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12 Reasons Why One Advisor Is Betting Treasurys, Not Stocks, Is The Investment Of 2016
While the traditional Barrons' flock of sellside penguins advisors is out and about, for the second year in a row predicting that, after being wrong on its consensus forecast for 2015 of double digit growth in the S&P500, the broader market will rise 200 points to 2220 by December 31, 2016...
... we are more inclined to go with the contrarian call by Prerequisite Capital Management which believes that Treasurys (deflation), not stocks (inflation) are the way to go in 2016.
Here are their arguments why.
- Deleveraging has hardly started: Both in the developed world and Emerging Markets.
- Capital Misallocation & Oversupply: Caused by (a) the cost of capital being held too low for too long, (b) policies that have caused saving & investment (global current account) imbalances to persist much longer than they naturally would have persisted
- Demographic headwinds: Aging populations etc
- CAPEX peak and credit conditions tightening: Escalating credit spreads, lending officer surveys show tightening standards for Commercial loans
- Turn in the Earnings Cycle: Profits and margins starting to compress globally and in USA.
- Tide going out on Buybacks: Growing recognition of corporate irresponsibility
- Global Capital Flows shift: Material regime change in pattern of capital flows last 12 months potentially representing an unwind of the last 7-15 years, engendering instability especially in Emerging Markets (highly elevated risks of banking crises & other shocks in the seasons ahead). Global trade also weakening strongly.
- Prevailing expectations towards higher yields: ZEW survey related inflation and interest rate expectations at peak optimism, ‘late-stage’ bear market psychology towards key commodity markets still absent(with vicious supply dynamics still reinforcing to the downside particularly in energy and industrial metals)
- Velocity still falling (both structurally and tactically): broader liquidity still tightening globally (overwhelming liquidity supply)
- Speculative’ Positioning remains substantially negative towards Bonds: stronger ‘commercials’ persistent in multi-year accumulation of Treasuries. ‘Late-stage’ bull market psychology towards multi-decade rise in Bonds still absent(& under-owned)
- Geopolitical Escalation and increasing trade barriers growing at the margin.
- Fed & Central Banks backed into a corner: trapped by excessive reliance on low interest rate policies (last couple of decades) and QE (over the last 7 years), unable to unwind such programs due to the extreme fiscal constraints of both the public and private sectors.
And some charts why it is TSYs that Barron's "pundits" should - but won't - be pitching.
First, Tightening Lending Conditions, which according to Prerequisite means "we may possibly be about to see bond prices go much higher."
Then a rollover in margin, both profit and debt "increases the probability that the US Stock Market cycle is indeed turning down, and that NYSE Margin Debt will likewise fall from here. (Which is all usually bullish for Treasury Bonds)"
PCM notes that capital flows - namely global FX reserve growth vs global economic growth - have decoupled. They say that "the contraction in Global FX Reserves is more indicative of a ‘regime change’ in global capital flows, which increase the near-term risks of growing instability in world markets & economies."
Next, there is spec positioning in commodities. A simple correlation shows that specs are still positioned far too bullishly, which also explains the stratospheric forward energy P/E mulitples.
Then there is the observation of capital flows becoming more concentrated: "When conditions improve, capital tends to ‘disperse’ more within the economy and the capital markets (rising grey and green lines). However, when times get more challenging or participants are starting to get worried, capital will tend not to disperse, but concentrate into a few key areas (falling grey and green lines)."
PCM's Key Takeaways:
- We do not yet believe we have seen a top in Bonds, and submit further an excerpt from Sidney Homer that captures the sentiments of the previous multi-decade top in Bonds (hat tip: Lewis M. Johnson, whose work we would recommend to anyone’s reading list).
- Such sentiment extremes are more consistent with market tops, such psychology being noticeably absent at present.
- The key risk is that the Bond markets collectively start to punish Government Policies, however, we believe there is still some way to go before such issues begin to gain traction. In fact, in order for Governments to take the more extreme policy actions required to cause Bond markets to revolt, it is highly likely that we would need to see a significant move higher in bond prices (amidst an environment of deflationary shock(s)) before policy-makers would have the tacit approval to escalate their policy experiments beyond the thresholds necessary to upset Bond markets and overwhelm the generally deflationary/low-or-no-growth conditions.
