Is the stock market going to tank?

[BobMc]

Meanwhile I’m over here trying to figure out where to move 11k on Monday morning. XOM call assigned at $97, already had some cash sitting there. I may stay cash liquid and sell out of the money puts on midstreams I want to own anyways.

[4matic]

3% yield and CPI is what? O ya, you're negative 5%. I shouldn't peak at your dumb ass comments.

I though you already had me muted? You act more like Benny every day dood! Lol.

Keep looking in the rear view mirror.

[4matic]

WTI is not much higher than it was in March. Gasoline is up considerably.

[4matic]

I've been short the 20yr since december and will continue to hold. +25% since...I think we will see rates in the 6-10% range. This is Jimmy Carter 2.0. Not because of what has happened, but because the telegraphed response. They are telling you they will double down on making it worse.

Spot on with energy...both oil/gas and utilities.

Good luck with you all investing!

TLT was lower on May 5th than it is now. Not by much.

[4matic]

I put a lot of money to work in April and May. Early and maybe wrong.

I went long BOND at 98.35 in April. It’s paid .50c in dividends and is trading at 95.50 now. So I’m down about 3% on the trade and it has a forward yield of about 3.25% with a 7 year duration. I could get a lot worse but we’ll see. I like the position. It’s 25% of my holdings.

I went long PDI at 22.60 and it’s paid .45c in dividends currently trading 22.10. About a scratch. It yields almost 12%. It’s 20% of holdings.

Long EMB at 93.50. It’s paid .70c trading at 87.22. Yields almost 6% Total disaster in the face of strong dollar. 12% of holdings.

Long FMSDX at 13.75. Total disaster. Don’t even want to talk about it. Lol. Completely on the wrong side of the yield curve and other problems. Down about 6% after dividends. 35% of holdings.

Long JEPI at 57.40 and it’s paid .40c in dividends. 6% of holdings.

I have a good sized position in T in A taxable

Anyway. I’m not overly concerned with price and all these are steady payers with a combined yield around 5.5%. So in essence I’ve lost a full year of dividends in three months. As long as they pay I don’t care. I know anything with a yield above 2% is risky but I like that my yield is 3.5x the SP500 and it has a lot of interest yield vs dividend payout.

For the people that think I’m way offsides on rates I hope your not long too much duration and growth.

[4matic]

Anyone can post up a bias tweet. Beneath energy is weakening prices and economy. Shipping rates are cratering now so that’s one element that’s also weakening.

“Some nifty math. When you strip out of the CPI all the items that are linked to energy (air fares, moving/freight, rental cars, delivery services, new and used vehicles), the core was +0.36% and the YoY steadied near 4%. The truth beneath the veneer.”

https://twitter.com/EconguyRosie/sta...7N1ZMmqNURWhKA

[4matic]

US import demand is dropping off a cliff

container spot rates from China to the West Coast have plunged 38% month-over-month to $9,630.

https://www.freightwaves.com/news/us...ff-a-cliff/amp

[summit]

Did import demand crater... or did supply?

[Cono Este]

Did import demand crater... or did supply?

I don’t man, but if I can’t find a new 4 runner for sticker in the next yr I’m going to have to rebuild my pilot. It’s almost a classic anyway.

I still think a lot of this is Covid related. It’s just not fixing itself as soon as soon as people think. We shut off the economy overnight, poured trillions into it, then turned it on like nothing ever happened after the election. I’m not a doctor, but the patient could have permanent damage.

Can you imagine the supply disruption if China took Taiwan?

iPhone 7’s would sell for 5k.


Sent from my iPhone using TGR Forums

[sirbumpsalot]

TLT was lower on May 5th than it is now. Not by much.

That's nice....but my short position is still up 25% since dec and my OPINION is that TLT is going lower in the future.

[dunfree]

US import demand is dropping off a cliff

container spot rates from China to the West Coast have plunged 38% month-over-month to $9,630.

https://www.freightwaves.com/news/us...ff-a-cliff/amp

dumb doomer dipshittery from Benny Benz. Anything changed in china in the past month that would change spot market demand/supply smoothbrain or you just all in on the sky is falling because you can’t handle complexity anymore?

