November 13, 2024

We are now in the 6^th day of trading following the election surprise…For sure, investors on both sides of the aisle wanted their candidate to win, but NOBODY knew the outcome…and nobody knew it would be so conclusive…And so what is happening now is a LOT of money is obviously PILING into a lot of paper (Stocks, the Dollar and Crypto) with a bullish attitude that I believe has a kind of “How can I lose?” fervor to it, the mob mindset being, “Trump is gonna be good for business! And the economy! Don’t wait. Buy the Stock Market now!”…which I think reeks of the sort of investor “certainty” that is often followed by that certainty turning into major “disappointment.”

I think the buying frenzy finishes any day this week…and that anyone who is buying (chasing) up here will be sitting on losing positions within days or weeks…and it will stay that way for a long time.

The next thing I see is “disarray” coming with DT’s policies (known and unknown) introducing 2-3 months of tremendous uncertainty, disruption, fear and market distortions…with nobody being able to predict what the real world outcomes of his policies will be…which I believe does not bode well for further stock market gains. Quite the contrary…and just as supposedly bulletproof Gold has just surprised analysts (nothing new) and investors by dropping over $200 in a matter of days, I think the same “unexplained” sell off could be what’s coming NEXT in Stocks…

ALL of the markets ARE driven by what every  supposedly “professional” and individual investor reads/hears in the financial media…and that being said…I can’t imagine that there is ANYBODY left who hasn’t already gobbled up all the tech and chip stocks they possibly could…topped off by the mad chase during the past 6 days…which leads me to think: EVERYBODY IS IN…WHICH, TO ME MEANS…SELL STOCKS HERE. SELL STOCKS NOW.

And midst all that I continue to believe that Bonds will be THE bullish beneficiary…I mean, the talking heads can yak all they want about inflation, or strong economy, or the Fed slow-going, and the possibility of another surge to higher yields…but what I say is NOBODY on the planet is going to sell US Treasury paper here…and that furthermore, with the GLOBAL uncertainty generated by “What WILL he do?”, regardless of what anybody’s political view of the USA might be, OUR TREASURIES ARE STILL THE BEST & SAFEST PAPER TO BE IN RIGHT NOW…ESPECIALLY WHEN CONSIDERING THAT BONDS ARE FULLY 80 POINTS OFF THEIR 2020 HIGHS…AND, IN MY OPINION, HAVE SPENT THE PAST YEAR MAKING A LONG TERM BOTTOM.

In reality, I THINK WE HAVE SEEN THE LOWS IN BONDS, AND THE HIGHS IN INTEREST RATES, FOR YEARS TO COME.

You want to know what the geniuses on Wall Street and the “pros” think? I posted this several weeks ago and will do so again…because this is, I believe, so, so relevant…

To be clear…Speculative funds are massively short…BETTING ON HIGHER RATES…and to exit those shorts, they have to BUY.

And this kind of says it all to me…that if the Fed doesn’t get going, next spring is going to be awful…

And do not forget that this is the same Fed that totally missed the inflation surge in 2021…and then had to play catch up…And I believe are making the same mistake again…and quite soon, any discussion of “Will they move a quarter in December?” will be replaced by, “The Fed needs to start cutting rates in HALF PERCENT increments…and they need to start NOW!”

THIS IS THE BET TO MAKE ON A DECLINE IN SHORT TERM INTEREST RATES

This contract (formerly the Eurodollar) goes up as short term rates do down…

And HERE ARE TWO BOND CALLS THAT I LIKE HERE…

I definitely recommend doing some of both the short rates (SOFR) AND the Bonds…

The Fed can’t wait…Wouldn’t you think that RATES HAVE TO START COMING DOWN NOW…or next spring could be one of the worst housing markets since the Great Recession? I think so.

Call me if you think these ideas are worth doing.

Thanks,

Bill

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: SOFR, Bonds