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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Square_Dealings who wrote (29754)	3/31/2005 8:05:58 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

It's a work in progress, as each T-bill that matures comes off at a higher rate. As the yields climb and the curve flattens in the 2-3 year range (the 2-10 spread is 70 today), gcm.com (T-bill and other rate quotes, I'll put this in the header): bloomberg.com just start extending duration a little to capture higher yield. For my elderly folks, I have them at the moment about 35% in 3 months, 45% in six months, and 20% in two years (took 3.86% at yesterday's auction). 40% of the three month matures on May 12, and will be reinvested at a higher rate, then 40% more on June 2, etc. There is a 3 year auction on May 10, that I will use if rates are higher than currently (4.01%). treas.gov I'm not interested in the five or ten year. The rest is in their banks and brokerages, getting below T-bill rates, so I'm moving steadily to clean those accounts out, as the rates uptick, one auction at a time. I have them hedged in GLD for about 10% of this amount. Sure, they have a few shorts, puts, corn futures, and PM juniors, but I can't be going too hogwild on this strategy for them, although I think everybody should have some put strategies in place. On the question of the USD, get a futures account set up, so that if the time is right (primarily watch for the return of Uncle Ernie and money printing pediphiles), you can always using some flucht in die sachwerte leverage to hedge things. More importantly is safety, as I can't rule out bank runs, panics, and a mad dash for perceived safety. You should look at the prospectus of any money market, or income fund that you own. And bank CDs? Jeez, have you looked at the derivative exposure in the large ones? I don't think folks have a clue. You would gag at what they have in there, just filled with MBS and ABS, and I'm sure all kinds of swaps and credit "insurance". One of the aspects of this Bubble is that 401k plans have locked participants into these, and have called them "safe income", or "conservative income". It's another in a long series of travesties, and most have no other choices. This commentary holds true too: wallstreetexaminer.com Some may offer a "government securities" portfolio, but that's nothing more than Fannie, Freddie, and Sallie paper, which in turn has very small spreads over Treasuries, because of blind FCB buying. In the case of TD Waterhouse, they quietly sent out a letter to customers informing them that their money market will in effect be a loan to TD Waterhouse bank, called "TD Waterhouse money market" paying currently under 2%. How many people pay attention to not only the yield, but the institutional quality? When I complained, a manager allowed me to use Waterhouse "government securities", "because I'm such a good customer". Well, f*ck you too TD, as low and behold, when I popped open the prospectus, there were all the agencies once again. So I set up Treasury Direct to my brokerage account to avoid this. publicdebt.treas.gov