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TLT

0% interest rate = Short Bonds! I may be jumping the gun here, but with the emergency rate cut. we are going to have to cut the rates some more next fomc meeting, and as the situation progress and with the way trump is whining about fed rate cuts. there a high chance of certainty that they will eventually cut the rate to 0%, especially as corona cases get serious and hits 1 million. it's currently at 90k right now but there's without a doubt it will suppress 1 million. i am looking to buy puts for 2021 and continue to double down if it keeps going up. Kinda like Michael Burry from "The Big Short" i will borrow money to keep doubling down if i have to! ITS A BOND BUBBLE!!!!! lolz Corona virus reference nypost.com multimedia.scmp.com
NASDAQ:TLTShort
by WallSt007
6
Yields and Bonds - Where are real interest rates going?3/3/20. Weekly Charts of TLT (20 yr bond ETF) vs TNX (10 Yr Treasury yield) compared. In order to crush high inflation, They raised interest % in late 70's - early 80's. As a result, the rate peaked in 1981 and 10 Yr Yield was near 16% and mortgage rate was 17-18%. People were getting 9% interest on simple CD from the banks. Today, 3/3/20, The 10 Yr yield briefly nose dived below 1% but then came right back up. Bond funds like TLT has been great investment so far but to think the ride is going to last much longer is not practical. Some people talk of negative yields and I always try to remind myself that I must assess Risk vs Reward, not what people say, and I also know that I live in a reality, not a fairy land. Creditors are going to want more return on their money soon or later.
NASDAQ:TLTEducation
by Successful_Inv_Strategies
2
A look at corporate debtThis chart illustrates the increasing importance of cheap money, which is being driven by buybacks. Once interest rates get to a certain point (via Eurodollar futures ) the S&P 500 falls apart. The point at which it falls apart seems to be dependent on a certain downward-sloping level. Historically, interest rates prairie dog above the meme line for a bit but once they go back into their hidey holes the top of the S&P is close. With my luck the Brent Johnson's dollar milkshake theory will probably be right and the complete opposite will happen. Okay that's great. At least we know yields will eventually make their way down to 0% so... all in bonds then, right? Not exactly. Take a closer look at the available bond funds, specifically the allocation to corporate credit and the ratings of that corporate credit. There is a solid chance that you will see a lot of BBB. BBB is the last level of "investment grade" debt before it becomes "junk". Once it gets downgraded to junk the pension funds and insurance companies that own most of it are required to liquidate it. The BBB bucket alone accounts for roughly 54% ($3T) of all corporate debt and dwarfs the size of the junk bond market and if the downgrades start happening the junk spreads will get blown out. My prediction: the floodgates will open when a seemingly healthy company defaults due to drop in revenue (and subsequently free cash flow due to being overleveraged) and the ratings agencies are forced to start downgrading companies that should have been downgraded a long time ago. Fear of being downgraded will finally sink in and companies will be forced to look at their margins and free up cash. The first order of business is reduce largest portion of SG&A: payroll. A gigantic portion of the population is nearing retirement and they will be the first to be shown the door It sucks but that's just how it works. On top of that, all of these people that just got retired are trying to hit some magic number and are either 100% S&P or 100% "X Retirement 2025" fund, which consists of a lot of equities and a ton of BBB garbage that doesn't know its garbage. So no income, no available jobs, halved 401k. Fantastic. Time to downsize but unfortunately there is nothing to downsize to because everyone else is doing the same thing. Only option is to build, rent, move in with children, or buy a double wide. So I like small houses and ELS , which is a trailer park REIT. Bullish: High-quality bonds: TLT , BND REITs: ELS Bearish: Trash bonds: JNK , HYG Insurance companies: the infamous AIG , AFL
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by fsuaouo