Two Ways To Play: Bubble Trouble for Treasuries
Strengthen your portfolio in good times and bad.
Bill Gross of PIMCO, the world's largest bond fund, believes the Treasury market is overvalued and displaying bubble-like characteristics. In terms of return relative to the next 10 years -- and given the potential of reflation -- these securities simply offer no return, he said in a Bloomberg interview.
This just a day after 3-month bill rates turned negative for the first time since debuting in 1929 and the Treasury sold $30 billion worth of yield-less 1-month bills.
Gross also acknowledged downside risk to the dollar: "Certainly the government and the Fed cannot continue to talk about the trillions of dollars of expansion of the Fed's balance sheet without the risk of the dollar going south. It is fair to say other economies are doing much the same thing. The dollar doesn't have to go south if all the economies reflate at the same time."
For more on the economy, see Professor Kevin Depew's Five Things You Need To Know: Fed Considers Issuing Own Debt.
From the Bull Pen: Professor Jeff Cooper had a wonderful write-up about Crude on the Buzz today. Oil has lagged the recent runup in metals lately and could try to catch up. Bulls who want to play could consider the ETF (USO) with stop at $33.
From the Bear Cave: Bill Gross believes Treasuries are a bubble. One way to play this is the Ultrashort Lehman 20 Plus ETF (TBT). Bears can consider this stock with a stop around $42.
Actionable ideas, instant analysis. Real-time from bell to bell.
Minyanville's Buzz & Banter - 14 day FREE trial
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter