Yield Curve Inversion Madness
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- Опубликовано: 29 июн 2024
- 💎Free Stocks, My TradingView Profile, and Social Links: linktr.ee/inthemoneyadam
Outro Song: • Urban Lullaby - Jimmy ...
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Go watch Marko's video: ruclips.net/video/T5LQs_gw_DM/видео.html&ab_channel=Marko-WhiteBoardFinance
S/o to one of the best RUclips finance people.
@@darrendent8288
He’s fucking awesome man
Thanks for the shoutout Adam hope you’re well bro
You’re consistently my favorite content on RUclips, regardless of genre of content. The honesty and clarity in what you say is refreshing and I always learn something.
I appreciate that you power through illness and hardship and still put something out for all of us. I sincerely hope yours and your brothers conditions improve soon.
o7
Heres a concept I think will help you with thinking about the yield curve. Most Yield pursuing funds are stuck on the back end of the curve, they have to buy 20-30 year maturities. There is limited money on the front end of this curve. The government is selling equal amounts of these bonds, but there is less money to buy up the shorter term maturity. Most money managers that are not forced into the back end of the market will own the front end of the yield curve and roll forward as the yield curve normalizes but this whole process is removing buying interest of the equities until it normalizes. Hope that helps I enjoy your videos.
Harvard would like to know your location
😂😎👊✊. Bro said Don't fool yo self fool! Classic OG talk.
Thanks for the amazing explanation Adam. I think you've single handedly explained yield curves in 13 minutes lol! All my prayers for your health..
“Maybe the stars are so far apart that there’s no light anymore and there’s no Federal Reserve” 😂😂
Happy to see you’re feeling good enough to post these vids, really hoping for the best for you and your brother, thanks for the great content
Not sure if I completely agree with you saying that the economy was going great in 2019. People may have felt that, but behind the curtain the signs were there.
-Bond market began getting wary from mid-late 2018 (both corporate and treasury).
-M2 money supply YoY% started steadily rising from Q4 2018 and onwards.
-ISM reports show a manufacturing slowdown throughout 2019 that actually went into contraction from August onwards.
-Durable Goods New Orders coming down from peak in Sep 2018 and continued declining through 2019.
-Industrial Production Index also coming down from peak in Sep 2018 and declining.
-SBO YoY was negative throughout 2019.
-European economic sentiment had been on a decline since Jan 2018.
-China's real GDP YoY% was dropping throughout 2019 (but China's numbers should always be taken with quite a large grain of salt, so in reality it may have been worse than reported)
Thank you for making videos, Adam. You inspire me to work harder. Hope you get well soon!
I'm so glad you're making videos again!!
Love you man, keep going strong 💪
Thanks for everything you do brother!
Very well explained about the yield curve. Thank you!
I’ve been wondering what your take was on this point, Adam. Thanks for doing this video. Get better soon, buddy.
My two cents:
Interest rates have two components: risk and opportunity cost. The more opportunity cost and or risk, the higher the rate. Tying your $ up for a longer period ‘should’ pay more interest (on ‘low risk’ assets like govt bonds). Currently, short-term risk is outweighing long-term opportunity cost - and to a degree not seen in 40 years. Historically a recession starts 6-18 months after the 2/10 inverts. We are in that window now. It inverted 7/5/22.
Love that outro music, good to see you making excellent content as always.
ty for your thoughts adam!
This was exactly my thoughts when I saw the chart. Agreed.
In Q4 2019, the federal reserve jump started repo operations for a few trading houses like Nomura. There was something really wrong in Q4 2019 that caused JPow and co to provide some serious liquidity.
Fear of the new admin coming in was my guess. Although I really didn’t think it was possible for them to print as much money as they did so quickly. Never seen the m2 money supply increase like that before.
Now they’re also back to propping up the market with money since oct/dec.
Absolutely crazy the manipulation going on these last few years.
THX for your videos bro !
I have learned so much from you Adam. A lot more than Options trading. I feel your pain. I've suffered a lot of pain including blurry vision, joint pain, inability to walk without the use of a cane. Etc. Many doctors only treated symptoms but not the underlying cause. Finally, taking my wife's advise saw a Rheumatoid Arthritis doctor who diagnosed me with Reiters syndrome where my healing began. I understand the pain and suffering where you almost feel like giving up. Stayed strong and bounced back. You are a smart young man and know that you will overcome this and come out stronger than ever. No shame in crying as suffering changes us. Accept the suffering and release some with crying. Sending prayers 🙏 or positive energy your way if not religious. Big virtual hug. Love you and take care Adam.
Adam, get well soon! Please! You deserve a better life with no health issues, brother!
feels a little like pattern matching.
