After The Largest One-Day Momentum Crash In History, Here’s The Ultimate Irony
“The last shall be first and the first last.”
That was the story for markets through Tuesday, as value posted record outperformance versus growth thanks to Monday's vaccine news from Pfizer.
The visuals are astounding, and they are myriad (see here, here, and here, for example). During these types of shocks that lead to dramatic dispersion, you can spend all day (literally) conjuring fun charts and statistics. I'll indulge one more. On Monday, the equal-weighted S&P outperformed i
Just idol speculation of the Fed on my part…we’ll wake up one morning to an announcement that they are buying the long bonds. TLT goes from whatever SD below 200 DMA to some goofy move about resistance.
Lower resistance is like 137. No way it’s going to test this before we’re post COVID. Maybe not even while we are still in the existing monetary regime.
The Treasury has already telegraphed that they are going to move from short term to longer term bonds to fund measures.
There is no ambiguity in Fed policy.
A reasonably high probability outcome for the next six months is COVID, businesses close, employment suffers, income suffers, lackluster stimulus, Fed jawbone or purchases creates YCC, Treasury sells long bonds, government funded using 20 and 30 years, checks go out.
What remains is what’s the level of rates where the Fed and Treasury have had enough. When the Treasury wants to fund with the longer bond, and they can fund at 0.6% instead of 1.0%, rates are going to move and they’re going to fund at the lower rate. And, it’s kind of in our nation’s collective interest any longer to want them fund at 0.6% rather than 1.0%.
we are going to need another vaccine