2022 investing thread

[Concrete Helmet]

I have been buying either 6 month or 1 year bills about every other week. I bought a good chunk of 6 month TBills in the auction today. I don;t mind keeping for an extra 3 months given the difference between the 3 and 6 month. But now the 6 month is closing in on the 1 year so I prefer shorter in that instance, We both know that current CPI is already coming down, but the backward looking # that will be released might still be elevated. I am getting the feeling that the rates market has sniffed this out, but maybe not the stock market. If the CPI release is a little soft, I think the curve will steepen, but not sure if that will be from short rates dropping or long rates rising. Given the turmoil in the UK, one has to think that something lurks in our shadow banking system. Given that belief, I still maintain the FED will not get to 4.5% on the O/N rate. However if they do, then I predict they will lower rates soon after. My opinion only, is they will stop soon, but let that rate rest there for a good bit. The problem with our FED is they are always looking backwards and have no one with an ability to think in real terms. They have to see actual numbers, hence why they are all PHD economists, sans Grand Master J. I guess what I am trying to say is that I think short rates are very near a top, just my 2 cents, and am comfy buying up to 1 year out. I think there will be plenty of time to rethink stocks down the road. Look at last week. 5% barrage up and poof it is gone. As to grabbing more, my opinion is if the CPI is softer, then the talking heads will keep up the hawkish talk thus keeping rates a little elevated, so I think you will get a chance to buy. If the CPI is hot, then you can pick up more at an even higher rate. Given such short durations to me it is not worth risking a couple of basis points trying to play the potential reaction to one number.

My stock holdings are at a minimal in my trading account (BHP 10% DIV.) and the rest is in the Tbills with one Wells Fargo 4.0% CD @6mn.. Fortunately our manager of the PSP and my IRA lived through 2000 and 2008 and has a bulK in short term or cash alternatives and inverse ETF's. I'm not planning on going ANYWHERE near the stock market until at least after the beginning of the year and perhaps longer. Sure there may be a bear rally before then but I've already lost an additional 3-5% trying to play that game over the summer plus I have over 10% in metals which are shrinking in accordance with the rising short term rates. Unlike the 2022 UF football team I'm trying to focus on a solid defense for now....

 

[BMF]

 

[BMF]

 

[FireFoley]

 

[FireFoley]

@Concrete Helmet you can pick up an extra double digits in basis points on the short end this AM if you wish.

 

[Concrete Helmet]

@Concrete Helmet you can pick up an extra double digits in basis points on the short end this AM if you wish.

4.24@6MN grabbed some earlier.....but if you don't mind telling me what in the f vck is the stock market so happy about? Between the core and cpi readings Powell may go 100 bp at the next meeting...

 

[FireFoley]

4.24@6MN grabbed some earlier.....but if you don't mind telling me what in the f vck is the stock market so happy about? Between the core and cpi readings Powell may go 100 bp at the next meeting...

Here is what I think, my opinion only. The numbers look awful (they are) but they are very distorted due to the way housing costs are measured. Housing is going way up in the CPI but if you look on the ground house prices (and some rents) are dropping fast on a % basis, albeit from a very ridiculously high level, but still dropping So as you know markets are forward indicators so perhaps they are sniffing out that the lows are close to being in. Also could just be a dead cat bounce. You know eventually the sellers are finished and you get these massive short covering rallies, etc. And I am sure there is no way Grand Master J would ever go 100bps in these circimstances, given he has already said multiple times that 75bps is an outsized move.. Just like early last week, I will use today to take some profits from recent buys, raise a little more stock cash, and await new lows if they come.

 

[Concrete Helmet]

Here is what I think, my opinion only. The numbers look awful (they are) but they are very distorted due to the way housing costs are measured. Housing is going way up in the CPI but if you look on the ground house prices (and some rents) are dropping fast on a % basis, albeit from a very ridiculously high level, but still dropping So as you know markets are forward indicators

Good point. Housing ran ahead for 6 months after the stock and bond markets started to rollover which I believe was due to the Fed waiting 4-6 months too long before raising rates.
As usual it seems the Fed is always behind the curve and causes a lot of knee jerk reactions. I think housing could cool down for another 6-8 months before we see any downtick in mortgage rates and hopefully smaller incremental ones when they come. We really need to get it(housing) normalized so we don't end up right back to where we are now in another 2-3 years.

