Monday Morning with Rick Ackerman
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Interesting thought on the long term treasuries Birdman.
Bond crash across the world as deflation trade goes horribly wrong — Ambrose Evans Pritchard….the Telegraph
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11666355/Bond-crash-across-the-world-as-deflation-trade-goes-horribly-wrong.html
Thanks for the link to the Evans-Pritchard piece.
That is a mind bender isn’t it. Especially against a deflationary backdrop. I think we need to keep our minds open to anything at this point. Over here we are seeing inflation build lately and its contradictory to the underlying global trend. I don’t think that the Fat Lady has sung yet though. We need a couple more acts before we will know for sure which way this turns.
Next leg down for the 30 year should get underway tomorrow or the next day. It’s close though so worth keeping a close eye on it.
If deflation is the name of the game, then how can one, such as Rick, believe that bonds are a good place to be? In that environment, cash is king and interest rates are high. I’m not so sure about a sustained rally in T-bonds going foward.
Try this….it will help explain a lot.
Monetary Velocity & John Exter’s Inverse Pyramid
http://www.kitco.com/ind/Taylor/2014-07-21-Monetary-Velocity-John-Exter-s-Inverse-Pyramid.html
good article post BM.
Thanks Rick. I am looking at the 30 year from the monthly chart right now and feel less optimistic that the bottom is in yet. Looks to me another 5 bucks could easily come off it and still be inside its channel.
I am thinking that we don’t get a real reversal until later in the summer as we approach September and some traders move strategically out of equities into safety. In general though I am in agreement the bond bull has not ended.
Maybe you caught Lacey Hunt’s excellent interview on the show a few weeks back. There is no question he is in your camp that deflation is alive and well and fixed income is still the place to be.
One of the indicators I follow is Velocity and that chart has clearly not hit bottom yet so we are not out of the woods by a long shot. And yet, there are incipient signs of inflation building that are confusing the equation for a lot of people including myself some days.
Money supply is growing again and that point was brought home in a recent article by Ambrose Evans Pritchard titled “Bond crash across the world as deflation trade goes horribly wrong”. I will link it below for anyone who did not see it already.
Anyway, I am thinking this may just be about timing over the next few months. The long bond wants to finish its current decline before the stock market begins what many believe is a long overdue correction. It makes sense in a way. Money needs to go somewhere and bad news (we know its coming) will lift most likely Treasuries as they flatten stock markets.
Meanwhile, here is Lacy Hunt with his 2015 first quarter review.
Hoisington Investment Management First quarter Review 2015
http://hoisingtonmgt.com/pdf/HIM2015Q1NP.pdf