Bloomberg finally posted a longer clip of Gay Shilling’s appearance yesterday for those that missed it live. Gary Shilling, president of A. Gary Shilling & Co. talks about the U.S. stock and bond markets, his investment strategy, and the outlook for central bank policy in the U.S. and Europe. Here is a direct link.
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A rising USD does not automatically mean that the US is to be considered to be a “Safe Haven”.
Foreign central banks have stopped adding T-bonds since september 2011, in spite of continued US Current Account Deficits. Not adding T-bonds by central banks would mean that the USD would have gone down against e.g. the Euro, AUD, CAD, Yuan, etc. But instead of a falling USD, the USD started to appreciate ïn the last say 12 months. Seems the next leg of (serious) deleveraging already has started in september of 2011. I draw an additional conclusion: If foreign central banks would have continued to add T-bonds then the USD would have gone up MORE !!
Germany & China are going to use the Euro & Yuan in the trade between the two countries instead of the USD. And that means demand for US T-bonds is going to shrink. Seems these countries see the writing on the (US T-bond) wall.
No wonder the US government got scared out of their wits and wants to impose the (infamous) “fiscal cliff”. They have seen the writing on the wall. Foreign confidence in the US seems to be shrinking rapidly. I wouldn’t be surprised to see foreign central banks aggressively shedding their T-bond holdings when the USD starts to strengthen again in the next leg of the financial crisis. This suggests the FED is going to “print” A LOT OF money to prevent a complete T-bondmarket meltdown.
And Shilling wants to be invested in the 30 year T-bond ?
It would be better advice just to buy and hold quality stocks some with a dividend and ride this out. You will do better than those trying to call a top or avoiding stocks because Europe may break up or other ridiculous daily headlines. Why people bother listening to this daily garbage on the news is beyond me. They just scare people out of holding quality companies for the long term. It also makes money for advisors because their clients are wanting them to buy and sell more of their holdings.
sounds like you are committed to buy and hold Dave. Very few people are cut out for the real life risk of a secular bear which brings the financial peril and emotional strain of repeated cycles of huge loss, interspersed with years of trying to recover capital. But if you are content with that approach, stick with it.
Just imagine when (NOT IF) the US starts to run Current Account Surplusses. Then foreign central banks will simply be FORCED to sell T-bonds, in order to get their hands on USDs. Then the FED will be FORCED to “print” giant amounts of money. Ouch.