Tuesday, May 25, 2010

Update 5/25

Tim Geithner is in China this week upon bended knee promising our Chinese creditors that we'll slow our borrowing at some point when our economy recovers. I wonder if their students laughed at him again; I know I am. At this point, the only thing keeping foreigners buying our Bonds is the fear in their own country's markets. We as a nation must keep bond rates low like Japan has over the last two decades if our Government has any hope of retaining solvency. Japan did it because of the frugal nature of their population, which worked tirelessly to save money and sunk it into Japanese Govt bonds at very low rates. We are no so lucky; Americans are still overindebted and spend too much. It's rather sad that the only thing keeping us afloat is the misery and fear in other nations. But that is where we are.

This morning again the overseas markets are heading south; yesterday was positive for most of the day but at the end it fell apart. From here, I'm going to "buy" two hundred of the ETF TLT at the open, which is bonds.. the more the stock markets go down, the more people pile into bonds. I'll put a six cent stop loss on this one. The markets simply refuse to rally; yesterday's valiant attempt ended in failure, and I fear that from here we're headed south in the DOW to perhaps the 9,000ish mark within a few weeks. My own opinion is that deflation looks to be setting in along with the fear in Europe.

Update 4pm:

TLT opened today at 99.65 and promptly went south on me, closing at 98.57. Looks like my timing sucked yet again. I'm going to adjust the stop loss to three cents. But I stand by this trade; the markets again overall look weak; again today the NYSE opened with Rule 48, then had "digital trading errors" for the first 45 minutes. That was certainly confidence inspiring, though a late rally did end the day in the green. I'm adjusting my sell order on the Euro to $1.18 with a three cent stop loss. One day we'll see parity with the greenback, but strong support around $1.185 needs to be broken.

1 comment:

  1. Thanks for the kind words regarding my blog Inflection Point at: http://notionalvalue.blogspot.com/.

    Timmy G. is an embarrassment.

    I read your article Update 5/23 & The Worst Case Scenario at http://themeanoldinvestor.blogspot.com/2010/05/update-523-worst-case-scenario.html
    Your end game scenario is interesting and all to real. And, regarding your comment: I couldn't agree more; you can not cure a debilitating debt load with more debt. I have commented on this throughout my analysis of the dollar.

    See: The Dollar/Euro at http://notionalvalue.blogspot.com/2010/05/stock-market_14.html and The Dollar: The "Flight To Safety" Is On at http://notionalvalue.blogspot.com/2010/05/dollar-flight-to-safety-is-on.html

    The larger picture is the deflationary effect this debt will have as it is restructured, reset and defaulted on.
    See:Inflation? The Dollar & the Great Unwinding at http://notionalvalue.blogspot.com/2010/02/inflation-dollar-great-unwinding.html

    Your Lehman 2.0 post at http://themeanoldinvestor.blogspot.com/2010/05/lehman-20.html is great. I will be reading more of your blog; thanks!

    Keep up the great work in exposing this financial Ponzi scheme and the elite corporate socialist who have captured our government and are destroying our country.

    Thanks again! And, please keep reading Inflection Point at http://notionalvalue.blogspot.com/