Minyan Mailbag: Any Safe Places to Hide?
With inflation, the rich get richer. In deflation, everyone loses... even the wealthy.
With the Fed seemingly cutting rates more and the government embarking on a huge stimulus package, it seems that they are going to fight a recession tooth and nail by making US dollars more and more available. This is what the bearish cult has been predicting for years and now it is here. Do you feel that this is priced into FX markets and precious metals?
You were right on the metals/energy theme, how do you feel now about it? There is becoming a shortage of places to put money that are safe. Yields are very low now on CD's and treasuries. Is it possible that the precious metals could be the next bubble about to inflate, with people parking money there as a safe haven?
Great question. I suppose the issue is one of timing. If this plays out how I foresee it--and there's no guarantee that it will--the dollar will rally and asset classes will deflate. I don't believe that's priced into crude or metals (or commodities in general) but they could well outperform on a relative basis (as opposed to absolute gains).
I've been trading from the long side the last few sessions--making to take 'em, so to say--but I believe we're in for a long, hard road. That doesn't mean straight down, it just means that we need to be conscious of the environment and not get caught up in the hype when the inevitable rallies arrive.
To your last point, I can't imagine there will be alotta places to hide if (when) this scenario arrives. That's sorta why the Fed (and global central banks) has been trying to inflate/reflate. With (hyper) inflation, the rich get richer. In deflation, everyone loses... even the wealthy.
And so it goes, the battle drum beats on...
Good luck, my friend.
GET THESE INSIGHTS AND MORE IN REAL-TIME. CALL 212-991-9357 FOR A 14-DAY FREE TRIAL TO THE BUZZ & BANTER OR CLICK BELOW.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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