[RoooR]

dumb doomer dipshittery from Benny Benz. Anything changed in china in the past month that would change spot market demand/supply smoothbrain or you just all in on the sky is falling because you can’t handle complexity anymore?

Plenty of people smarter than anybody on here agree with 4matic. I respect that he's willing to share his positions. You willing to do the same? Anyway the name calling and hostility from you is uncalled for.

[ötzi]

You new here?

[4matic]

dumb doomer dipshittery from Benny Benz. Anything changed in china in the past month that would change spot market demand/supply smoothbrain or you just all in on the sky is falling because you can’t handle complexity anymore?

That’s not what the LA port authority has said. No interruptions.

If I though the sky were falling would I have added value, FX, and duration to my holdings? Would have been just the opposite?

Inflation, Rates, and the dollar are peaking. That’s the basis of my theme.

[dunfree]

Plenty of people smarter than anybody on here agree with 4matic. I respect that he's willing to share his positions. You willing to do the same? Anyway the name calling and hostility from you is uncalled for.

You can read his link for the doomer porn he picked, or “reverting to prepandemic levels” and “massive volumes moved between these two countries in 2021 were at unprecedented and unsustainable levels”. You could also read the correct imo correct assessment that inflationary pressures in energy and food were caused by supply shocks not artificially stimulated demand (which is contra to the politics of the hard money doomers). Feel free to look at the graphs of “total demand destruction” that look like reversion to the mean. Your choice. Target having to start discounting patio stuff before 4th of July when they aim to have all of that sold through before Labor Day is a lot closer to the mean than “everything flies off the shelf immediately without discounts”

[4matic]

You can read his link for the doomer porn he picked, or “reverting to prepandemic levels” and “massive volumes moved between these two countries in 2021 were at unprecedented and unsustainable levels”. You could also read there correct imo correct assessment that inflationary pressures in energy and food were caused by supply shocks not artificially stimulated demand. Your choice.

Isn’t that what I said? I’ve been an opportunistic bond investor for a long time. Last time I bought bonds was 2018. Sold them In April 20 (early). Buying them again now (early).

[Brock Landers]

I'd like to better understand the idea that bonds won't continue go down in value as rates continue to rise. Isn't buying bonds at the moment a bet against further rate increases?

I have no idea where the bottom is for equities, but I've upped my automated bimonthly purchases of VTSAX in the anticipation of a further downturn or extended sideways time period.

I have an SGOL position. Anyone have any allocation into other commodities funds (I might have asked before)? Seems like the futures contracts commodity ETFs have a lot of inefficiencies, but I do like the idea of more commodity exposure.

great questions. first, make sure your commodities etf's aren't leveraged or gaining on curve moves...hopefully they're based on spot prices.

anyway. in every other period where the Fed started to hike rates, going back to the 70s (some of this is from an environment that may not even be comparable anyway but it still fits the narrative) interest rates had the bulk of their jump BEFORE hike #1.

Also, yields right now overall are higher than they have been in...15 years? From 2y to 30y, things are "cheap" (yields are high). Yes, for good reason. We are seeing CPI prints that don't look great! But the 10y went from 150 to 3/315 and for 6 weeks its been pretty rangebound. Mammoth, market-concerning inflation numbers come out on Friday...and the 10y goes up 12bps? Thats it? 12bps. The market is priced for inflation. All the inflation we see out there...its priced in. Now, 3 50bp rate hikes in June July Sept are all priced in. And Fed funds futures are pricing in over 3% early next year. So the expectation/market is saying inflation will be as bad or worse than we've already seen it.

Now...should the August CPI data come in much higher than already-high expectations. Which is the risk. 1. The economy at that point will already start to melt in certain sectors, certain businesses, certain workforces. 2. The Fed will launch an absolute missile of 75/75/???. The Fed will put the screws to the market, which ALREADY has cracks in it. Consumer credit is jumping up. Fed beige book is reporting districts where businesses are already slowing. Inventories are going through the roof. Growth is ok overall, but slowing, and really slowing in certain districts/businesses/industries.

