May 1, 2024

Still Short Cocoa

On April 22^nd, I re-recommended shorting Cocoa. It has since begun a collapse that I believe will take it down to at least $4000. Put options are not cheap, and with the market swinging enormously every day, quoting prices here is a waste of time. Call me if you want to explore possibilities.

Still Short Bitcoin

My unscientific guess is that 99.5% of the people who own Crypto do not own it to use it…but rather simply because they have heard, or think, that it is going up in value…

And as I wrote on April 9^th: To me, it’s more of an EXTREMELY expensive accounting mechanism, that does have its uses (primarily in the underworld?) but the simple fact that it’s “value” is in itself expressed in actual Fiat currencies…like the Dollar…would argue that it is essentially useless UNLESS it can be converted into one of those government backed currencies…So, that being said, is it a currency…or just an electronic form of “script” (all of which have historically disappeared sooner or later)…or another version of “Tulip Mania?”

Still expecting more weakness in equities…

And I LOVE THE TREASURY BOND MARKET HERE….

Every time Chairman Powell or some other Fed Governor says, “We’re not ready to ease,” IT’S BULLISH FOR THE TREASURY BOND MARKET. I am relatively certain the average response to that statement will be, “Bill Rhyne doesn’t know what he’s talking about. Doesn’t he know that inflation just won’t go away? And how can the Bond market go up if the Fed isn’t lowering short term interest rates?”

I’m not going to get into some longwinded discussion about how LONG TERM rates move but will simply say that the Fed does NOT control what the Bond market does. For sure, they can exert some influence through what they do with short term rates, but LONG TERM TREASURIES have a mind of their own and even all of those bankers and economists who sit on the Federal Reserve Board will tell you that there are times when they don’t understand why the long end does what it does…And when the Fed is talking inflation “vigilance”, you’d better believe that International and Domestic Fixed Income Investors everywhere LOVE hearing that…and it gives them more confidence in buying THE BEST PIECE OF LONG TERM PAPER ON PLANET EARTH.

Since making a MAJOR, MAJOR bottom last October (with the whole world screaming, “rates going higher”)…and rallying about 20 points…they’ve been drifting lower since January 1^st, thereby convincing the whole world (again) that yeah, “Rates are going higher!” And in the interest of brevity, I will just put it this way: WHETHER THEY BELIEVE THE MEDIA HYPE THAT RATES ARE GOING HIGHER OR NOT, NO HALFWAY INTELLIGENT FIXED INCOME PORTFOLIO MANAGER ANYWHERE IN THE WORLD IS ACTUALLY SELLING UNITED STATES TREASURIES HERE…And if they are, my guess is that a year from now they will be out of a job for having done so.

The Bond market has been accumulating more and more buyers as speculative bearish sentiment has pushed prices lower…and somewhere in here (NOW really), I think Bonds just start up and GO…same as they did in the face of overwhelmingly negative sentiment last October.

 I THINK TREASURIES…RIGHT HERE, RIGHT NOW…ARE A SCREAMING, ROARING BUY…

And if you want to scan the internet to find some opinion that makes you feel comfortable about doing this…to find some opinion that truly agrees with this perspective? You Won’t. Having traded this market more than any other for the past 43 years, I “know” that when Bonds ARE a buy, virtually  of the squawking heads will NOT be recommending doing so…

And then there is the Cattle Complex

WHICH REMAINS A MONSTER, MONSTER SHORT

This is as strong as my opinion ever gets…which does not mean I will be right, and when I am wrong it can mean losing everything you invest…But I DO think 140 in Live Cattle and 180 in Feeders are EASY to envision…again, just to get the bear market started…and hitting anything close to both of those points on the charts above IS potentially VERY big money.

One more time…I think these two options have gigantic potential…And one more time to say: Cattle DO go relatively straight down and I firmly believe this last little two week rally is over and they ARE ON THEIR WAY DOWN…NOW.

And I am still long Cotton, Short Soybeans and Corn…and will address them again in the next few days.

Call me and Do This…

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: Bonds, Cattle