I wonder how that will affect the consumer psychology. UR at 10%+ that doesnt go away, U6-UR spread at records, hours at lows, wages and salaries dropping. Month after month I'm not even counting on this on my bets but its quite possible there will be some japanification of the US consumer, why have a large family and low savings with a labor market like this?
Matter of fact this another argument for Fed stays low for longer, their own actions of a quick exit could further hurt the consumer psychology. The Fed needs to be pretty darn sure the consumer is back and healthy in order to put on the breaks(Which is why Jef Lacker belongs to mental not a monetary institution), but I cant count on the fed being prudent, they could make a mistake
You just got to take your inner criminal hat off to Tyler at zerohedge, the guy must have broken the world record of distributing copyrighted and private material without getting shutdown or sued Now hes got the Whitney GS sell note http://www.zerohedge.com/article/meredith-whitney-why-be-greedy-goldman
Financial headwinds will only abate slowly: Kohn 1:45pm Today1:45pm 10/13/09 Inflation expectations might fall: Kohn 1:45pm Today1:45pm 10/13/09 Deflation is bigger threat than inflation: Kohn 1:45pm Today1:45pm 10/13/09 Recovery will be more gradual than V-shaped: Kohn 1:45pm Today1:45pm 10/13/09 Kohn doesn't expect V-shaped recovery 1:45pm Today wow, someone stop this man, front end is soaring right now
I'm looking forward to being able to get bullish on risk assets. I have no permanent bias with regards to them, I'm not one of those perma bears/US bashers. As soon as a meaninful correction comes I plan to get long and use strategies like -"TheIvyPortfolio" strategy, essentially go long things like stocks, corp bonds, commodities, REITs when they are above the 200MA and earn the same risk premia with lower drawdowns than buy and hold -Long commodity index futures(to lever up) and Brazilian stocks to play the boom -Long Buffett 10 largest stock positions to play his tendency to outperform the averages(by as much as 10%), maybe the stock portion of the Ivy Portifolio will be structured this way instead of using DIA or SPY -Fat tail way OTM calls on commodities
I could structure my networth like this. Instead of keeping cash earning 0% I would be 80% invested in a http://www.theivyportfolio.com/ type strategy, the rest would be in cash for liquidity and buying power. Meaning I will hold multi asset classes ETFs and Buffett stocks trying to earn 10% or whatever a year. In the meantime I will be researching and trying to find a 'big bet' type situation where I can 'go for it', to try to gun for a 20-50% yearly return. This year was the eurodollar and ZQ trades(and the puts that were losses) other than a few shorts and longs I'm mostly in cash(earning nothing) and reluctant to go long risk assets to earn premia because of this momentum mini-bubble But a correction could change that
One could try to outalpha the ivyportfolio by doing stuff like -Instead of going long government bonds above 200MA, go long Bill Gross bond fund, although I'm not sure that is possible through IB for non-US citizens. He will beat the IEF in all likelyhood -Going long Buffett stocks instead of SPY or DIA, rebalance quarterly -Give less weight to REITs and government bonds since they are probably not great long-term value It involves risk of course to try to outperform the system. But I just find it too damn irresistible
I antecipate 2010 wont be much different from this year. Will still be big on betting fed staying low -Buying fed futures in the 6-8month from expiration zone and selling when they are in the 3month from expiration. Picking up the historical premium -Holding Dec eurodollar calls -Will short big time S&P emini futures on a break of an important technical level(by definition this monster rally wont be looking good if it is breaking key levels). I'm assuming the correction doesnt come this year
Then when risk assets correct to more resonable levels. Will go long multi asset classes on close above the 200MA -20% developed world equities(maybe the Buffett strat, although having to buy WFC will make me puke) -20% EM equities(probably EWZ) -25% commodities(bit overweight to try to generate some alpha) -20% bonds(pimco stuff maybe) -15% REITS(ugh, specially with the US tax on dividends for foreign investors)Maybe I should choose something like Asian REITS Apparently the pimco funds are not avaliable through IB for foreigners. There is some pimco funds traded on the NYSE but they just seem glorified bond ETFs not managed by Gross