Add in law of large numbers, hard to get sustained high inflation levels. Long run breakevens (inflation expectations) are like 3%. Yawn

Could inflation and rates go up, and bonds lose value? Yup. Short term, definitely could happen. But...stocks can also go down. Youre buying bonds cheap now. Recession next year (or this year) you'll be happy you bought low. Nothing happens and rates stay where they are...you carry 5%. Inflation exceeds even the high expectations...Fed jumps in and throws the flamethrower at it (and adds to an impending recession).

Buy bonds.

EDIT- Im not a bond guy.

[Brock Landers]

Bonds have already priced in forward Fed guidance right or wrong. The 2yn added 20+ bp on Friday which effectively priced in an additional 25 points to what the market already perceived as terminal rate. So the cash bond market is looking out 24 months to the future. Your own perception of the future two years from now is what matters. Personally, I think we drop below trend growth and wages and employment will stall. The overwhelming risk in my view is a systemic risk to bonds due to QT and liquidity problems. A broken market. There are already some signs of that.

To me, a guaranteed 3% yield for 10y is attractive and is at a 10+ year high.

I also suspect a long sidewise equity market which is being forecast with a benign Vix in the face of these declines. Remember, the seventies was a long sideways slog for stocks as was the 2000’s.

Also, the 10y note rate is more than double the dividend rate on the SP 500.

I should have just seconded this

[dschane]

A few thoughts floating in my head on the bond debate . . .

As the rates go up, bonds become more attractive, so if buyers take advantage of that, rates could level/drop.

Have mkts priced in Fed increases? Theoretically, yes. But "transitory" inflation eventually became "peak" inflation and, since Friday, I'm not sure where the discussion/pricing goes.

The Fed is no longer buying bonds at $80B per month, so there's a big loss of demand. And, it believes its tightening is equivalent to a rate hike, so another tailwind to rates.

Japan is a big buyer of U.S. Treasuries but has been retreating.

What does that mean for overall demand and bond prices/yield? I personally think the rates have some space to go up but arguments on both sides seem very persuasive.

[liv2ski]

Not a fan of bonds in an increasing rate environment. Say you buy $10k worth at a 3% yield, that is $300 yield. Rates go to 4%, now your $10k investment is worth $7,500 X 4% = $300 if you want to sell. Only buy bonds if your certain rates are going down so the inverse is true.

[4matic]

Most of bond QT for now is just roll off. Rather than raise rates more than anticipated Fed can just actively increase QT to sell off bond balance sheet which would further tighten credit in longer duration

Japan is buying its own bonds as they are still pursuing QE. It will be a good time to ski Japanese powder this winter with the yen cratering; if they let you in.

[4matic]

if you want to sell.

Which indicates lack of discipline when it comes to investing rule #1:

Define your timeframe

[Brock Landers]

Not a fan of bonds in an increasing rate environment. Say you buy $10k worth at a 3% yield, that is $300 yield. Rates go to 4%, now your $10k investment is worth $7,500 X 4% = $300 if you want to sell. Only buy bonds if your certain rates are going down so the inverse is true.

What has to happen with inflation for 10y to go to 4%? We just hit 8.3, more than expected...and the 10y barely moved and has been treading water for 2 months.

What happens to your 10y bond paying 3% if rates go to 2%? What happens to your 10k if you put it in stocks and the market loses another...10%? 20%?

[4matic]

What has to happen with inflation for 10y to go to 4%? We just hit 8.3, more than expected...and the 10y barely moved and has been treading water for 2 months.

What happens to your 10y bond paying 3% if rates go to 2%? What happens to your 10k if you put it in stocks and the market loses another...10%? 20%?

Yeah, anything can happen in the short term. Nasdaq 8000 is easy target on the chart. As you know bonds return all your money at maturity unlike stocks. That’s why 3% was attractive compared to recent history.

If rates continue substantially higher we’re looking at a serious recession.

[Brock Landers]

I’d separate the inflation piece and rates piece. High inflation is already priced in, with the Fed coming in with 50/50/50

I think the recession comes regardless, even if inflation starts to abate (or if the Fed has to throw down the hammer post-sept mtg)