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Will the long-term trend ultimately prevail? Trapped in a world of nearly permanent ZIRP?
Will the short-term trend break everything? Housing! Stocks! Bonds! Employment!
Will it be a combination of both? Or neither?
Stay tuned for the next exciting and terrifying episode of...
Global Devolution!
16 comments:
https://en.wikipedia.org/wiki/Whip_inflation_now
Having broken the channel on the downside, the Fed now has to correct by breaking the channel to the upside. It won't last, but it'll sure leave a mark.
Yeah, it’s certainly leaving a mark on Stagflationary Mark’s April TLT purchase.
This is not how I intended to ride the bull. My bottom’s sore, lol. ;)
That said, I continue to believe that we haven’t put ZIRP permanently behind us.
https://twitter.com/MacroAlf/status/1581724155019374598?s=20&t=8BOqw6ebuHn7Tzd2ehrWew
Contrary to popular belief, higher levels of government and private debt lead to lower (real) yields over time - not higher.
It's all about equilibrium: a world swimming in (unproductive) debt needs lower and lower real yields to remain functional.
Believer. The real yield on the 20-year TIPS is now a whopping 1.89%. I can’t believe that it’s sustainable, given all the headwinds we face.
https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Speaking of unsustainable, it was 74 degrees at 4:00am last night where I live (just outside of Seattle). And 88 today! Joked to my neighbor that I was thinking of building a snowman.
I cannot believe that I’m watering my lawn right now, in mid-October. Crazy.
"(or decay)"
I'm glad you made that point.
One of our local financial advisor office's has been offering 4+% 1 yr. CD's. Only this week they upped the ante to 100K minimum. I need to stop in soon and thank them for the help.
Anonymous,
My neighbors are moving. Will be giving up a low rate mortgage for a high rate mortgage. I told them that had to hurt but maybe they’ll get a chance to refinance in a few years at a better rate. They said they’s what they are hoping for.
I told them that I am sharing their pain in TLT. We’re both positioned the same way. Betting on more decay, at least over the long-term. Not a sure thing, by any stretch of the imagination. Lots of uncertainty. Perilous times.
I waded bought some more ZROZ this morning. There’s got to be a bottom somewhere, I hope.
Great Unknown,
It’s definitely been painful. I keep expecting our economic Jenga Tower to experience a “soft landing” each time the Fed removes an interest rate block, but there it still stands, seemingly as resilient as ever. Even with all the cracks and termite damage. Amazing.
I worry that we will not get what we hope for, but I also worry that we do. The Jenga Tower is especially high right now. The landing might crush us all. *cringe*
Hey, maybe the next generation has workable solutions to our many problems.
https://twitter.com/WallStreetSilv/status/1582731244541947904?s=20&t=tn8JTYPe9iIDOSGVvQy9Iw
Or maybe not. *cringe*
I feel your pain. I am trying to view my TLT and similar ETF positions as an insurance policy in case we”re right.
https://schrts.co/uneQvpqM
As seen in LTPZ, Inflation protected bonds have done worse than TLT since I bought TLT.
Market has not predicting perpetual 1970s.
However, LTPZ has been outperforming TLT lately. I think it’s just short-term but it’s worth watching. It’s concerning.
The big risk is the Sovereign debt crisis theory that those such as Luke Gromen have been advocating. It is very possible that we are there. In that case we are truly in for tough times.
Yeah, that’s truly a nightmare scenario.
I own a home knowing that something is virtually guaranteed to destroy it someday (earthquake, volcano, asteroid, war, ….).
I own US Treasury bonds knowing that something is virtually guaranteed to destroy them someday. Might even be the same thing that destroys my home.
It’s all in the timing. Will it happen in my lifetime? I don’t think so, but thinking about it doesn’t help my insomnia. I do have this Illusion of Prosperity blog. A Sovereign debt crisis would certainly pop the illusion. Big time.
Twitter thread by MacroAlf that’s worth reading:
https://twitter.com/MacroAlf/status/1583491735820603392?s=20&t=0mFiTFvIYTIkEtHZVhedyQ
FYI - your "Seattle: CD Rates" link is no longer working.
Thanks!
Replaced it with CD Rates in Washington. :)
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