February 1, 2018
Well, well, well…
I know that “GDP Now” (box following) is not infallible…and it does change week to week…but this IS a Fed product that tries to keep GDP estimates updated on a weekly basis. And if their latest number, 5.4%, isn’t going to contribute to those Fed governors thinking they need to move more aggressively on raising rates than analysts and the markets have been projecting, I don’t know what ever would…
I think the Fed is about to absolutely start hitting the brakes harder and I therefore REALLY continue to think the trade is to still be short both Eurodollars…AND Treasury Bonds…which DO appear to be beginning something of a collapse…Wall Street has frightened the public into buying ZILLIONS of dollars in Bonds during the past few years and the majority of those buyers are ALREADY in losing positions…and I think it’s about to get a LOT worse…meaning, I believe, tons and tons and tons of selling.
I THINK TREASURY BONDS ARE GOING IN THE TANK FAR BEYOND WHAT ANY OF THE NEW YORK GENIUSES MIGHT THING POSSIBLE.
Bonds are breaking out of this one year consolidation, and if my experience is any guide, the next thing we could easily see is the straight down sort of move that is often the case in this market…BONDS MOVE when they do move.
Here’s the long term picture…
Here is one option I LOVE right here…
And ditto in the Eurodollars…
I may be dead wrong, but I think big moves are IN GEAR for both of these markets…If you think you have missed the move in Eurodollars…I say they still have a long way to go…THROUGHOUT 2018…so it is NOT too late to get on…
And Bonds? I think they ARE just getting started…I think option prices are dirt, dirt cheap (from being sideways for so long) for the size of moves that ARE normal in this market…
So I encourage you to not just sit there and think, “ He might be right”, and do nothing with this. BONDS DO MOVE…and that is what they HAVEN’T been doing…But it damn sure looks like that is now changing to me.
Your call. Pick up the phone if you want to talk about it.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Treasury Bonds, Eurodollars.