Tuesday, November 25, 2008

Market Is Telling Something

I just don't get the message. First of all, up three days in a row. Great! Maybe time to short, but several gurus, including immensely respected Todd Harrison, are neutral, so me too. Strange picture on the treasuries market. I thought that failure to deliver (what on the stock market is called naked shorting) several trillion dollars in size is just a temporary blip, but it's going on for at least three weeks now. There is only one explanation possible: huge unsatisfied demand for treasuries. Which means panic: financial world is buying the safest investment vehicle. At the same time, dollar fell significantly against practically all currencies and gold went up sharply. Gold price is just another side of panic: "safest" way to hold your money in valuables. Dollar fall is not that clear (looks like I sold UUP just in time).

If dollar grew up as well, the message would be clear: deflation and depression. As it is, not clear. Let's wait and see. Maybe it's time to short treasuries, they just can't get much higher, by definition. They are at 1930s level already.

Full disclosure: at the time of publication author had no positions in UUP and no positions in other stocks mentioned. Positions can change any time.

Seeking Alpha Certified

1 comment:

PGvinter said...

Alex I would love to talk to you about your views on US Bancorp and Wells. Also have a question about your take of the latest fed liquidity program. shoot me an email with your contact info pgvinter@gmail.com

Thanks,

Phil