(Post in Progress)
Federal Reserve Governor warns that Fiscal problems make it more likely that Fed will have to keep interest rates low, even in the face of inflation.
http://finance.yahoo.com/news/Feds-Hoenig-Fiscal-strains-rb-2209393300.html;_ylt=AggbtDxrTUc89IyhK.nltEu7YWsA;_ylu=X3oDMTE1czFlNGNiBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawNmZWRzaG9lbmlnZmk-?x=0&sec=topStories&pos=7&asset=&ccode=
Foreigners cutting back on buying US Debt; Rates may rise:
http://finance.yahoo.com/news/Foreigners-cut-Treasury-apf-1402391707.html?x=0&sec=topStories&pos=6&asset=&ccode=
By the fiscal problems Hoenig speaks of (in the first article above), he means that the government will have to keep borrowing and running deficits. If the government keeps borrowing, borrowing rates should climb, stifling the recovery. To combat these, the Fed will continue to keep at least the prime rate low, so as to promote lending. The Fed will have to stop printing and buying mortgages, but it will keep rates low. This means that commodities have to rise, because they're the only safe bet. China and India too need commodities. The dollar is doomed, at least against the Aussie and the Loonie, for the next 3-5 years.
A Few Options for IRA/Long-term Account:
a. Long TBT (Inverse TLT - Short US Debt). The problem with TBT is that it is ideal for short-term moves. Because of daily compounding, it may not work well in the long-term.
b. Long PST (2X ultra short 7-10 year treasury.)
or Long TYO 3 X Treasuries. This has horrible returns, for some reason. Much worse than TBT.
c. TLT Leap Puts. Advantage: Good leverage. Problem: Not all IRAs allow Options.
2. Long PMs
Double long Gold ETF: DGP or UGL
Double Commodity long: DYY
Double long Silver ETF: AGQ
3. Long the Aussie Dollar. Via futures. Not for everyone.
4. EDC - 3 X Emerging Markets
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