- Due to regime change dynamics that are starting to force an unwind of the last 7-15 years worth of conditions, and some of the issues touched upon in this presentation, we believe that investors around the world are likely to experience an increasing amount of ‘disorientation’ in the seasons to come. Such will require, almost demand, a slightly more ‘active’ approach to portfolio management as the changes in capital flows are likely to be quite paradoxical (& sustained) at times, and we would anticipate some larger swings in Velocity and increasing volatilities as well. In fact, it is primarily with regards to global velocity measures that we would submit will be one of the key metrics to monitor in order to confirm (or pre-empt) any possible turn down in the Treasury Bond markets.
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Time to give Jesse Jackson a call. Not one Irishman among those strategists. Not one.
Does this tell us the current price for renting your reputation like this?
Hard to believe they could make a profit, the amount of business this will produce. Wonder if they understanding pricing of declining-value assets?
Treasuries, really?!!!!! Yes, Until the US gov goes broke, then what?!!!!
Uh, in case you haven't noticed, the US went "broke" quite a long time ago.... see usdebtclock.org
Here's an idea, draw up a graph and extrapolate it to find out WHEN the monthly repayments on US government debt (national debt) to bankers will no longer be affordable leading to default. Now that would be an interesting piece of research.
Who owns Big Auto, Big Oil, Big Pharma and Big Banks? The same people running "Big Government"!!! The 5 trillion pound gorilla in the room:
Rahm Emanuel
Chief of Staff, Son of a Zionist terrorist; dual-citizen of Israel and America.
David Axelrod
Senior Advisor to the President, Jewish.
Elena Kagan (2009- )
Supreme court Justice - Jewish (40% of which are Jewish in the S. Court)
Douglas Shulman
IRS Commissioner, Jewish.
Janet Yellen
Federal Reserve Bank chairman, Jewish.
Benjamin Shalom Bernanke (previous chairman, Jewish) Alan Greenspan (next previous chairman, Jewish)
Source: https://undercover4liberty.wordpress.com/2010/09/26/who-really-runs-the-...
Gary Gensler (2009- )
Chair of the Commodity Futures Trading Commission - Jewish
Mary Schapiro (2009- )
Chair of the Securities and Exchange Commission - Jewish
Jason Furman
Director Of Economic Policy, Jewish.
Steven Rattner
Treasury Advisor For Auto Sector, Jewish.
Robert Rubin
Economic Advisor to the President, Jewish.
Alan Blinder
Economic Advisor to the President, Jewish.
Jon Leibowitz
Chairman Of FTC, Jewish.
Timothy Geithner
Treasury Secretary, Crypto-Jew?. All reliable information points to
him being ethnically Jewish (at least partially), but if not, he
definitely married into The Tribe (m. Carole Sonnenfeld, 1985)
Janet Napolitano
Secretary of Department of Homeland Security, Jewish. Born to
Jewish mother (technically makes her Jewish), she claims her
religion is now Methodist.
Ronald Klain
Chief of Staff to the Vice President, Jewish.
Jared Bernstein
Chief Economist and Economic Policy Adviser to the Vice President.
Paul Volcker
Economic Advisor to the President, Former Head of Fed Reserve,
Crypto-Jewish?
Lee Feinstein (2009- )
Foreign Policy Advisor
Ronald Klain (2009- )
Chief of Staff to the Vice President
Jack Lew (2009- )
Deputy Secretary of State
Eric Lynn (2009- )
Middle East Policy Advisor
Peter Orszag (2009- )
Director of the Office of Management and Budget. Formerly a member
of Clinton’s Whitehouse, advisor to the Bank of Iceland before they
crashed and burned, and also advisor to the Jewish Oligarchs in
Russia when they started stealing billions.
Dennis Ross (2009- )
Special Advisor for the Gulf and Southwest Asia to the Secretary of
State Mara Rudman (2009- ) Foreign Policy Advisor
Dan Shapiro (2009- )
Head of Middle East desk at the National Security Council (yet
another
‘neutral diplomatic Jew’ when it comes to foreign policy matters
involving the Middle East); also a major Washington lobbyist and
fundraiser for the Democratic Party.
