Sell 1/2 of tlt…rest tomorrow. Low inflation 1.76 ccpi and especially weak gcpi 1.5 means
weak economy = stimulus until 2.0 reached
It’s as simple as that. In March 2013, 2.0 was achieved, 3X occurred and the Fed day was perfect to buy TLT on that day. This situation is going to take 3-5 months before we see it again. Taper talk is all smoke they may even add to QE if inflation doesn’t rise to their target.
I estimate the earliest ccpi to be 2.0 in November but could be December/January. Taper would be December 18 meeting at the earliest but most likely January/March.
Of the 3X, only one TLT:SPY had occurred in late August. Both TLT and TLT:$WTIC were missing so that’s a bad sign. In addition, ccpi was too low at 1.70.
As in March 2013, wait for taper to buy in either 2 situations :
1st) 3 X: TLT 10wkma X, TLT:SPY X and TLT:$WTIC X
2nd) Buy on taper day
OR
1st) Taper occurs most likely Dec 18 / end of Jan. Then wait until
2nd) Buy after the 3 X: TLT 10wkma X, TLT:SPY X and TLT:$WTIC X
The Fed has been blowing bubbles since 1987 and clearly doesn’t care about bubbles. Given the highest leverage ever used in this market, taper will create mayhem when it occurs. Fed policies are clearly ineffective as economic growth targets have been ratcheted down again to 2.1.
Good article from Ambrose:
The net loss of jobs over the summer months has been entirely among men, mostly aged 25 to 54 and university educated. The cohort aged over 55 has been growing, so this is not happening because baby boomers are retiring early and happy to grow cantaloupes in Arkansas, or to play golf at Torrey Pines.
The labour “participation rate” dropped to 63.2pc in July, the lowest level since the late 1970s. The rate for men is at an all-time low. The unemployment rate has been falling, but chiefly because so many people are giving up hope and dropping off the rolls.
Also:
http://www.reuters.com/article/2013/09/17/us-usa-economy-poverty-idUSBRE98G0PN20130917
Although the bulk of the more than 8 million jobs lost during the downturn have been recouped, many of the jobs have been in services
industries such as retail and restaurants that typically do not pay well.
Credit Flow Investor 