Lending to Value…………….with update at 8:44 AM
There is a simple answer to all the talk about what went wrong in the banking sector over the past 28 years. Why not lend to the macro trend line value. According to the experts, in 2005, residential real estate values were some 45 percent above the long term trend line. In order to keep from creating a bubble, banks should have required anything above that long-term trend line be put up in cash. I can guarantee you that if they used that policy, we would have never had the real estate bubble. The time for simple policies like this is in the good times but the market is self correcting and real estate is now moving down towards the trend line, and the good news is that the long-term trend line is still headed higher.
In the current market watch the Dow Transportation average, it has been the weak sector for some time. This sector is a good proxy for future economic activity.
No Change in positions at the moment, but while we expect lower T-bond prices and much higher gold prices down the road, both of these markets have reached levels where we plan to take some trading profits this morning. Probably will take off all the Short T-Bonds and half the gold.
At yesterdays close the NAV on the EMA ETF Fund was 988.
8:07 AM CST
UPDATE at 8:44 AM At the opening in the EMA ETF Fund we sold half the GLD position at 88.36 and all the TBT position at 44.78. Keep in mind that the T-Bond market is not a real market these days, the government is buying T-Bonds to keep mortgage rates down, while we all know they are going to have to become big sellers of T-Bonds at some point in-order to finance the deficit.