The Fed said: To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserves holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserves holdings of Treasury securities as they mature.
And the market turned around in a hurry (yet it did still close in the red.) The market rebounded and the Fed is on the job. Win - win you would think. The thing is, the fact that the Fed has to pull out it's wallet... again, means that the first 2 stimulus weren't good enough. The warm fuzzy feeling of the Fed winding down and the economy recovering is turning back into worry. Why? First off we're buying our own treasuries with money we made. That's like Rich Uncle Pennybags buying Park Place himself instead of selling it to us suckers. We've run out of suckers and we're the only suckers left.
It does seem needed if look under the curtain of Fridays jobs report (Larry Levins' blog tore the curtain down) and a third stimulus bill looks almost certain, just what we need right? May be not. A third stimulus package might put us in the Japan lane, I think. Hyperinflation can come out of no where easy and fast. Probably not as fast as Japan got it but when it comes you won't care how long it took.
So, is this the end? should you go get your gun and wait at the window like Malcom X? Not just yet. But you should take a long hard look at ways to hedge for all the possible futures.
For inflation I'm looking at the ETF $TIP that's iShares Barclays TIPS Bond The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S.Treasury Inflation Protected Securities (TIPS) index (Series-L). it closed today at 107.66 up 2% year to date. Worth taking a look.
Also $CEF That's the Central Fund of Canada Limited (Central Fund) is an investment holding company. The Company is a specialized, passive holding company with most of its assets held in gold and silver bullion. Central Fund’s purpose is to hold gold and silver bullion on a secure basis for the convenience of investors in the shares of Central Fund.
As always you MUST do your home work on these investments before you invest your money!
I'm also looking for the right time to start my $SPXU buy program back up as this market may start seeing the bad for what it is.... Bad. I think I might wait until next month when the big boys come back because the volume is so low the market seems easy to manipulate. On top of that traders can't decide which way to send the market. We get zero follow through it seems. I am holding longs and I think if inflation does come, the beginning will be seen in inflated stock prices and I plan on riding that up a bit. Also with bond rates so low I hear chatter of bond money coming into high yielding stocks. I'm holding $ADP with it's 5%+ yield. Also holding some $GE which just upped their dividend.
All in all it's still summer time so these moves don't reflect the bias of the real big boys. Lets wait for next month and see what the big money thinks of all this. I plan on blogging more, but I planned on blogging more after my last blog so, we'll see. Anyway, until then, Do Some Home Work, Make Some Money.
Peace.
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