There are two schools of thought at play here. One lies in the fact that markets are dislocated from reality, ignoring the slack in the global economy and deleterious effects the decline in WTI will have on the heavily invested energy sector. The other side of that coin is pervasive central bank planning that will succor asset prices, which will, inevitably, lead to higher prices.
If you’re into buying gold stocks, due to the central bankers, it’s hard to buy them here–following a 1 week 15% gain.
If you’re looking to buy equities, it’s a little scary to do so, as oil breaks $40 to the downside.
REITs, UTES? That’s a hard trade too, since those sectors have been bid up to new highs.
Where is a lad to place his hard earned cash?
For me, the sole destination for all of these questions is the ark, via TLT. Also, I just added a short position, which was mentioned in Exodus today. On the long side, I like nothing–but Exodus is spitting out oversold signals for some key names.
Bottom line: Ignoring the drop in crude over the past month has proven to be a profitable course of action. Whether this trend will continue is anyone’s guess. With my money, I prefer to sell short the basic materials and remain idle in treasuries and cash.
This is the ebb tide. Time to make a move.
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We have reached a permanently high plateau.
You’re a moron of the first magnitude.
Dr. Fly, can you explain what you mean in prior posts about the Arb trade in government bonds between Treasuries vs. Bunds and JGBs? In a nutshell, are traders selling short the Bunds and JGBs and buying up Treasuries? Thanks for the insight.
Treasuries have a better credit profile than any state in Germany, yet have a lower yield, due to ECB QE. As long as this relationship exists, going long TLT is a good play, especially with Italian yields lower than ours.
Makes sense. Strange world we live in indued.
We will have higher stocked markets because the shadow of Bernanke’s beard deems it necessary. Fly was fond of saying Don’t Fight the Fed.
Then one day the bottom will fall out. I think that could be years from now. Yes it seems imminent and it’s completely unpredictable. Energy market implodes? Oh well, bad shit has happened before. Remember the entire banking and auto industry on the precipice? We’ll paper over it till we can’t anymore. Then we’ll have a fine mess to deal with and likely a war as an alternative to collapse from the inside.
yes…decades from now
http://www.telegraph.co.uk/business/2016/07/31/texas-shale-oil-has-fought-saudi-arabia-to-a-standstill/