Those recessions had other issues that may or may not have had anything to do with rates.
The internet boom / bust would have happened regardless of an inversion in yield curves. You had companies that never made a product or service valued in the billions of dollars or more, and even what would normally be value companies were sometimes trading at PE ratios in the 30's or higher.
The last one on the graph the curve inverts and then we get into the economic issues of the sars-CV2 and how the reaction from government impacted the economy.
If government shut-downs around the world were different the recession might not have happened at all yet the inverted yield curve right before 2020 wouldn't have been predictive at all.
At best it is an indicator that might mean, "heads up and keep your eyes out for storm winds ahead" but you may also never encounter the storm winds. The world is very complex.
Example - we could have a Russian / Ukrainian war drag on for a year or more. Or they could stop it tomorrow. Both would have vastly different outcomes for the economies around the globe as lots of uncertainty is off the table and that might make the 2019 inversion meaningless.
But again, it is a caution flag that says be aware but I wouldn't call it predictive. Here you even acknowledge how in the 70s and 80s it is a bit different. Wouldn't that make even fewer samples for this pattern matching? Like 5 times in 40 years?
First off..you may be my favorite RUclipsr..definitely my favorite financial RUclipsr. We all appreciate you and hope for your full, speedy recovery. It would be great to get a peak at your portfolio and hear your thoughts on WHY you invest the way you do. Keep up the great work!
Adam, I've spent the last 6 months learning all I could about bonds, interest rates, yield curves, etc. And I have to say your take on the yield curve being a useless indicator for recession is spot on.
Anytime the Federal Reserve has raised interest rates several consecutive times we've went into a recession,
My guess is we go into a recession with a milder sell off than last year with a trough in March or May ($SPY 320 by then maybe), with rates peaking then and bad earnings for next Q priced in
Thanks for the video!
Stay strong, hope you will be recovered very soon
Finally someone who points out that so much that is being said is clearly flawed.. yet so few speak up on it. I dont know if youve done a video on the whole idea of options market makers hedging thru buying the underlying. If that actually happened.. then well.. every firm would buy up all call options in existence to push up what ever stock they have. So I doubt that it is that simple. But my average yearly return is -83% so im terrible at this
The audio quality was incredible.
if rates are lower on the long-end of the yield curve its because there is a expectation of trouble further out (for which the Fed must accommodate) - hence an inverted yield-curve spells recession / the fed being forced to loosen to accommodate a weak economy and/or market
Wishing you the best ITM ADAM
Thanks!
Thanks for the great vid. Love you in an Internet stranger kinda way. Appreciate your knowledge
Hey Adam, thanks for all the great content ! Keep it coming! Can you do a video about how to invest when we have a recession ? Maybe talk about what options work well and are stocks worth buying or not?
Happy to see those glasses back! 🤓
Lmao, he said am I still off the dab
I love you man ❤
Still watching your videos even though I've stopped attempting to trade. I have your Leaps are Supreme video on my Watch Later cause I am still so confused on it hahaha. Hopefully it all finally clicks in the future when I started trading again and have more money to invest/play with. It's nice to keep up and be updated with the market though.
Glad to see you are doing well and able to make videos again here and there!
Is there like a full song for your outro music. Really catchy
So what you're saying is all in on SPY 350P expiring 2025?
Audio is fixed but weird aliasing now on the camera? even at 4k? Or just me?
This is what I need. The bond market is so huge. Originally wrote "bong"
Oh the thumbnail hahahaha
Hey guys its in the money
Me with ptsd from selling options: oh shit, oh wait
You have been dropping more content lately. I hope this means you are feeling better Adam!
my dude is pumping out content, man i missed this.
Best channel
My brain loves the out music! Hmmm hmm hm hm hmm 💃
Suddenly I am painfully aware of my stop losses
Good one man, thanks!
In the immortal words of Cleopatra, “correlation ain’t causation bro”
“Is he gonna say bitch or baby-either way someone’s getting fucking slapped” -me, in suspense at ~6:30
Lol
Greatest title ever
One thing that people often aren't considering is that QT influences the yield curve. The Fed was buying lots of bonds during QE and when they stop buying, that influences volume and the yield differential. You can tie the yield curve inversion into QT. This is one of several reasons why it could be a false signal.
And wasn’t this the first time QT has been done?
@@fungdark8270 QT's been done before, but I don't think it's been done to quite this extent.
Is there anything to the M2 money supply trending down whilst we're seeing the initial economic effects of raising rates now? Does that add to "hard landing" spec at all? HardER landing?
what leaps are you looking to buy when the market crashes?
