Everybody wants Energy Efficient Vehicles

I hate to accentuate the negative again, but everyone is excited about car sales. Here are the facts:

July auto sales rose to 11.2 million when converted to an annual rate. That's the first month this year that sales rose above the depressed 10 million level. As recently as 2007, car and light truck sales topped 16 million vehicles, but a drop in consumer confidence sent sales plunging late last year. Ford Motor Co., which has steadily been gaining sales since GM and Chrysler took government aid and went through bankruptcy proceedings, reported a year-over-year sales increase, up 2.4 percent for the first year-over-year sales jump since November of 2007.

Here is another fact:

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion. Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

I mentioned earlier the government cannot continue to subsidize growth. Therefore, my strategy is to purchase a basket of international SOVEREIGN bonds. Most people will mention currency risk, geopolitical risk and a history of default risk, but the US is in debt, USD are in danger of devaluation and the US is relatively young compared to Italy, France, China and India. I mentioned I wanted to short Treasuries but I saw an error in my strategy. This is an asymmetrical position, there is not much to gain by going short unless you "juice" the investment. By that I mean leveraging the position to see a larger return.