well, it is my understanding that the market is pricing in too many cuts in his opinion. so he thinks shorting bonds is appropriate for now. prices down, yields up
There's one thing I haven't heard you guys address. Why you believe rates need to stay so far above the neutral rate. I would understand the argument they should cut to around neutral and stop. But staying this restrictive? Does not compute
This assumes that higher rates are actually restrictive and not just a product of a strong economy that can accommodate the rates. Higher rates also make capital insurance (treasuries) cheap.
The neutral rate is not some objective thing, like the orbital period of the Earth around the sun. Your perception of what is “neutral” is simply different from his.
So all the data and graphs, if they don't fit your model, they are "weather related" or some other reason they are wrong? Isn't that called "confirmation bias", or something like that?
Yes, it is called "bias" sir. Also if CES data quality is poor and it is well known issue for last 1.5 year then why Ed didn't look at QCEW or CPS data instead? It is not like he doesn't know about alternative data sources which are still official, government data sources.
When I worked as a stockbroker back in the 1980’s for a St. Louis brokerage firm I would occasionally be on a conference call with Ed. I believe he worked for Donaldson, Lufkin and Jenrette. He was a smart guy then and has only become more so! Let me know if my memory serves me correct regarding DLJ.
How much it is government positions? Why is there such a large discrepancy between the payroll survey data and QCEW data (data based on tax declarations, so it is extremly accurate, but delayed by 1 year)?
The Fed will reduce interest rates in September despite inflation will not come down to the targeted 2% anytime soon. Nevertheless, a hard landing looks more likely as unemployment rate is moving higher now. Interest rate reductions will take time to work into the economy which may take up to 12-18 months. Thus, “Short Bonds” presumes 10Y treasury yield will rise way above 4% and close to 5% again. If so, the entire economy will have to tank.
I Hit 110k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Katherine Storch for helping me achieve this. .
The automakers are hurting. If unemployment continues to rise won't consumer spending continue to slow? The world as a whole is slowing, won't that hurt the US job outlook?
This time it was weather... so do not worry about it. Yeah... each month different excuse. It is not about one month off, it is trend for last half year. It is about trend and about misalignnent job market hard data (QCEW) vs payrolls survey data. It is about inverted yield curve which is starting uninverting. It is about weak economy in Germany, China, Canada, UK... as USA is highly connected with other countries we can't ignore their economic problems. If something is looking like recession and smelling like recession and barking like recession, then maybe it is recession?
Title makes no sense.
Right, and not much else did either.
It had a ? after it.
Ed's the man! Thank you for your insights Ed
Did you addess the question your title raises? If so, I missed it.
well, it is my understanding that the market is pricing in too many cuts in his opinion. so he thinks shorting bonds is appropriate for now. prices down, yields up
There's one thing I haven't heard you guys address. Why you believe rates need to stay so far above the neutral rate. I would understand the argument they should cut to around neutral and stop. But staying this restrictive? Does not compute
This assumes that higher rates are actually restrictive and not just a product of a strong economy that can accommodate the rates. Higher rates also make capital insurance (treasuries) cheap.
He doesn't perceive them as restrictive and as a margin you could cut on if the economy really got into trouble.
The neutral rate is not some objective thing, like the orbital period of the Earth around the sun. Your perception of what is “neutral” is simply different from his.
So all the data and graphs, if they don't fit your model, they are "weather related" or some other reason they are wrong? Isn't that called "confirmation bias", or something like that?
Yes, it is called "bias" sir.
Also if CES data quality is poor and it is well known issue for last 1.5 year then why Ed didn't look at QCEW or CPS data instead?
It is not like he doesn't know about alternative data sources which are still official, government data sources.
These two are great.
Ed, we need a few rate cuts of 25bps each to get Funds down towards 3.75% to 4%. Last I checked, that range is not zero.
Seems like he said the opposite of what you said. This was the most dovish I’ve ever heard him say
short bonds???
from the foot notes - As for the bond market, we see three possible scenarios and lean toward the mildly bearish one.
Clickbait
When I worked as a stockbroker back in the 1980’s for a St. Louis brokerage firm I would occasionally be on a conference call with Ed. I believe he worked for Donaldson, Lufkin and Jenrette. He was a smart guy then and has only become more so! Let me know if my memory serves me correct regarding DLJ.
How much of “new employment “ is part time positions?
How much it is government positions?
Why is there such a large discrepancy between the payroll survey data and QCEW data (data based on tax declarations, so it is extremly accurate, but delayed by 1 year)?
The Fed will reduce interest rates in September despite inflation will not come down to the targeted 2% anytime soon. Nevertheless, a hard landing looks more likely as unemployment rate is moving higher now. Interest rate reductions will take time to work into the economy which may take up to 12-18 months. Thus, “Short Bonds” presumes 10Y treasury yield will rise way above 4% and close to 5% again. If so, the entire economy will have to tank.
I Hit 110k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Katherine Storch for helping me achieve this. .
You meant McChesney Martin
The automakers are hurting. If unemployment continues to rise won't consumer spending continue to slow? The world as a whole is slowing, won't that hurt the US job outlook?
Do not think to much or you would be called doomsayer :D :D just look at the headline and be happy citizen.
This time it was weather... so do not worry about it. Yeah... each month different excuse.
It is not about one month off, it is trend for last half year.
It is about trend and about misalignnent job market hard data (QCEW) vs payrolls survey data.
It is about inverted yield curve which is starting uninverting.
It is about weak economy in Germany, China, Canada, UK... as USA is highly connected with other countries we can't ignore their economic problems.
If something is looking like recession and smelling like recession and barking like recession, then maybe it is recession?