Minority Whip Cantor Bets Against U.S. Bonds

By
Friday, June 18, 2010 at 12:40 pm

A great catch from The Wall Street Journal:

[Rep. Eric Cantor (R-Va.)], the Republican whip in the House of Representatives, bought up to $15,000 in shares of ProShares Trust Ultrashort 20+ Year Treasury ETF last December, according to his 2009 financial disclosure statement. The exchange-traded fund takes a short position in long-dated government bonds. In effect, it is a bet against U.S. government bonds — and perhaps on inflation in the future.

Nice! Here’s a more thorough description of the bond product, from Reuters.

ProShares UltraShort 20+ Year Treasury (the Fund), formerly ProShares UltraShort Lehman 20+ Year Treasury, seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index (the Index). The Index includes all publicly issued, the United States Treasury securities that have a remaining maturity greater than 20 years, are non-convertible, are denominated in United States dollars, are rated investment grade (at least Baa3 by Moody’s Investors Service or BBB- by Standard & Poor’s (S&P)), are fixed rate, and have more than $250 million par outstanding. The Index is weighted by the relative market value of all securities meeting the Index criteria. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as –200% of the daily return of the Index. The Fund’s investment advisor is ProShare Advisors LLC.

But it appears that Cantor is not a very canny investor. The fund is down 31 percent this year.

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Comments

43 Comments

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[...] This post was mentioned on Twitter by daveweigel, Annie Lowrey, Scott Peterson, R Subramanian, Jacob Silverman and others. Jacob Silverman said: RT @AnnieLowrey: Eric Cantor invests in a fund that bets against U.S. bonds. It is down 31 percent this year. #win http://bit.ly/dgKvP7 [...]


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[...] If Cantor truly cares about “America’s prosperity,” one would have to wonder why he is literally betting against its financial future. The Washington Independent’s Annie Lowrey adds that “Cantor is not a very canny investor. The fund is down 31 percent this year.” [...]


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Harvey Hudson
Comment posted June 18, 2010 @ 10:52 pm

That's not really fair. It wasn't a “bet against U.S. Bonds;” it was a bet that interest rates would go up.


Daveyjones
Comment posted June 19, 2010 @ 12:36 am

betting interest rates will go up is an incredibly foolish thing to do when you are clearly in a deflationary spiral.

You will notice Pimco is loading up on treasuries, after first dumping them on inflation concerns.


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philogratis
Comment posted June 20, 2010 @ 9:19 pm

If this deflationary spiral was clear to world economists, central bankers, and government policy makers (particularly in the US and Europe), there would be no risk of said deflationary spiral. One of the upsides of a deflationary crisis is that it makes printing money (whether as currency or in electronic form) a good idea from a central banking point of view, in addition to the fact that the government gets a bunch of free money! The easiest way for the U.S. and Europe to help their budget deficits would be to print some money and pay some bills with it, and then borrow some more for another round of stimulus.
The tragic aspect of this situation is that inflation might increase to the Fed target of 2%, or even a little more. This makes some central bankers extremely nervous.


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Basilisc
Comment posted July 6, 2010 @ 7:20 am

Shouldn't it be prima facie illegal for anyone who has influence over US fiscal policy – like, say, the House minority whip – to take a position in the US bond market? Or, if we want to move from the conflict-of-interest approach to the aligning-incentives approach, it should be prima facie/i> illegal for such a person to be short the US bond market??


marvinmarks
Comment posted July 6, 2010 @ 5:15 pm

what an idiot. we really have to make sure the Republicans do not get back in charge of anything this November. they are a disaster.


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[...] near zero for the rest of the year, and possibly beyond. Cantor bought the shares in December. According to the Washington Independent’s Annie Lowrey, “the fund is down 31 percent this [...]


tamillaz
Comment posted June 28, 2011 @ 8:53 pm

This jew sob should be deported to zionist israel.


Dennis
Comment posted June 30, 2011 @ 1:32 pm

How’s that working out for them, Daveyjones.  Go to their website and find out.  Cantor is not betting against anything, he’s simply been advised to diversify his holdings like any prudent money manager would tell him to do.  If our debt defaults, he stands to lose far more in the rest of his portfolio than the relatively small amount he might gain from his paltry (relatively speaking) position in the ProShares Ultrashort Fund.

This is quite possibly the most ridiculous criticism of a politician I have ever read before, and I have read some whoppers.  No one repeating this non-story as something significant has done even a cursory amount of homework and has no understanding whatsoever about interest rates and bond funds, or even the concept of diversification.


Gjevon
Comment posted July 1, 2011 @ 7:29 pm

The criminal hidden in the government is now revealed!


Rochelle Sstockman
Comment posted August 2, 2011 @ 4:10 pm

Little late to this conversation, but what once gave companies support via investing has turned to a Casino for the “haves”.  It’s nothing more than speculation with companies losing out unless they join the speculation branch in legalized fashion.


Gjevon
Comment posted August 2, 2011 @ 6:38 pm

The media totally missed this.


1794693
Comment posted September 7, 2011 @ 12:40 pm

1794693 beers on the wall. sck was here


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