Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
For weeks, if not months, I have been reading one bearish bond article after another. In fact, many of these same writers have been arguing with me for months about the bond rally I expected back in November of 2018. One suggests that this rally is really a “fake,” whereas another has been strongly suggesting that investors fade this rally, with many more supporting their opinions. The problem is that these analysts have been trying to “fade” this rally for the last 10-15% up. Yet, I will gladly bank my “fake” 20% profits on this trade.
As each week goes by, I continue to chuckle about how many people do not understand the context of the markets upon which they opine. Remember how certain analysts and investors were that rates were only headed higher back in November of 2018?
For all of 2019, I have been watching one analyst after another suggesting investors “fade” the rally in bonds. And, of late, these voices have been getting louder and louder, as I just read yet another article calling for the “Great Unwind” in the bond trade.
Well, folks, decades ago John Maynard Keynes noted about such people that the market can remain irrational longer than they can remain solvent. And, 2019 has certainly proven the truth of Keynes’ perspective when it comes to the bond market.
Contributed by Hedge Fund Tips: In the past 30 years, we have had 7 instances of sequential S&P operating earnings drops of 6% or greater (data table below highlights sequential drops in yellow/red). In each case, it was not a positive – and a stock market correction reflected the downturn in economic activity.
There is a KEY distinction when referring to sequential operating earnings declines:
In 5 out of the 7 times, the sequential drop was limited to 1 quarter (SEE Blue Vertical Lines Above) – meaning the following quarter came in above the previous quarter where there was a precipitous operating earnings drop of more than 6% sequentially.
A ‘wild card’ segment has been added to NFTRH reports because I
wanted the freedom to go out of bounds in any direction, beyond our
usual areas of disciplined coverage. Last week it was a look at the
This week it is Fed policy with a side trip down memory lane,
trying once again to illustrate why today is not at all like the ZIRP
era and why the post-2015 re-connect between the Fed Funds rate and the stock market does not bode well for stocks, assuming the Fed really is going soft.
Excerpted from tomorrow’s edition of Notes From the Rabbit Hole, which will also include loads of actionable analysis along with the more theoretical stuff below…