James B. Steinberg (2009- ) and Jacob Lew, Deputy
Secretaries of State, second in rank only to Hillary Clinton in
foreign policy
matters (meaning if something happens to her one of them will take
over,
giving a Jew yet another major Cabinet slot); both of these people
are hardcore Zionist Israel Firsters, so it is difficult to imagine
how they
will remain objective and neutral when it comes to dealing with
foreign
policy matters in the Middle East.
Lawrence Summers (2009- )
Director National Economic Council, Crypto-Jew (real name:
Samuelson)
Mona Sutphen (2009- )
Deputy White House Chief of Staff
Eric Lander AND Harold E. Varmus,
Co-Chairs of the President’s Council of Advisers on
Science/Technology.
Penny Pritzker
Obama’s National Finance Chair during the election cycle; she is a
billionaire
heiress
of the Pritzker family fortune (at least 5-7 separate billionaires
in
the family); the Pritzkers are major players in the ’squeaky clean’
Chicago political scene.
Robert Reich
Economic adviser to Obama-Biden.
Nora Volkow
Director, National Institute of Drug Abuse. Great-grandaughter of
Trotsky
(Leon Bronstein), Bolshevik murderer and point man for the
International
Banking Jew’s over-throw of Russia.
Richard Hass
President of the CFR and Obama’s ambassador at large.
Jon Leibowitz
Chairman, Federal Trade Commission.
Alan Bersin
Special Representive for Border Affairs.
Susan Sher
Chief of Staff for Michelle Obama.
Thanks to
Zsidozas
Obama’s Jews, Change we can’t believe in
OBAMA’S LEADING JEWISH ‘CZARS’
Economic Czar
Larry Summers (real name: Samuelson)
Regulatory Czar
Cass Sunstein
Pay Czar
Kenneth Feinberg
Medical Czar
Ezekiel Emanuel (brother of Rahm Emanuel)
Guantanamo [torture]/Military Jails Czar
Daniel Fried
Car Czar
Steven Rattner
Border Czar
Alan Bersin
Climate Czar
Todd Stern
Global Warming Czar
Carol Browner
Climate Change Czar
Todd Stern
JEWS IN INTERNATIONAL AFFAIRS
Richard Holbrooke
Special Envoy to Pakistan/Afghanistan
Stuart Levey
Under Secretary for Terrorism and Financial Intelligence
Lawrence Summers
Chairman, National Economic Council
Paul Volcker: Chairman, Economic Recovery Advisory Board
Jared Bernstein
Chief Economist and Economic Adviser,
Peter Orszag
Director, Office of Management and Budget
Jason Furman
Deputy Director, Office of Management and Budget
Dennis Ross
Obama’s Ambassador-At-Large in the (Entire) Middle East
Jeffrey Zeints
Chief
Performance Officer to streamline government and cut costs as well
as
Deputy Director for Management at the Office of Management and
Budget
Gary Gensler
Chairman, Commodity Futures Trading Commission
Mary Schapiro
Chairwoman, Securities and Exchange Commission
Sheila Bair
Chairman, Federal Deposit Insurance Corporation
Karen Mills
Administrator, Small Business Administration
Jon Leibowitz
Chairman, Federal Trade Commission
Douglas Shulman
Commissioner, Internal Revenue Service
Neil M. Barofsky
Office of the Special Inspector General for the Troubled Asset
Relief Program
(“SIGTARP”)
The Federal Reserve…
Benjamin S. Bernanke
Chairman of the Federal Reserve (replaced by Janet Yellen - Jewish)
FRB of Boston
Eric S. Rosengren: Jewish
Timothy F. Geithner: (former) FRB of New York.
Crypto-Jewish.
Former Goldman Sachs executive Stephen Friedman was acting head
until
May, when questions about his insider Goldman Sachs stock purchases
came
up and he stepped down. Denis Hughes, an apparent Goyim labor
leader,
fills the spot at least until December, when a new one will be
named for
2010.
