Sunday, April 27, 2014

Treasuries Outperform Nasdaq - Even As "Big Money" Is In The Opposite Trade

Here is a very simple bet:

Visit to see<br> more great charts.

Long the 30 year Treasury, short the Nasdaq. From a technical perspective, notice the recent breakout above the 200 MA of the ratio, the magnificent double bottom, and, over the past two months, series of higher highs and lower lows.

The Treasuries (27 year average maturity) are yielding 3.3% with 17 year duration. The QQQ is yielding 1%. Lower yield, longer duration.

Which one would an interest rate increase really hurt?? The stocks have two ways to lose and the bonds only have one.

Best part: in the Barron's "Big Money" poll, the managers are 89% bullish on U.S. big caps and 89% bearish on treasuries. And they are most bullish on tech stocks.

I'll bet a lot of people who own the Nasdaq are short long bonds, either because they hate them or because of the crazy Tepper "hedge" concept. So, if the Nasdaq falls they will probably buy long bonds to cover. 


theyenguy said...

Global fiat asset prices are falling as the bond vigilantes are calling the Benchmark Interest Rate higher.

A number of investors are still long stocks, or have gone long stocks hoping for a bounce higher, and are short Treasuries.

Those investors who are short Treasuries, such as the US Ten Year Note, TLT, are in for a rude surprise, as its Finviz Chart shows it to be in the process of topping out.

Both Equity Investments and Credit Investments are now trading lower, as both are falling into the Pit of Financial Abandon.

Not only are Nation Investment, EFA, and Small Cap Nation Investment, IFSM, and Global Financial Institutions, IXG, trading lower from their April 9, 2014, highs; this coming on the failure of credit in China, in Russia, and in the US; but now Aggregate Credit, AGG, is also trading lower.

Yes, a see saw destruction of fiat wealth is underway, as Aggregate Credit. AGG, is trading lower, as the bond vigilantes are having success in calling the Interest rate on the US Ten Year Note, ^TNX, higher from its March 1, 2014, value of 2.6%, and are having success in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, as Jesus Christ has released the Rider on the White Horse, that is the First Horseman of the Apocalypse of Revelation 6:1-2, to effect coup d’etats.

The US is increasingly losing its Dollar hegemonic power. In its place the Ten Toed Kingdom of regional economic governance, as seen in Daniel 2:25-45, with toes of iron diktat and clay totalitarian collectivism, that is the diktat money system, is rising to provide political rule and economic experience.

Anonymous said...

Unrelated comment that I think you may find interesting. Couldn't find your direct contact info so feel free to delete this post.

Regarding the state of the credit markets, I received this message from a HY trader.

"We have been working with a Buyer of anything "callable in 2014 or 2015"."

Anonymous said...

"Those investors who are short Treasuries, such as the US Ten Year Note, TLT, are in for a rude surprise"

Anonymous said...

"We have been working with a Buyer of anything "callable in 2014 or 2015"."

Meaning - someone who thinks interest rates are going to rise?