Aug 26, 2022·edited Aug 26, 2022Liked by Alfonso Peccatiello (Alf)
I don’t understand one thing: if the yield continues to rise (with Fed’s rate), the 10-years bond price may decline further for long term. Why should we buy bonds now while the price may crash further?
I’m still curious to see how the Fed responds once tax receipts fall (off a cliff seemingly) and the Treasury must continue to issue debt at new higher (unsustainably higher) interest rates - and the dollar wrecking ball continues to encourage triggers to monetary geopolitical instability around the world. Michael Kao has a good Twitter thread speculating on the likelihood of Asian contagion 2...
Spent a year listening to macro appreciating we are at "end times" and that as a lay person I needed to get clued up for purposes of wealth preservation. I didn't bother going in on the last rally because it seemed obvious that Fed was nowhere near pivoting and Earning bottom on a recession (irrespective of definition) was yet to ride in on the back. Feeling chipper this evening.
On another note, Alf would love you to tackle CBDCs at some point. Great Reset/WEF trending everywhere on Twitter. People are joining the dots. Obviously politics not necessarily your baileywick, but fascinated that Danielle deMB is saying Powell is against; Democrats for. Clearly CBDCs could undermine commercial banks by walking around them direct to the people. There is inherent tension here, but no one in the macro world is talking about it. Meanwhile, all CBs quietly preparing ....
Thanks Alf. I appreciate the cyclical argument but won't things like energy remain good bets due to supply issues and discretionary be more at risk as people cut back on wants and focus more on needs like staying warm and food?
I guess we'll see in 24 days, will it be 50 or 75. Are they jawboning or are they serious? And they better hope energy doesn't turn, because there's plenty that will remain sticky. At least the money supply is flat for 4 months now.
Al has called this correctly, right from the beginning. He did this even as so many others kept telling us about what they believed was Powell's "softening" of his position. Al has proven that he is not just another pretty face, and that we really should take him seriously.
My guess is, that if he is correct about a six percent unemployment rate on the horizon, then real estate rental market ROI is in for an ugly slide. If that happens, then CAP rate could get ugly, and there will be added downward pressure on investment real estate. That, along with rising short term rates, will be a punch in the gut for vacant land prices.
"..build up exposure if 10y Treasuries trade in the 3.25-3.50%" Grazie for confirming my sense that this is the upper bound. Still uncertain if U.S. treasuries hold or trade. But agree in this market these offer value albeit moving carefully.
This is amazing work. I’ve been a full-time investor now for the past five years. My first three years have been difficult. But these last two years I’ve created amazing strategies and insight from a macro perspective that leads me to better trade on a short-term technical timeframe. Every day I’m learning something new here, and like you said in the previous write up, true wisdom is knowing that you know nothing. I love these reports, thank you as always!
Employment is full and employers are crying out for staff. Zombie companies have been allowed to rumble along, suppressing free labour. Conditions tightening won’t necessarily equate to rising unemployment, we need the productive job vacancies to be filled first. Only then will wage inflation be tempered. It’s going to be a difficult transition (not least politically) but surely slaying the zombies has to be the way out of this?
So Alf you are positive that when those high rates break something they will not cry uncle and pivot? Specially in an election year? The FED tends to change speeches way too fast.
Need to be careful with those clueless madafa**ers
I don’t understand one thing: if the yield continues to rise (with Fed’s rate), the 10-years bond price may decline further for long term. Why should we buy bonds now while the price may crash further?
Thank you for some clear and usable analysis. You don't waffle you actual give an opinion.
I’m still curious to see how the Fed responds once tax receipts fall (off a cliff seemingly) and the Treasury must continue to issue debt at new higher (unsustainably higher) interest rates - and the dollar wrecking ball continues to encourage triggers to monetary geopolitical instability around the world. Michael Kao has a good Twitter thread speculating on the likelihood of Asian contagion 2...
Spent a year listening to macro appreciating we are at "end times" and that as a lay person I needed to get clued up for purposes of wealth preservation. I didn't bother going in on the last rally because it seemed obvious that Fed was nowhere near pivoting and Earning bottom on a recession (irrespective of definition) was yet to ride in on the back. Feeling chipper this evening.
On another note, Alf would love you to tackle CBDCs at some point. Great Reset/WEF trending everywhere on Twitter. People are joining the dots. Obviously politics not necessarily your baileywick, but fascinated that Danielle deMB is saying Powell is against; Democrats for. Clearly CBDCs could undermine commercial banks by walking around them direct to the people. There is inherent tension here, but no one in the macro world is talking about it. Meanwhile, all CBs quietly preparing ....
Thanks Alf. I appreciate the cyclical argument but won't things like energy remain good bets due to supply issues and discretionary be more at risk as people cut back on wants and focus more on needs like staying warm and food?
Fantastic as always Alf, thank you.
I guess we'll see in 24 days, will it be 50 or 75. Are they jawboning or are they serious? And they better hope energy doesn't turn, because there's plenty that will remain sticky. At least the money supply is flat for 4 months now.
Al has called this correctly, right from the beginning. He did this even as so many others kept telling us about what they believed was Powell's "softening" of his position. Al has proven that he is not just another pretty face, and that we really should take him seriously.
My guess is, that if he is correct about a six percent unemployment rate on the horizon, then real estate rental market ROI is in for an ugly slide. If that happens, then CAP rate could get ugly, and there will be added downward pressure on investment real estate. That, along with rising short term rates, will be a punch in the gut for vacant land prices.
"..build up exposure if 10y Treasuries trade in the 3.25-3.50%" Grazie for confirming my sense that this is the upper bound. Still uncertain if U.S. treasuries hold or trade. But agree in this market these offer value albeit moving carefully.
Hi alf, newbie here, could you please explain that 1.5 sigma, 2 sigma thing? How is it calculated? I couldn't get it.
Alf, the work you are doing here is fantastic!
I enjoy your interviews very much, and I will be digging into all of your materials.
Thank you again so much!
This is amazing work. I’ve been a full-time investor now for the past five years. My first three years have been difficult. But these last two years I’ve created amazing strategies and insight from a macro perspective that leads me to better trade on a short-term technical timeframe. Every day I’m learning something new here, and like you said in the previous write up, true wisdom is knowing that you know nothing. I love these reports, thank you as always!
Employment is full and employers are crying out for staff. Zombie companies have been allowed to rumble along, suppressing free labour. Conditions tightening won’t necessarily equate to rising unemployment, we need the productive job vacancies to be filled first. Only then will wage inflation be tempered. It’s going to be a difficult transition (not least politically) but surely slaying the zombies has to be the way out of this?
George Kanakis
Ευχαριστώ για το "λαικ" σου. Δεν είναι λίγη η αναλυτές που εκφράζονται με φιλολογία μόνο και μόνο να φανούν αργότερα να έχουν κάνει λάθος.
So Alf you are positive that when those high rates break something they will not cry uncle and pivot? Specially in an election year? The FED tends to change speeches way too fast.
Need to be careful with those clueless madafa**ers
Excellent comment; thanks Alf and I totally agree