FRB of Philadelphia
Charles I. Plosser: Jewish
FRB of Richmond
Jeffrey M. Lacker: Jewish
FRB of St. Louis
James B. Bullard: Jewish
FRB of Minneapolis
Gary H. Stern: Jewish
FRB of Kansas City
Thomas M. Hoenig: Jewish
FRB of Dallas
Richard W. Fisher: Jewish
FRB of San Francisco
Janet L. Yellen: Jewish
FRB of Cleveland
Sandra Pianalto: gentile
FRB of Atlanta
Dennis P. Lockhart: gentile
FRB of Chicago
Charles L. Evans: gentile
Kosher Kongress
The
updated list of Jews in the U.S. Senate and House of
Representatives.
Don’t forget the crypto jews and the shabbas goy sympathizers,
which
solidify ZOG’s stranglehold on “our” government. Knowing the enemy
is
half the battle.
To whom do these alien infiltrators pledge their
allegiance? It is not the United States of America or the
principles
upon which it was founded.
U.S. SENATE
Barbara Boxer (D-Calif.)
Benjamin Cardin (D-Md.)
Al
Franken (D-Minn.) He Replaced Jew Norm Coleman in a highly
contested election
vote count.
Russ
Feingold (D-Wisc.)
Dianne
Feinstein (D-Calif.)
Herb Kohl
(D-Wisc.)
Frank
Lautenberg (D-N.J.)
Joseph
Lieberman (I-Conn.)
Carl
Levin (D-Mich.)
Bernard
Sanders (I-Vt.)
Charles
Schumer (D-N.Y.)
Arlen
Specter (R-Pa.)
Ron Wyden
(D-Ore.)
HOUSE OF
REPRESENTATIVES
Gary
Ackerman (D-N.Y.)
John
Adler (D-N.J.)
Shelley
Berkley (D-Nev.)
Howard
Berman (D-Calif.)
Eric
Cantor (R-Va.)
Stephen
Cohen (D-Tenn.)
Susan
Davis (D-Calif.)
Eliot
Engel (D-N.Y.)
Bob
Filner (D-Calif.)
Barney
Frank (D-Mass.)
Gabrielle
Giffords (D-Ariz.)
Alan
Grayson (D-Fla.)
Jane
Harman (D-Calif.)
Paul
Hodes (D-N.H.)
Steve
Israel (D-N.Y.)
Steve
Kagen (D-Wisc.)
Ron Klein
(D-Fla.)
Sander
Levin (D-Mich.)
Nita
Lowey (D-N.Y.)
Jerrold
Nadler (D-N.Y.)
Jared
Polis (D-Colo.)*
Steve
Rothman (D-N.J.)
Jan
Schakowsky (D-Ill.)
Allyson
Schwartz (D-Pa.)
Adam
Schiff (D-Calif.)
Brad
Sherman (D-Calif.)
Debbie
Wasserman Schultz (D-Fla.)
Henry
Waxman (D-Calif.)
Anthony
Weiner (D-N.Y.)
Robert
Wexler (D-Fla.)/
https://undercover4liberty.wordpress.com/2010/09/26/who-really-runs-the-...
the dual citizenship bs I find very irritating and somewhat suspect....who has dual citizenship w/some random country?....do we have many dual citizens with The Vatican? Scotland? Poland? Denmark? it is, at a mnimum, very off-putting.
Whew, I was worried that Eric Holder made the list.
I was just thinking where is the diversity, and why no black jews?
There's Sammy Davis and Whoopie!
P3 bitchez !!!
Elliott wave reference btw
twelve buckets of hogwash that have nothing to do with anything. treasury rates will continue to decline because they must. end of discussion.
every one of the males took daily ass whippings at school for several years
(buzzsaw up there looks like one of the whippers)
Basically banks will now shrink as their jobs are being done by techfin and blockchains for much less debt creation and at much lower cost.
The demise of the digital debt machine built on fractional reserve banking that just LIVES OFF THE CASINO of digital money it creates out of nothing-- skimming the ponzi off the top all guaranteed by tax systems of the state, as it has no asset base of its own-- is fundamentally a deflationary monetary system until it gets replaced by the new money routes of tech fin and block chains.
We are seeing the world move away from the debt casino and its happening faster in the third world which has not been sucked into the casino; aka in places like Africa.
