Helicopter Ben lives up to his name!
By buying US treasuries and MBS, Ben is printing money to essentially expand the US balance sheet by $1+ trillion. It's a good time to be long gold and commodities, since he is devaluing the US dollar.
I think MCD is still a good play since a high % of their profits come from non-US markets. But now, I think SLB might have more legs and DE might be dead money. Thoughts?
Lulu: I think the market recovery still has some way to go. I'm looking to sell over $10.
GS: I'm still a bit ansy about GS and the US banks overall, since I have no idea what moves those stocks. I wonder if we should put a tight stop loss on GS of say $80.
Aside, I like the new acronym for AIG: arrogance, incompetence, greed.
posted by Junk Bonds @ 3/19/2009 11:35:00 PM
1 Comments:
yep, the deflationary spiral may yet be avoided but at the cost of letting loose some nasty inflation genies! I doubt either Bernanke or Obama have the political courage to turn off the taps when the credit starts to flow again. The very idea that gov't can control something as complex as the global economy with crude instruments like the Fed funds rate and just printing money is laughable. You don't need a Ph.D in economics to tell you that this latest move is Bernanke's 'all-in' move.
The mere fact that he is doing this means that private capital will not be compensated for buying longer dated treasuries. He is fixing the market for govt bonds and Econ101 suggests that soon the Fed will be the only buyer of Treasuries. What then for an encore helicopter Ben?
If the bond vigilantes aren't allowed a free market in which to buy and sell Treasuries without govt interference, then they'll just have to buy gold. Or is the fix in on that market as well? This is becoming a banana republic with mob rule!
I was early on my purchase of TBT (short US long bonds)in December. I bought after the dip, when Bernanke threatened more extreme unconventional measures, but i really should have waited until he played his all-in!
Oil has rallied with other commodities this week and SLB has kept up. I think oil will rally with the markets in general. (if there is a continued rally)
DE is a hard call. It could be seen as a infrastructure as well as Ag play.
Lulu is not even on the radar in this kind of market. Too bad really, the first potential hyper growth stock, gets trumped by bad timing! I think $10 is optimistic looking at the chart. That's a %25 move from here (~$8). Maybe we should hold our nose and sell at $9?
GS - my bet is that if Geithner can just lay out some reasonable plan or if the suspend mark-to-market and call it something like mark-to-fantasy, that financials will rally. I'm not holding my breath, however so a stop loss at $80 and maybe a sell at $110 would be another 10% rally from here ($97)
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