REAL F.E.A.R. - FED ENGINEERED ASSET RAMPING

Short-term traders and the 2-and-20 crowd may be able to take advantage of the current asset ramping perpetrated by the Fed, but long-term investors will continue to lose money in real terms. On a constant-dollar basis, or inflation-adjusted basis, investors will lose value on their investments in terms of the purchasing power of their assets.

 12 Month Performance

• SPX - UP 8.5%
• DJIA - UP 11%
• COMP - UP 12%
• GOLD - UP 30%

12 Month Performance Relative to Gold

• SPX - DOWN 22%
• DJIA - DOWN 19%
• COMP - DOWN 18%

 Future economic conditions/inflation expectations are being priced into the 30 year while the current state of the real economy is being priced into the short end. The long end of treasury curve is selling off while traders/investors are still chasing the short end.

Chasing returns by buying U.S. stocks , (especially at current levels), because the Fed is destroying the dollar may be one of the most irrational exuberances we have ever seen.