Stocks, Bonds And Commodities

They say on Wall Street, that if stocks and bonds point to different directions, bonds are usually right.

Bonds are pointing to Great Depression 2.0. No doubts here. Treasuries are at GD levels, corporate bonds are too, selling new bonds issues is almost as hard as in 1930s.

Stocks? I don't understand where are they pointing. Market is down big for the year. We had a local bottom, with obvious capitulation, on November 20. Market is up since then, but S&P didn't break 900 and trading in a 800-900 range. It can go either way from here.

The strangest thing right now is behavior of commodities, including gold. Fall of dollar is strange as well. This week commodities market is screaming "Inflation!". Dollar confirms. But Treasuries yields don't predict any significant inflation. More like deflation.

What's in future? Stocks don't say. Bonds say we are in GD 2.0 already. Commodities say inflation and recovery. Last year, when commodities and stocks were pointing to growth and bonds to recession, bonds were right. If they are right now, bad.

My crystal ball is all misty. The only thing I know is that dollar fall this week doesn't make any sense to me. If it continues to fall, I probably will buy DRR, to play on dollar recovery.

Opened TBT position today, as a way of shorting Treasuries. I'm also looking at ProShares UltraShort Lehman 7-10 Year Treasury ETF (PST).

Full disclosure: at the time of publication author had a long position in TBT and no positions in PST or DRR. Positions can change any time.