Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[petegz28]

Originally Posted by TwistedChief

Sorry, but that’s an entirely ridiculous analysis.

Term premium - or the amount investors are compensated for investing in longer maturity interest rates - is low. A portion of that is a function of the Fed’s large holdings of Treasury securities. But a larger portion is the fact that 30y German bonds are yielding -0.20% (exerting a global pull lower in yield) and a portion is a function of lower inflation expectations than we’ve faced in many, many decades. So it’s a lot easier

You’ll hear a lot about how the inverted yield curve is an indicator of a coming recession. And while that may be true, there are lots and lots of reasons why it could easily be giving a false positive in this environment given the much reduced term premium mentioned above (ie, inversion has a much lower bar) and a sort of self-fulfilling quality to it all as the Treasury rally tends to accelerate when it inverts because of its alleged meaning. I’d also mention that liquidity - that is, the ease with which one buys and sells - in Treasuries is abysmal right now (JPM released a paper today mentioning that it declined by a factor of 3 this month), and August is seasonally a month very favorable to a flattening of the yield curve.

In any case, if the Fed actually started selling Treasury securities as per the trader you saw on CNBC (I wanna LOL at that), equities would be down 10% tomorrow.

The Fed hasn’t been the problem here, no matter what Trump tells you.

First of all this has nothing to do with Trump so talk about idiotic analysis, you just said the most idiotic thing I've heard in a while. Secondly I don't disagree with anything you said save the part of excusing the Fed. Thirdly I agree that if the Fed started selling it would put pressure on equities but that was not the point this person was making. A Fed cut and a dump of 10 years would in fact right the curve. The fact it would impact equities negatively however is expected. You can LOL all you want but newsflash, just because you are in the business doesn't mean you are the only one in the business.

[petegz28]

Originally Posted by lewdog

Now you tell me!!!

Thanks a lot asshole!

Meh, keep using your EMAs of they work for you. But I am just saying when you hear the talking heads spattering about averages they are using SMAs.

[TwistedChief]

Originally Posted by petegz28

First of all this has nothing to do with Trump so talk about idiotic analysis, you just said the most idiotic thing I've heard in a while. Secondly I don't disagree with anything you said save the part of excusing the Fed. Thirdly I agree that if the Fed started selling it would put pressure on equities but that was not the point this person was making. A Fed cut and a dump of 10 years would in fact right the curve. The fact it would impact equities negatively however is expected. You can LOL all you want but newsflash, just because you are in the business doesn't mean you are the only one in the business.

If you think the inverted yield curve has nothing to do with Trump, you don’t know as much as you think you do about markets.

And further, what’s so great about an analysis (your words) that speak to actions the Fed can take to force the yield curve steeper that would actually increase the odds of a recession? The whole issue of an inverted yield curve is what people think it represents given that historically it often - but not always - presaged recession. If the Fed decided to torque the yield curve by itself, you’d just lose the signal while doing nothing to treat the disease. Correlation <> causation.

[petegz28]

Originally Posted by TwistedChief

If you think the inverted yield curve has nothing to do with Trump, you don’t know as much as you think you do about markets.

And further, what’s so great about an analysis (your words) that speak to actions the Fed can take to force the yield curve steeper that would actually increase the odds of a recession? The whole issue of an inverted yield curve is what people think it represents given that historically it often - but not always - presaged recession. If the Fed decided to torque the yield curve by itself, you’d just lose the signal while doing nothing to treat the disease. Correlation <> causation.

You've said a lot of nothing. How has Trump inverted the yield curve? I have not heard one person claim that so you have the stage.

[TwistedChief]

Originally Posted by petegz28

You've said a lot of nothing. How has Trump inverted the yield curve? I have not heard one person claim that so you have the stage.

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

[petegz28]

Originally Posted by TwistedChief

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

I've heard all that before from a few and I call bullshit. That just sounds like partisan bullshit. Your opinion on his "stimulus policy" is just that. Your political bias was injected several posts back and again at the end of your post here. The Fed raised too far, too fast and it had little to do with any tax cuts or trade policies. AS usual, the Fed ****ed up and they have a history of doing so. Not to mention the trillions of $'s in negative yields globally that existed before Trump. Europe has been a shit hole for a long time. I think in a previous post you eluded to negative rates being a reason for inversion and you should stick more to that than a President wielding power to invert the yield curve.

