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Strategist: Stocks to Trounce Treasuries In 2012


Despite an announcement that the Federal Reserve would begin releasing rate forecasts, one “Fast Money” expert said the best bet ahead was shorting treasuries.

“The fundamentals are pretty sound on the U.S.,” Nomura Securities strategist George Goncalves said Tuesday. “Barring a complete apocalyptic view for Europe, we can see Europe just muddling along, and the U.S. will just steal Europe’s lunch money. The U.S. economy can actually do pretty well.”

Earlier, Bank of America Merrill Lynch analyst Mary Ann Bartels noted a strong downward trend for treasury yields, predicting they could potentially break below 1.5 percent.

Forecast: 2012 Bond Yields

“When you look at 10-year treasury yields, and when we look at the monthly charts going back to 1990s, the chart is still coming down,” she said. “We haven’t even ruled out 1 percent.”

Goncalves said the flight of foreign investors signaled a bear market for treasuries.

“If you take a step back and think about what happened in 2011, most money managers actually missed the trade,” he said. “They got long at the lows in yields.”

Goncalves also said he expected QE3 to happen.

“I think the Fed would do QE3 just to kind of re-ensure that the economy’s on track,” he said.

Karen Finerman, president of Metropolitan Capital Advisors, saw no upside to U.S. treasuries.

“I can’t see wanting to own treasuries over equities at this point, particularly for U.S.-focused companies,” she said.

Joe Terranova, chief market strategist at Virtus Investment Partners, agreed.

“I think at some point this year, shorting treasuries is going to be a generational-type of trade,” he said. “It’s just a matter of gauging the right time to put that trade on.”

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Trader disclosure: On Jan. 3, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Adami is long (C), (GS), (INTC), (BTU), (AGU), (MSFT), (NUE); Seymour is long (INTC), (BAC); Terranova is long (VRTS), (IBM), (LQD), (MUB), (EMC), (CSCO), (AXP), (SBUX), (CSX), (APC), (OXY), (XOM), (TRLG), (SWN), (V), (SU); Finerman is long (AAPL), (BAC), (JPM), (GOOG); Weiss is long (CHK), (KO), (RIMM), (QCOM), (GM), (EUO), (HPQ), (VZ), (BRCM), (AMLP), (NS); Weiss is short (FXA);

Karen Finerman, Metropolitan Capital
Fund is long (AAPL)

Fund is long (JPM)

Fund is long (IBM)

Fund is long (CF)

Fund is long S&P 500 puts

Fund is long (IWM) Puts

Fund is short (SPY)

Mike Khouw, Cantor Fitzgerald
No disclosures

Mary Ann Bartels, Bank of America Merrill Lynch
No disclosures

George Goncalves, Nomura Securities
11 Liquidity provider

Nomura International plc and/or its affiliates (collectively "Nomura") is a primary dealer and/or liquidity provider in European, United States and Japanese government bonds. As such, Nomura will generally always hold positions in these bonds, which from time to time, may be considered a significant financial interest.

Jim Iuorio, TJM Institutional Services
Has positions in (VXX) and (TBT) ETF

Tavis McCourt, Morgan Keegan
Firm makes market in AAPL, RIMM shares

Pavel Molchanov, Raymond James
Firm expects to receive or seek investment banking services from BP in the next 12 months

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