Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bonds, Inflation & the Market Amigos

Stock-Markets / Financial Markets 2018 Mar 19, 2018 - 05:39 AM GMT

By: Gary_Tanashian

Stock-Markets

The Bonds segment of NFTRH 491 took a turn to tin foil territory to allow the letter writer to expose newer subscribers to his ideological views and thus, bias. #491 also got pretty talky on the precious metals as it did a thorough review of the sector’s status, with silver’s symmetry to 2016 a very key item. Hint: An ill-fated bounce like so many that have come after the 2016 top is not what we are looking for with the next rally, but it ain’t gonna be easy. You can check out this article for a good piece of the picture: Silver’s Equal and Opposite Symmetry to 2016 Indicates Future Sustainable Rally. On to the Bonds segment…


Bonds, Inflation & Amigos

I’d like to put the bond segment right here after the US stock segment because bonds/yields are so important to sector selections in stocks.

As noted at the site on Thursday I took the bird in hand (profit on combined price and distributions) of the longer-term bonds funds (3-10yr) held in favor of long-held cash equivalent T-Bill funds (SHV) and a far smaller position on 1-3 year Treasury funds (SHY). SHV is after all, going to keep pumping out reliable monthly income that improves with every Fed rate hike.

If this were October 2008 or March 2009 I’d say sure, cash is trash because risk vs. reward in stocks was very positive. But with the combination of a mature stock bull market showing signs of volatility and a rising Fed Funds rate the opposite situation is at hand… cash is not trash.

On the longer-term bond picture, while anti-bond sentiment had built up to a degree perhaps sufficient to propel TLT to its 200 day moving average (black) the pump to the 50 day average was fine for me to get off the contrary bond bounce play, at least actively using my own funds. Point proven… you get a triumvirate of experts pumped at you day after day by the media, you prepare for a contrary outcome. That manifested in a bounce.

But what of inflation? What of deflation for that matter?

Affixing the Tin Foil Hat

It is the age old story as a deflationary force pulls the macro toward its gaping maw (of debt reconciliation) and valiant (some, like your letter writer would say manipulative and immoral) policy makers, both at the Fed (monetary) and in politics (fiscal) try to forestall it by pumping ever more inflationary policy into the system.

That my friends is where the disparities of society come from; the unending supply of inflationary policy always at the ready to drive asset prices in one casino or another. But in order to benefit, you have to have a seat at the table. The poor and middle class do not have seats, at least not with the high rollers.

I am going to go idealistic on you here for a moment. The system is in my opinion morally bankrupt and upon a would-be debt reconciliation, also legitimately bankrupt. Short of a 2008 style liquidation however, as long as the Fed and political fiscal policy makers are allowed to do what they do, which is inflate the economy at every sign of weakness, the system is not functionally bankrupt. It is inflated; a Keynesian experiment lurching forward after a near-death experience in 2008.

So you can see why I did not keep my Treasury bond funds as any sort of investor. As for T Bills, as long as there is a government that functions they should be okay. But one of my core beliefs is that it is all monetary chicanery, from the US dollar to global currencies to bonds (debt) of all prominent indebted nations… it’s a magic show with paper and digital entries representing moving prices of all kinds, but with “value” also being a constantly moving target due to the manipulation of money supplies and debt instruments. Value in my opinion, does not exist in the modern conventional realm.

So the bottom line is that neither the United States nor other developed economies are going to go functionally bankrupt as long as central banking has a say in the matter. As long as the majority of global participants accept central banking as a necessary component of the modern financial system (and as long as inflation expectations are under control) there will always be inflation and as such, there will always be great and growing disparity between the rich and the poor.

Current asset owners can invest more and capitalize during the long stretches when debt reconciliation is not in play (most recently from 2009 to today, and previously from 2002 to 2008) and with central bankers perceived to be at the ready, always expect the next bailout if things go wrong. The poorer classes do not have the ammo to deploy during liquidations because they’ve barely managed to keep up with inflation during the previous centrally managed expansion.

And so it goes, and thus the reasons NFTRH uses bonds as market indicators much more readily than as serious investment alternatives. I just wanted to make that clear for newer subscribers as I may have been seen as pro-bonds out there in public of late. I am not pro-bonds, just anti-media touting that panics the herds at ill-timed junctures.

I am anything but pro-bonds. What I am is a macro signal observer. One critical signal is the Continuum (30yr yield) with its monthly EMA 100 ‘limiter’ (aka Amigo #1).

So it is no surprise that with all the rising interest rate hysterics in play for the last few months, global yields have started to ease. When playing it straight, the red line on the chart above is a caution point. When playing it idealistically I cannot see how the line of demarcation for a chronic inflator was not broken years ago.

Back to the US, the 10yr yield has moderated as L/T bonds have bounced…

…but the 2yr continues apace, and thus the yield curve is still flattening.

The bigger picture view (of Amigo #3) is clear. It’s a boom.

SPX/Gold Ratio (Amigo #1) says “It’s a boom.” These are the signals playing it straight. It’s still a boom for now. Manage it with your head rather than fighting it with your heart.

Subscribe to NFTRH Premium for your 40-55 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Also, you can follow via Twitter ;@BiiwiiNFTRH, StockTwits, RSS or sign up to receive posts directly by email (right sidebar).

By Gary Tanashian

http://biiwii.com

© 2018 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in