will turn the tide for US treasuries...........

http://perotcharts.com/2009/01/daily...hru-1-16-2009/



Anyone have a thought on it?

The 'cure' of the Danaides curse. Think plugging the holes in the jugs will hold til the bath is full then the bath will spring leaks. The curse of the Danaides continues. No fair rewriting Greek mythology.

[Glenn Black]

Re: Fed termites to infest bond market - Eric Janszen

George Soros has done an excellent historical review of the system, how it works, and how we got here.

Value of George's solution for the future is yet to be seen.

Fred, I would suggest putting a link to this article on Itulip's front page as a very useful primer for the new arrivals, aiding their quick study and comprehension.

[metalman]

Re: Fed termites to infest bond market - Eric Janszen

George Soros has done an excellent historical review of the system, how it works, and how we got here.

Value of George's solution for the future is yet to be seen.

Fred, I would suggest putting a link to this article on Itulip's front page as a very useful primer for the new arrivals, aiding their quick study and comprehension.

mega posted it to news under the title Soros sez we are all F*cked!

to put it back on the front page, add a new post to it.. that'll bump it to the top of the list and put it back on the front page.