Thursday, December 5, 2013

10-Year Treasury Yield vs. Nominal GDP Growth

Click to enlarge.

As seen in the chart, nominal GDP took a giant leap to the left during the Great Recession. There was a dead cat bounce to the right (as the dotcom bust left the 10 year moving average) but it is now being pulled to the left yet again. Where it stops nobody knows.

If the long-term trend does continue (down and to the left in the chart), then we'll be stuck in ZIRP till the cows come home (just like Japan), and that's if we're lucky. So all this talk of Fed tapering or not tapering is nearly meaningless to me. I refuse to have the bulk of my retirement nest egg parked in short-term savings patiently waiting for the Lord of Cattle to bless me with higher interest rates. That bovine deity is much more likely to milk short-term savers for all their worth.

The Phrase Finder: Till the cows come home

Cows are notoriously languid creatures and make their way home at their own unhurried pace.

They'll get home eventually though. They've got to be here once the cow tipping point is reached. I strongly suspect that is a very long time from now, perhaps even long after I'm dead and buried cremated. It's all in the timing. Rome did not fall in a day.

As a side note, I went with "their worth" over "they're worth". Both are apparently technically correct (perhaps because worth can be a noun or an adjective). Maybe. Even Grammar Girl isn't sure.

Thief #1: How much should we milk from it?
Thief #2: We should milk it for all it's worth.
Thief #1: What if it keeps its wealth in a bag? It's its worth.
Thief #2: For what it's worth, then we should milk it for all its worth!

Dizzying. Who thought this frickin' language up, anyway?

November 13, 2013
Takeover bids milk factory for all it is worth

THERE is a bargain in the Australian dairy sector, but it is no longer Warrnambool Cheese & Butter Factory.

Don't even get me started again! The milk factory's worth? Its worth?

This is not investment advice. Don't look to me for grammar advice either for that matter. I pretty much only use the math side of my brain at best. I'll end a sentence with a preposition and create sentences with single adverbs if the mood suits me. That's what moods are for. Seriously. ;)

Source Data:
St. Louis Fed: Custom Chart


Rob Dawg said...

Draw again minus CPI-U .

Interest rates are not absolutes, they are relative to inflation. Oay, relatce t inflation execrations but...

Rob Dawg said...

Wow. That was not what I typed. You get it anyway.

Stagflationary Mark said...

Rob Dawg,

I'm of the school of thought that inflation adjusted treasuries (TIPS) tend to be tied to real GDP growth and nominal treasuries tend to be tied to nominal GDP growth.

When growth dries up, interest rates tend to fall. When nominal GDP growth is low, inflation also tends to be low. So which came first, the chicken or the egg?

Stagflationary Mark said...

Nominal GDP and Interest Rates

As we continue to await a possible tapering of QE, below is a look at the relationship between nominal GDP and interest rates.  Both measures are effectively a function of the same two factors: growth and inflation, and going back to the 1950's, the yield on the 10 year Treasury note has generally tracked the same path as the year over year change in nominal GDP.

I'm clearly not alone.

I'm bearish on growth over the long-term, and lately it's been growth in both nominal and inflation adjusted terms. I prefer inflation protected treasuries (TIPS and I-Bonds) though, because I do want the inflation protection.

mab said...

So all this talk of Fed tapering or not tapering is nearly meaningless to me.

The taper talk is typical MSM bullsh%t. QE is yet another propaganda tool. A ruse. In fact, QE is net deflationary rather than inflationary as the majority have been (mis)led to believe.

Here's a challenge. Show me a reserve! Show me an individual consumer that has spent a reserve!

If consumers can't spend reserves how are they inflationary?

Udder bullsh%it!

Stagflationary Mark said...


Udder bullsh%it!

Worthy of a cow pie chart! ;)

I tried to work that pun in yesterday but didn't want to force it. Pun patience has paid off! Moohoo!

mab said...

Pun patience has paid off!

Besides that, you probably didn't want to milk udder bs!

Stagflationary Mark said...


I'm too busy trying not to be the Dairy Queen.

mab said...

I tried to work that pun in yesterday but didn't want to force it.

Great mimes think alike. No wait, that's not what I meant to say.

Oh yeah, now I remember. There's a fine line between Pun restraint and making your point with a boot on your head.

The guy is missing a kidney too!

Stagflationary Mark said...


A free pony for every American!
Zombie powered treadmills!

What's not to like? ;)

mab said...

What's not to like?

I know! Less stick, more brains, lol!

Stagflationary Mark said...


Less stick, more brains, lol!

Trade that SH** for brains!

(SH** = SHLD! What did you think I meant?)

"It makes you question the value of what Sears is sitting on," he says. "It may have to continue dismembering itself to stay alive today and shrink from inside out."

Dismembering? Shrinking from the inside out?

"They're cutting costs to the bare bone," Swinand says. "The stores look like hell. Not all of them, but most of them. If you don't invest in the stores over the long term, you don't have a business."

Cutting to the bare bone? Looking like hell?

Don't let the naysayers win! It is a ghastly pillar of retail strength I tell you!

Either you guys are joking or you like to buy high and sell low. Not my style. Lampert and Sears will prove to be fantastic investments over the next 10 years. Over the next 10 minutes? who knows and who cares?

Down 49%! Less than 4 1/2 years to go!

Lampert and Dykstra are like two pees on a POD!

The pun restraints are off! I've gone full puntard!

Gallows humor. Sigh.