Why is this one "the big one" and not every equally-sized correction (from what I've heard) that has happened in the last year?
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This time there is a confluence of data points. Housing is slowing, auto is slowing, bonds falling (basically unprecedented), Fed tapering QE purchases is a double bind for inflation. Volume never recovered from Feb pullback. Institutional $ leaving/left.
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Yeah, I was just reading your previous tweet about treasury bonds. I know this is semi-unrelated to treasury bonds, but I was always under the impression that "the Fed" raising interest rates and not meddling as much was a good thing so they can do it again in case its needed.
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That is the idea. To bring rates back up so that they can lower again if ever necessary. But whats different now, is that this year the Fed starting selling the bonds that it has bought since QE first began, and the market is collapsing because no one is stepping in to buy them.
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Yeah, seems rational with how the US seems to have been perceived. Do you think this is politically motivated / trade war uncertainty or that no one is interested in safe and reliable. Just looked at the rates and... wow. I can kind of get why no one wants under 3% returns 1/2
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Confluence of all things trade, political, and economic related. I suspect Trump will use trade war talks with China as a card to play if it gets really bad. There were rumors China would boycott the treasury auction today, which thankfully didn't happen. They are hurting too.
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To start: what are you looking for tomorrow? Futures indicating more selling tomorrow. I have this on my mind: "EVERY major decline starts as an appetizing oversold condition to ego driven bottom fishers."
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I'm watching SPY outflows/inflows. Keeping an eye on TLT, GLD (which I don't expect to move). Really there is no where to go. I expect to just see equity outflows for the next few weeks, with wild volatility on dailys. No one stepping in to buy bonds at these rates yet.
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Why is tomorrow important ?
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To see if equities can hold or if the sell off continues. To see how bonds react to the situation. We’re on a ledge.
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Does Trump have a play to thwart the fed and soften the bubble pop and if so how does that change things?
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Yes, trade deal with China is a card that he still holds. He is putting pressure on the Fed right now to slow their tightening of bonds. Fully expect the Fed to cave and slow their tightening over the next few months. Will result in random equity rallies in a volatile market.
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Do you see bonds as the major catalyst? I remember the major international sell off of bonds that happened 2 months ago which i found to be a major red flag. I’ve watched NY real estate prices come to a freeze at the same time as foreclosures are rising. It’s not looking pretty.
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I would rank housing + bonds as the most important. The catalyst this time was a combo of housing data and rates.
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