November 14, 2024

The media is basically talking about nothing but “higher rates,” or “rates staying high,” or “coming down very slowly.” In other words, inferring that Treasury Bonds are NOT a buy here…I TOTALLY DISAGREE. I THINK THEY ARE A MAJOR BUY…AND THAT, IN REALITY, WE HAVE SEEN THE HIGHS IN INTEREST RATES FOR YEARS TO COME.

To wit…Just a few headlines from today…all basically bearish the interest rate markets.

As I see it…

It would be really bad for the Bond market if the Fed was saying, “We don’t care” what Trump’s win means for the economy, spending, inflation, etc. Conversly, however, they ARE giving a nod to all that…They DO “care,” and in my experience, this “attitude” is BULLISH for Bonds…I literally cannot count the times I’ve seen exactly this at Bond Market Bottoms.

THIS IS WHEN YOU BUY THE BOND MARKET. I’ve said it for decades…Bonds are THE contrary opinion market…For reasons that relate to the extremely conservative “banker type mentality” of fixed income interest rate participants, the Treasury market has, by far, more of a “crowd following” or “bandwagon” factor than ANY other market…such that, at the turns, the I’m-following-everybody-else groupthing is ALWAYS overwhelmingly one sided, and at a Bond Market Bottom, this mob “logic” ALWAYS argues for “rates going higher.” Period.

I URGE YOU TO IGNORE ALL THE USUAL SUPPOSEDLY “LOGICAL” BEARISH NEW YORK CLAPTRAP AND BUY THIS MARKET…HERE WITH ME…AND IN THE REAL WORLD INSTRUMENTS.

Think about this…In the paper investment world, there are two basic asset classes…Stocks and Bonds…and trillions of Dollars are always invested in both…but funds also are constantly moving between the two…And right now, Stocks have been flying, and Wall Street is howlingly bullish…while Bonds are at 15 year lows (but actually turned up a year ago), and the brokerage house word is, “Don’t buy it here,” which I think is just absolutely, totally BACKWARDS…

A final note…I have a buddy who grew up in the mortgage business (literally, with his father), and has been in that industry for 50+ years…And being an old, old hand, he is obviously well established and not ever lacking for clients…So I was blown away several days ago when he told me that he currently has ZERO loans working on this books…and where one might argue that November is not the “busy” season in residential real estate, for a professional like him to have NO current business whatsoever suggests to me that this highly important sector of the economy is in trouble…And without getting complicated, I would say that LOWER INTEREST RATES…RIGHT NOW…IS ALMOST AN IMPERATIVE.

Pick up the phone…Be that 1 in 10 guy…

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