LIBOR continues to rise and risk-free rates drop.
This is amazing in a deflationary Prechterish way.
We have been numbed by these clowns for so long because the spouted theory without any real catalysts.
Well the catalyst is here.
The S&P500 is 7% off its all time high. No big deal. That is why it's imperative to lock in gains and take shelter. Buy low, Sell high, that's what we've done since 2003.
I've sold and rotated into Investment Grade Bonds which are are trading at 200 basis point spreads on average. I've also bought Icelandic Krona at 12.5% yield (carry trading with the dollar). I own precious metals, but not in size, not yet. When the Fed gets a handle on this, and they overshoot, that's when gold goes parabolic.
The way I see it the Fed needs to cut rates to 2% tomorrow for this to be fixed. That's not going to happen and we now risk a major debt unwind/deflationary spiral if Greenspanesque ACTION is not taken. Yes, I know that will create other problems, but the point is to solve THIS problem, the Fed needs to PRINT MONEY NOW and monetize this bad debt before it creates MORE bad debt...Commercial RE, high yield,...
I encourage all to buy into a diversified pool of hedge funds if you are financially able, the Japanese figured out a long while ago that was the only way to earn an acceptable return in their world of low yields. This is my firm's second best year (2000 was the best) in absolute terms and probably the best year in alpha terms. I expect it to continue into 2008, particularly as Distressed opportunities begin to emanate.
God Bless America and the World because America needs God. |