It will come to the first world sooner than we think, unless government blocks it, but they can't as they are part of the problem and cannot stop the move away from digital ponzi of QE + bankster fractional reserve combine. The whole system is now unsaveable.
https://www.youtube.com/watch?v=moTDTJxxpd0
What Fed Increase? Top Treasuries Forecaster Is Bullish for 2016
16 December 2015, by Susanne Walker Barton (Bloomberg)
http://www.bloomberg.com/news/articles/2015-12-16/what-fed-increase-top-treasuries-forecaster-is-bullish-for-2016
LeBas at Janney sees 2.22% 10-year yield at end of next year.
At some point in 2016 PMs will come into their own and be recognised for what they are- a store of value and insurance. I especially expect the insurance aspect to become more important. Look for a stampede on the first large bank failure.
7-Year itch.
GOLD(bond) can help with that I believe.
Good one
Fails to mention that according to Jim Willie, China has been privately demanding that the US devalue their dollar 50% over 6 months in intl trade because of the Feds QE counterfeiting fraud.
These Treasury Bond and dollar advisor "penguins" keep pretending and extending their optomistic forcasts oblivious to the dollar's pending demise. In fact Willie keeps calling the dollar the sheiss dollar in reference to what it's going to be worth.
you people, you 'the dollar is sheisse' thinkers, continually fail to understand that all paper currencies are relative to each other primarily and to the physical world secondly. in order for the dollar to go to shit, some other currency(s) must climb dramatically. picture the yen and euro getting stronger....difficult I know. or maybe all the emerging mkt currecies climbing to the moon, for some reason that I cant even imagine at this point. How on earth is the dollar going down unless something else goes up. the past 6 years we have seen stocks, which theoretically are a claim on real, income producing assets, climb dramatically while more currency (digital or otherwise) comes into the system.
next time as you claim the $ will go to shit in 90 days, tell us all the other factors conspiring /s to do this. once hyperinflation sets in, well past the deflationary bust we will see all currencys worth nothing and real assets climb (and perhaps emerging mkt currencies) the dollar (and the pwoer structure behind it) has to yet to be tested and we will see some freaky shit when that happens
Agreed, I'm long USD, short Euro, short yen. My money is where my mouth is. Cleanest shirt in the closet. Maybe not in ten years but definitely the next 3 or so in my humble opinion. I also have about 5% in physical PM's as a just in case.
The gold cultists do not understand the critically important point that you have made, and if you force them to respond to it, they will reveal that they have the fantasy and delusion that ALL the fiat currencies will go down together because the frightened and enlightened will flee globally to their inert shiny lead cult god.
some how all these guys claim at least 11% to generally 25% or more EPS growth!!!! is anyone going to call BS on that?? we are shrinking yoy!! what in the fuck is going to make Earnings climb dramatically???
all that while seeing the sp500 climb...but giving a token p/e compression.... marroonns!!
So which way does all this send the gold price? If gold is not going up any time soon, I need to get out of it, completely. I don't have years, or even many months.
Gold is going down in spite of the tsunami of apocalyptic collapse doom porn gushing from the wizards of the gold cult.
99.9999% of individual and institutional investors need INCOME from their savings/capital and will flee to inert NO-INTEREST VERY-HIGH-TRANSACTION & HOLDING COST gold *ONLY* if some kind of financial market and economic collapse appears to be immanent -
which is why the wizards of the gold cult must keep flooding the media with predictions of apocalyptic collapse doom porn in order to keep the mindless terrified disciples buying their newsletters, videos, books, speaking tours, and otherwise useless shiny lead.
The financial market and economic conditions are poor, but *FAR FROM* teetering on the razor edge of collapse.
I thought that in BONDS 101 we learned that bond prices fall when interest rates rise (Fed tightening). What school did these guys go to? The time to invest in bonds was late 80's early 90's when interest rates were still high and about to fall. That's when you could have made a killing in bonds. Today , its a joke if you think bonds are a good investment here. Look at what happened to just a few high yield funds when the Fed barely moved rates higher?
The markey is the titannic, Treasuries are the lifeboats. If the long bond goes from 4 to 3% that is a 33% capital gain. We are approaching icebergs.
You have US Treasuries confused with high-yield, ie JUNK bonds - ZERO comparison.