 

[BMF]

Good point. Housing ran ahead for 6 months after the stock and bond markets started to rollover which I believe was due to the Fed waiting 4-6 months too long before raising rates.
As usual it seems the Fed is always behind the curve and causes a lot of knee jerk reactions. I think housing could cool down for another 6-8 months before we see any downtick in mortgage rates and hopefully smaller incremental ones when they come. We really need to get it(housing) normalized so we don't end up right back to where we are now in another 2-3 years.

Once people get used to 6+% being "normal" the housing market likely settles in and starts making a run again....but we're still months away from the bottom (12-24 months?). Even during the 2002-2006 run up the rates were well over 5%.

 

[Concrete Helmet]

Once people get used to 6+% being "normal" the housing market likely settles in and starts making a run again....but we're still months away from the bottom (12-24 months?). Even during the 2002-2006 run up the rates were well over 5%.

Sounds reasonable but demand is still there due to the expense of renting. I agree with the "resetting the bar" narrative which is why I hope they don't drop the rates rapidly but rather incrementally so the inflation factor doesn't bite back too quickly which feels weird saying for me. Obviously it's an instant shot in the arm for our business but sometimes it works out better for long standing businesses when a lot of the undergrowth get burned away....Weird times though for sure when you're used to long term rates that have gone down at a 45 degree angle for the last 40 years....

 

[Concrete Helmet]

Well this idiot would know...and has 8 years of prior experience

Biden Asks Officials To Prep For Possibility Of 2008-Level Financial Crisis: REPORT

 

[BMF]

10-year at 4.22 today.

 

[FireFoley]

10-year at 4.22 today.

15 year high. Hoping the week ends on the upswing. would like to buy some 6 month T Bills in Monday auction near 4.60 if possible.

Speaking of the 10 year, what happens when the 30 year Conventional mortgage has an 8 handle???

 

[FireFoley]

10-year at 4.22 today.

10-year at 4.32 this morning, yes 10 basis points higher.

 

[FireFoley]

Well there is your stock rally this AM. 2 yr has come in 10 basis points and 10 yr has come in 12 basis points since my last post.

Good weekend errbody.

 

[Gator By Marriage]

Well there is your stock rally this AM. 2 yr has come in 10 basis points and 10 yr has come in 12 basis points since my last post.

Good weekend errbody.

Pretty sure I can hear Tom Petty singing "Free Fallin'."

 

[Concrete Helmet]

The shorter rates are actually slipping down today(as did the 10yr after noon). DXY just dropped off pretty good too. I think what we're seeing the start of the end....We're bailing out Europe(which explains the drop in the DXY) and the inflation read for November is rumored to drop substantially. There will be one more increase and the curve will be reverted...that along with a new incoming congress will be more than enough to flip the script by Feb.....better be in the long bond by then....

 

[Concrete Helmet]

@FireFoley Hey did you notice the 10 year crossed under the 3 month yesterday? These shorter term rates seem to be tailing off......probably not related but I also had one of our closers tell me she has closed two 2nd mortgages this week for the same lender that were in high 5's.....maybe some unknown person with the initials JP has started buying up the 10yr?

 

[FireFoley]

@FireFoley Hey did you notice the 10 year crossed under the 3 month yesterday? These shorter term rates seem to be tailing off......probably not related but I also had one of our closers tell me she has closed two 2nd mortgages this week for the same lender that were in high 5's.....maybe some unknown person with the initials JP has started buying up the 10yr?

Oh yeah, I did. It was the first day that the 3 mo. 10yr. inverted beyond a basis point and today it is "significantly" inverted. I don;t need to tell you what that means historically. Much more of a tell than the 2-10 inversion. Be that as it may, I think the move down in rates is due to both Canada and Australia raising rates less than expected. Today the ECB sounds like they will never get to QT. And if you saw the forward looking indicators in today's GDP, they look bleak, regardless of the headline number. Actually predicting negative growth going forward. All that to me is confirming that market rates have topped, regardless of the FED. The 6 month is the 2nd highest yielding treasury only to the 1 year but by only 5 or so basis points. Short duration is a lovely thing in the fixed income world. The entire curved is so inverted that Grand Master J and the gang are either going to have to lower rates soon or kick QT into high gear if they want to steepen the curve. I am very suspect of the latter.

 

[Concrete Helmet]

@FireFoley Just a side note on those mortgages I mentioned...it's true I just went into the wifes office and she was working up 3 more that are between 5.00 and 5.50%, these are 2nd mortgages not HELOC's ...maybe banks know what's coming???