URGENT CAPITAL WAVE #3:
$3.4 TRILLION LEAKING FROM U.S. TREASURIES
Shah sees multiple bond-related “capital waves” – including corporate, municipal, emerging market bond plays, etc. – all heading our way in 2011 and into 2012…
But according to Shah, the biggest may well be the massive exodus from U.S. treasury bonds.
For starters, The Fed’s controversial second round of “quantitative easing” is set to expire on June 30.
That’s been a $600 billion shot in the arm to T-bonds. And let’s face facts. It has artificially propped up the market for the past 6 months.
Even Bill Gross, who heads the world’s largest bond fund and investment giant PIMCO, wrote in his Investing Outlook for March:
Shah’s right there with him. For months now, he’s been saying the party in the long bond is over…
And the potential capital shift here is staggering is size.
The U.S. alone accounts for roughly 43% of the world’s fixed-rate and securitized debt. That’s $34 trillion right there.
If even 10% of that money flows out of the long bond, it will create a “capital wave” of $3.4 trillion.
Investors and traders are starting to get the drift, too…
In February, Gross divested his famous PIMCO Fund of ALL of its long-term government debt. They’ve even begun shorting it in recent weeks.
That’s a swing of $35.4 billion in one long-bond-focused fund alone – a sizeable “capital wave” all by itself.
How he recommends playing it: Here’s what Shah told his readers about the long bond outlook back in December, in the middle of QE2:
Unless we’re headed for another global meltdown, or experience some devastating, unforeseen shock to the financial markets…
Shah believes the long bond has had its ride.
When interest rates start to rise – and it’s coming any day – bonds will take a huge hit and we’ll see a mass exodus out of bond funds.
You may already know about some of the more obvious triggers away from bonds:
- Bi-partisan pressure on The Fed to unplug the money-printing presses…
- China, Brazil, and Australia upping interest rates to keep inflation fears in check – with others soon to follow…
- The all-but-certain simultaneous hemorrhaging of municipal debt across the fruited plain…
And when the switch flips on interest rates, as Shah expects, watch for the long bond to crash faster than Tiger Woods’ endorsements.
To play this collapse, expect Shah to recommend bond-related short plays…
Like a trio he’s recommended recently that brought readers fast gains of 23%, 25% – even 26% in just 39 days.
Except this time, Shah predicts the gains could be far bigger, as debt gets absolutely hammered to the floor.
Easy 50%… 100%… even 150% returns in the short run aren’t out of the question. Here’s what Shah has to say:
You see, there’s something scary happening in the leveraged loan market. “Covenant-lites” and “pic-toggles” are back, in a big way. Remember them? They made their last stand right before the credit crisis hit. When this game ends it will start off with a whine, then will turn into a scream as the bottom falls out and investors find out there is no water at the bottom of the well.
But, when the bucket hits bottom, we’ll be there on the handle cranking up the cash from crash. I estimate potential gains at 50% to 150%.
And it’s not just the debt that can
make you money…
Now, you may have noticed that all of the more than $4.3 trillion worth of “capital waves” I’ve just shown you have a common thread…
They’re all in some way related to debt.
That’s because according to Shah, the single biggest “capital wave” influence on the planet right now is the crushing weight of global debt.
But there are many other “capital wave” drivers out there, too. In fact, I’ll show you three more HUGE ones in a moment.
There are dozens, even hundreds more of these on the horizon – in all sizes, durations, and shades of intensity.
And every one of them is a golden opportunity for Shah to lead you to wealth.
Like real waves on the ocean, “capital waves” never stop.
As long as there are people, governments, currencies, commodities, industry, and economies… waves of money will flow into and out of assets of all types…
Now, I know what you’re wondering:
If this happens all the time, 24/7, why’s Shah saying that so many BIG “capital waves” are getting ready to break right now?
It’s precisely because of the global economic strife of the last two years.
Let me explain…
Capital “concentrations” of over $21 trillion are about to slam into the markets like tsunamis
According to Shah’s research, the last two years of uncertainty and turmoil have “parked” over $21 trillion in various secure assets worldwide.
