patrick.net

OO, thought you'd like those H3 numbers. Looks like it all went to the "bottom line". I still don't understand the whole "interest on deposits" at the Fed (which, BTW, happens in 2011, or sooner if Ben gets his druthers). Doesn't this just mean that the loan interest rate is effectively lowered on TAF (borrowed) funds that show up as "negative non-borrowed reserves".
FYI, the latest TAF auction had a similar bid-to-cover as the auction 28 days ago (which was the first auction for $75 billion)... so it seems the demand is holding steady.

Here's what I got from the H.4.1 numbers. Four billion in Treasuries was sold off ($487 billion to go). Non depositories seem to continue to improve. Their "discount window' (aka PDCF) decreased by $4 billion and the TSLF fell to below $100 billion. The latest TSLF auction was off by $2 billion (compared to the one 28 days previous), so the "recovery" may be levelling off as improvements were much better in the weeks previous to the last.

Relativism is bad. Absolutism is good. May God save us all, save the relativists.

What does the stock market do ? It celebrates the retail sales report. Which says that consumers have to pay more for the same food, gas etc and now shop mainly at the discount stores

Precisely, people have to turn to Walmart and Costco because they are hurting. The pundits are saying that people spent their rebate checks instead of saving it, so that was part of the good news. Maybe someone can start a thread on the credit card bubble.

Have you ever felt sick about this world around you?

What did you feel like doing when that feeling of sickness fermented and slowly rose inside you?

Did you turn to God and pray?

Or did you look up "The Unabomber Manifesto" in New York Times' archive?

Was your wife present?

Yes? So did she receive some sort of spanking?

Or did you get some instead?

Did you get hard afterwords?

How was it? Write to me.

Danville Woman,

I have a problem with PIMCO's integrity. I used to own a not-too-trivle position in PIMCO's unhedged international bond fund without digging hard into the prospectus. I bought in 2004 fully expecting to profit from the fall of the dollar and subprime, saw it coming since 2003. Yet, in 2006, I found out that this fund was loaded with USD mid-term Treasury bonds and USD MBS, MBAs, the USD-denominated fixed-income weighting of this fund was as high as 45%!!!

Upon finding out about this, I immediately dumped all my PIMCO holdings, but I nevertheless incurred loss on opportunity cost, had I known about this, I could have invested in far better tools since I knew very well what I was trying to achieve.

Therefore, I would be careful with any PIMCO funds, their name may not correspond to their actual holdings. The safest way to play commodity is to buy funds that directly hoard it (or claim that they hoard it) like GLD, SLV, or buy shares in companies that produce it or hoard it, like BHP, RIO, XOM, etc. If you want to bet on the price itself, buy Rogers fund, he has a far more proven track record than Bill Gross.

@OO

Thanks for confirming my suspicions about PIMCO.

DBA and RJA are both ETN's which means their viability is dependent on the Securities Firm holding these ETN's. Sounds a little risky. Any other ideas about agricultural commodities?

I am becoming very risk averse and am rearranging my portfolio.

Thanks!

OO
How do you feel abot money market accounts?
I am envisioning a broad loss in the US stock markt for years to come. At least 10% a year for 3+ years. I am also envisioning 7% inlfation, although the govenrment will report 4% or less (so TIPS are bad).
The problem is the money at issue is in a 401k and there is a long list of bad options. Bonds look bad (per your previous).TIPS and Treasuries look bad. Stocks are bad. Is money market the best of bad options?

Any other ideas about agricultural commodities?

Commodities futures. It can be very risky though.

Not investment advice.

Duke,

I empathize with you. I am still lost on options for 401K. looking out like you.

Danville Woman,

commodity itself, even without the intricacies of derivative contracts, is a very risky business, particularly soft commodities like agriculture, because we can "manufacture" it. DBA is an ETF and RJA is an ETN, and if you decide to get involved, these are the leading funds, so at least there are lot more eyeballs (inherent monitoring) looking at them. Before RJA came out, Rogers fund moved its account to Refco, and up till today, some clients were still not able to get back 100% of their funds. The macro factors are very favorable for agriculture, but the inherent risk in the trading mechanism is high no matter how you do it.

How to mitigate the risk? I hoard physical gold. If there is a counter-party failure that will bring down some major banks (all major banks have a substantial share in derivatives), the financial system as we know it today will just collapse. When that happens, physical gold price will shoot through the sky because we will have to resort to the most primitive and fundamental way of recognizing wealth.

Duke,

if you are faced with a poor choice of funds, TIPS is actually better than money market. No matter how the government manipulates data, the extent of inflation will have to be reflected after they exhausted all possible substitutions, changed all weighting mechanism etc.. You are just losing on the time lag, which could be a few years. And once inflationary trend is established, it won't go away soon. It will be here to stay for a while.

Money market funds just track the Fed rate, which can completely ignore the inflation data. So TIPS is the least bad instrument in a 401k account with limited choice. You should perhaps look at conversion of 401k to Roth in 2010, which opens up a whole new world of alternatives.

SBIA,

did you say "!!WOW!!" today?