We'll just have to agree to disagree here as you are apparently unable to have a debate on the matter without accusing those who may disagree with you of doing it out of political bias. Then again you blasted me the night all the Reek news broke claiming I was ignoring all this "evidence" and just rushing to defend Reek because I said from the off that something about the story was not right. And we saw how that worked out.

Clearly you're a professional in the game but there are lots of professionals in the game. Many with differing opinions than yours.

[Hog's Gone Fishin]

As much as I like Trump for standing up for America. I have to tell you my daughters economics professor says Trump is a complete idiot.

[scho63]

Originally Posted by Hog's Gone Fishin

As much as I like Trump for standing up for America. I have to tell you my daughters economics professor says Trump is a complete idiot.

And you are surprised how.......???

[scho63]

Originally Posted by TwistedChief

I don’t know whom you speak to. I worked at Goldman Sachs for a decade and was a managing director on the US Treasury Desk. Since then I’ve worked at a hedge fund as a portfolio manager. I can assure you that people I speak to on a daily basis think Trump is a prime reason the curve has inverted. And why? Simply, his trade policies have put a crimp in the global supply chain, increased uncertainty, and slowed global growth. If you want to go deeper, he crafted a stimulus package that was completely unnecessary (and in the end also far less effective) when the economy was at or near ‘full employment,’ which prompted the Fed to raise rates faster than they otherwise would’ve done. This did nothing to increase ‘trend growth’ or the supply side of the economy as had been promised.

I’m no fan of Trump and I realize I’m arguing with somewho would has a sig celebrating him, but this is my view as a market participant, not as someone who is politically biased.

Great post and I have a single question:

What is the perception of the trade war with China as it pertains to China's complete theft of our intellectual property, the manipulation of the currency and the complete trade imbalance?

[Hog's Gone Fishin]

Originally Posted by scho63

And you are surprised how.......???

Well, I actually know the professor on a personal level. He's Republican and a Vietnam vet. So, I must say the comments he made did surprise me somewhat.

[petegz28]

Originally Posted by Hog's Gone Fishin

Well, I actually know the professor on a personal level. He's Republican and a Vietnam vet. So, I must say the comments he made did surprise me somewhat.

Not going to get political but anyone, regardless of whom or what party, that wins a Presidential election when literally all the odds are overwhelmingly against them is hardly an "idiot".

[MahiMike]

Originally Posted by lewdog

People have said we have hit a bubble since 2017! Timing the market correctly, while dumping that cash to gold isn't really a good plan for anyone. Unless you have that crystal ball on timing the market............

Gold is up 30 pct in the last year. Stocks 3 pct. Countries around the globe are stockpiling in millions of pounds. They know the central banks are out of options. Everyone should have at least 10 pct in gold.

[petegz28]

Originally Posted by MahiMike

Gold is up 30 pct in the last year. Stocks 3 pct. Countries around the globe are stockpiling in millions of pounds. They know the central banks are out of options. Everyone should have at least 10 pct in gold.

I've never bought into that theory at all. First of all most people don't buy gold, they buy gold stocks. Secondly it's a brief hedge that fails to last. So unless you are good at timing you might as well buy the stocks that are down and benefit in the long run. If you want to trade gold then trade it. Otherwise the "you should always have 10% in gold" is a bunk philosophy in my opinion.

Finally, say you do buy physical gold. Take that to any retail store and let me know of they take it instead of $'s.

[petegz28]

Take it for what it's worth as you should with any Wall St. Pro but I have always liked Mohamed. I am sure TwistedChieft knows him and or hates him for whatever reason...

https://www.cnbc.com/video/2019/08/1...-el-erian.html

Problem isn't the economy, it's the markets' sensitivity, says Allianz's El-Erian from CNBC.

[TwistedChief]

Originally Posted by petegz28

Take it for what it's worth as you should with any Wall St. Pro but I have always liked Mohamed. I am sure TwistedChieft knows him and or hates him for whatever reason...

LOL. Well, I have met him before while visiting Pimco's offices, but his explanation basically parallels mine in that politics (read: Trump's trade fancies amongst others) are polluting markets. So now you have two people who are telling you that Trump is in large part responsible for the inversion of the yield curve. Hope you listen to El-Erian as he is indeed very smart and thoughtful.