But now these vast concentrations of sidelined capital are poised to plow into the markets – creating a historically unprecedented period of intense “capital wave” activity starting right now…
And continuing into the dog days of summer…
And steaming straight through the fall, winter – and well into 2012.
If this scenario plays out as Shah expects, investors who pay attention could soon start closing out WEEKLY double-digit gains of 43%… 70%…
Even triple-digit wins of 113% – 166%, over and over again.
How can these kinds of returns be possible?
The reason is simple. It’s because of all the money that’s just waiting to flood into the right market opportunities:
- $13.1 trillion poised to flee low-performing bonds. Who’s going to hang on to all those billions worth of 10-year T-bonds currently yielding 3% or less when interest rates hit 4%, 4.50% – even north of 5%?
Shah’s betting that millions of these income-focused investors will bail out of long bonds and flood into solid dividend-paying stocks – like those that have recently paid Shah’s readers 20%, 26%, and 28%.
- $2.5 trillion earmarked for leveraged buyouts. You’ve heard the names: Blackstone, Carlyle, KKR, TPG, and others. After two years of waiting for the bottom after The Crash, private equity (“PE”) shops are ready to wake up and start “bottom-fishing” for huge market bargains.
After more than 20 years of swimming with these sharks, Shah knows how these huge money pools play the game. That’s why he’s keeping his eye on mid-cap firms in specific sectors that are flush with cash… enjoy global reach… and are positioned in the market “sweet spots.”
- $2 trillion stockpiled for possible M & A. As a safe haven against the dicey conditions of the last two years, U.S. companies have amassed nearly $2 trillion in cash – their biggest hoard in 51 years.
Now, with the outlook better and company valuations still attractive, Shah’s looking for these firms to go on a mergers and acquisitions (M & A) shopping spree.
- $4 trillion in currency ebbs and flows every day. Few traders realize that currencies are the biggest financial market on Earth – in value terms, they see more than 12 times the daily turnover of all the world’s stocks.
Lots of “macro” factors affect currencies: Inflation, deflation, central bank policy changes, interest rates, debt crises, natural disasters, weather events, commodity fluctuations, even plain old politics. And Shah’s got experience playing every one of these angles – for gains of up to 166% in 6 days.
Certainly, ATT’s recent $39 billion T-Mobile acquisition shows there’ll be plenty of action on the domestic front. But Shah’s also scoping out potential M&A plays in emerging markets.
In Asia, for instance, the average cash balance of juicy target companies is almost double that of U.S. companies.
Just these four major concentrations of soon-to-be-moving cash total up to $21.6 trillion dollars.
And these aren’t anywhere near all of the big “money pockets” out there.
I’m not even counting the $77 billion holed up in various commodity and emerging market ETFs…
- Or the more than $5 trillion in foreign currency reserves held by just the top four holders of foreign debt: China, Japan, Russia, and the EU…
- Or the more than $82 billion (and counting) in gold reserves China and India have stacked up in the last few years…
- Or about a hundred other major sources of capital just waiting to be released in huge market “waves” by one macro event or another.
But Shah’s got them all under his watchful eye.
As this money begins circulating over the next few months – and in some cases it already has – “capital wave” investors stand to make a lot of money very quickly.
How much?
If the recent history of Shah’s lucrative picks keeps up, enough to turn your $10,000 into $156,349 in just 12 months.
But Shah warns:
For 99.9% of ordinary Americans, trying to ride these monster “capital waves” would be a fool’s game.
You see, institutions (like what Shah used to work for) typically skim the biggest profits off the top. That leaves just table scraps for regular investors…
And that’s if you could even get access to these plays at all.
Then there’s the timing. Knowing when to catch the wave, ride it to the crest, and profitably surf it in.
Call it wrong, and you’ll find yourself crushed in the breakwaters.
But there’s one way to make it all remarkably easy – and very profitable…
All you have to do is listen to Shah Gilani.
