Submitted by QTR's Fringe Finance
There's nothing more pathetic than being wrong in your prognostications and then Monday morning quarterbacking an excuse after the fact. It's behavior that I don't tolerate from people in my life and shouldn't tolerate from myself either.
After all, if my brain droppings are going to be of any help other than just being cathartic for me, the goal should be correctly analyzing trends ahead of time. While my lengthy disclaimer at the bottom of all my posts makes it clear that I’m not a professional, generally shouldn't be listened to, and write only my own personal thoughts and opinions, it would still be nice to get something right once in a while.
I’ll pause for obligatory pity laughs.
First, I’ll take to my mea culpa: I have been predicting that equity markets are going to move lower for the last two years, since rates have started to rise, and for the most part I’ve been wrong. This doesn’t mean I'll be wrong in the future, but it's important to know that thus far my timing has been poor, while I continue to believe that the fundamentals of my thesis – namely, that 5% rates on the largest outstanding bubble of debt in history - are still going to wreak havoc.
Next, let's take a look at what happened on Tuesday, post-CPI, and why I think people are getting way too excited, way too quickly about inflation, the Fed, and rate cuts.
CPI, which is still elevated at 3.2%, came in under expectations (not under the Fed’s target), leading to a huge spike in markets, and a relief rally in bonds.
The move in bonds is less surprising for me than the move in markets.
Both assets have been pushed lower over the last couple of months, but bonds have especially been tormented.
Even if you're a believer that yields need to continue to rise, which I think may be the case, I'm not completely surprised by the fact that bonds are using CPI as an excuse to take a breather. I continue to own and buy the iShares 20 Plus Year Treasury Bond ETF (TLT) on the regular, not only because I think yields are attractive with inflation where it is currently, but also because I believe these recurring buys will eventually capture higher yields if the bond market winds up continuing to crash in the mid-term.
One thing is still for certain...(READ THIS FULL REPORT HERE).