-- Published: Wednesday, 30 March 2016 | Print | Disqus
The Smart Money — i.e., the same clowns who hang on Yellen’s every word and who make an obscene living throwing Other People’s Money at financial garbage — is saying it’s time to throw some of your own hard-earned cash at inflation hedges. Specifically, Black Rock recently joined Pimco in pushing inflation-hedged bonds, and gold. This is like Time magazine picking the Colorado Rockies as the team to beat in 2016. In other words, a bet you can fade with perfect confidence. If you had any doubts about this, consider that the ‘inflation’ the institutional hacks foresee is based on tightening labor markets and firming oil prices. Seems these guys actually believe the U.S. economic recovery is for real. Whatever the case, investors have given Black Rock $4 trillion to play with, implying that the firm’s bet on inflation may already be getting a tad crowded.
We think it’s a good time time to double down on deflation, which in case you hadn’t noticed is about to swallow the economies of Europe and China. In the meantime, as long as Black Rock, Pimco and their ilk remain steadfastly on the wrong side of the bet, there will be plenty of upside for us in long-term Treasurys and other deflation hedges. My long-term forecast for the 30-Year calls for 1.64% yields, versus a current 2.61%. If my target is reached, capital gains potential would be enormous. Does the chart suggest that T-Bond prices are about to fall (see chart)? Perhaps no one at Black Rock or Pimco can read a chart? That would seem to be the case, given that they have been nothing but wrong wrong wrong on interest rates for years. Concerning gold, maybe they’ll be right — although not for reasons of inflation. Rather, with the global financial system primed to collapse, bullion might benefit. Whatever. It’s good to be on the ‘wrong’ side of the bet, fading the Fed and all the bozos who have fervently believed in the central bank’s transparently idiotic ‘story’ all along.
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