February 20, 2024

 Inflation is NOT a problem.

A growing economy is BULLISH (not bearish) for Bonds.

THEY LOOK READY TO GO ON THE UPSIDE AGAIN.

My recommendation is to buy them…right here, right now.

One and a half years ago, all of Wall Street’s economists, analysts and “strategists” (what a joke) started calling for a recession…and continued to do so throughout 2023 as the economy did nothing but EXPAND…And those same know-nothings predicted the S&P 500 would finish 2023 at 4000…when it closed out at 4700…AND they are also the same geniuses who were screaming “rates going higher” last October, precisely when Treasuries were making their lows and about to rally almost 20 points during the next 10 weeks…AND they’re the same people who were calling for $100+ a barrel Crude Oil prices last year, only to see it end 2023 at $70…Those are just a few examples that solidify my long held belief that all of those investment industry self-proclaimed “experts” are exactly the opposite of that…just crowd following, well spoken, suits that are adept at repeating BACKWARDS market myth cliches, and are generally MUCH more ABSOLUTELY wrong than right (if they ever are), with their single greatest talent being in CYA type “revising our forecasts,” and rarely just saying, “We were deadass, miserably wrong.”

As always, I do not hold myself out as some sort of market guru…I am sometimes dead, dead  wrong but I do somewhat frequently get it quite right as well, wherein, with those guys, my impression, going ALL the way back to having spent my first 11 years in this business at a major brokerage house (Merrill Lynch), is that the VAST majority of them, some quite well known, are only worth listening to as an indicator of what NOT to think or do. Period.

Why the, “they’re dummies,” rant? Because regarding the interest rate markets, those same people have quite typically taken two events (see below) during the past few weeks, and interpreted them in their classically backwards fashion, to once again, after having already missed the afore mentioned  20 point bull move, infer that this is NOT where you should be buying Treasuries…that rates, they believe, for the time being, are NOT going lower…And I disagree. Same as I was screaming 3 months ago, my recommendation is to BUY TREASURY BONDS, here and now…that they ARE on the way a LOT higher (and rates lower)…and that the recent 6 point selloff is a fantastic opportunity to get long.

The events? One, the last Employment report that showed 353,000 new jobs created during January, thereby indicating that the economy is quite strong (true), and by Wall Street’s “logic,” rates therefore cannot be heading lower…which, simply stated, is absurd. As I have noted for years, internationally, there are literally billions of dollars every day that HAVE to buy some long term debt instrument, and US Treasury Bonds forever have been, and still are, regarded as THE safest piece of paper on Earth…and the idea that, “investors don’t want them here,” is just stupid. I mean, this IS a 20-30 year investment, and you’d have to be horribly naïve to think that some Bank portfolio manager, in Europe, or South America, or Asia, or Africa, or ANYWHERE, who has funds that HAS to buy SOME piece of quality long term debt today, is going to be thinking, “ The US economy appears to be too good. I don’t want US 30 Year Bonds.”

Enough talk. Here are a few charts…and my current recommendation…

BUY THIS CALL OPTON

Ignore all the chatter about the Fed doing this or that…Ignore ANYONE who argues that a strong economy is bearish for Bonds…Ignore anyone who says that interest rates can’t go down when 1000’s of new jobs are being created every day…Ignore anyone who actually still believes we are actually in an inflationary cycle…JUST GET LONG HERE...And know that Bonds DO commonly move 15-20-25 points in the course of 2-3 months.

And what I hate…and love…about the Bond market?

Since ALL of the “experts” in the interest rate markets are THE BIGGEST SHEEP IN THE INVESTMENT BUSINESS (think conservative, never-rock-the-boat, follow-the-crowd, banker types) they ALL spend their days just repeating the “logic” they hear from their peers, which, in this area of the markets (interest rates) that since LONG ago, over and over, I have proven to be my very best opinion (not always right for sure), means that I am inevitably always making a case that goes TOTALLY against what all those know-nothing yakheads bleating, unanimously, to the whole world…And that, for this old, old hack/hand (take your pick) is what always makes it feel almost impossible to get people on with me whenever I am involved in an interest rate trade. Which I hate. But I also LOVE, as, and I definitely do not say this over-confidently, SOMETIMES IT JUST MAKES IT EASY TO “KNOW” THAT I AM ON THE RIGHT SIDE OF THE MARKET,

Same as I was screaming back in October…THIS MARKET IS A BUY. Maybe now I’m dead, dead wrong but my recommendation is: Don’t just watch the next 20 points happen.

Call if you want to talk about it…

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

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