Duuuuudeee!!!!
curious why you choose BND over TLT? with TLT being all treasury bonds and covered calls on TLT are nice as well
Wait, not even joking yesterday I stubbed my toe... Watch out two months guys
Hey can you do a video showing us you portfolio, you don't have to show the amount but just the precentage of each stock, etf of the total.
I hear you not a fan of Dividend stock, but for those of us living off the dividends and have no other income except S.S. they are great
Feels like the current situation is pretty unique and its really hard to have a good idea of what the hell is gonna happen. Just keep an eye on BlackRock and Vanguard right?
i gots two puts that are currently in the money baby!!!
What do you think about VGT? So far this portfolio has outperformed (Total returns) the benchmark: VGT, SCHD, JEPI and BND. 30-30-30-10% respectably.
Just looked at an IRA statement from April 1998, during the tech bull run. Money Market was paying 4.84% -- higher than today.
Yup, short term yields are based
Do you have any idea how they defined those grey areas (recessions)?
Two consecutive quarters of negative GDP
@@InTheMoneyAdam I know that’s how we’ve defines recession for a while but I don’t think that’s what constituted the grey areas. For example, in the grey area that we got during Covid I don’t think we fulfilled that requirement. I’m going to dig a little and I’ll reply here again. You rock Adam.
Wow.... never thought of paying it forward and betting on the market to pay off when the sun goes out and the direct descendants would have long since past.... definitely paints a picture of present bleakness. Haha!
I have been a long term investor for almost 20 years, easy. Now been trading for over 4 years and huh it sucks 🤣. Will just buy the companies I like and use since that's been paying off but darn option premium so high . Insurance expensive in flood and tornado areas so I think the market knows more then letting on.
Wait, am I high? 😆 🤣 😂
have you tried investing all your money is tesla but only in the last 3 weeks?
Best strategy ever.
What color paint is that?
I like SCHD. Dividend Aristocrats
How do I buy bonds?
the yield curve has inverted at least 4-6 times in the past 5 years and every time everyone says the same thing: RECESSION IS COMING
No it hasn't. It's very easy to prove that it isn't.
@@Tunafishyme Yes it has, several times in the past 5 yrs, off the top of head 2019 and 2022 spring and fall it did
@@bizzybone5022 I mean it really hasn't. I'll give you last 15 years since end of 2007. We barely inverted in 2019 and we did get a recession, though who knows what would have happened with covid. Maybe we were actually going to go into one anyways and the fed just printed us out with covid - who knows. Then we have 2022 where we are still in.
That's 2 times in the last 15 years if I give you 2019 (when a recession did happen) and 2022 where we have not un-inverted yet so who knows if we will get a recession. So really you are 0/2? and also 2 is not 4-6.
It's ok to be wrong. Just hope you start doing some dd before making factually incorrect comments for next time. Your neighborhood spiderman.
im curious, how much yield should one expect for 200mil year bonds??
4.95%
VTI is god. VTI is life.
so not a hard or a soft landing but a DELAYED landing
Hey Adam, do you know if the robinhood roth ira collects interest on uninvested cash?
It does not, unfortunately. They are legally required not to.
Exp 2025 leaps...yes please
Weren't we already in a Recession....? (Until they changed the definition)
You are correct
Ayo
What's the ticker for "VU" he mentioned. I couldn't find it. Thank you.
Is it VOO?
Yes
soo all our long options to 2024 are dead? :(
Did he say QQQN or QQQM?
Hey adam, bring back that membership where I can ask you a question 😅. Im struggling with an active call option right now
What's the deets?
@@InTheMoneyAdam I sell TSLA weekly call options about 20-25% above current price. TSLAs huge run up is messing me up bad because currently its like 17% above my strike price 🥲. They are kind of my long term holds too so I don’t want to get rid of them. Even rolling the options require a significant loss, and it could be even higher next week. Any advice?
Take assignment, start selling puts. If you can’t roll for a credit or non-detrimental debit, just wait. Maybe TSLA drops and you can roll. If not, take assignment (likely at expiration).
If this is messing up a long-term TSLA holding, not much you can do other than the above. No magic tricks here, you’d have to watch Andrei Jikh for that.
Will look into puts. Appreciate the response! Need a new strategy that involves cutting losses sooner or maybe I should avoid selling calls with long term holds
Post hoc ergo propter hoc
Where tf are your contacts?
Sup
Why do you like qqqm vs qqq?
Lower expense ratios, although no options
Here’s my thought on the 2019 yield curve inversion. I believe our economy was nearing the end stage of a long bull run. Obviously the pandemic and heavy stimulus with the lockdown interrupted what would have been a normal and healthy end of that very long run. I’d hardly call the movement we saw in 2020 a recession. It was heavily caused by government intervention and quickly rebounded unlike the other recessions we’ve seen in the near past.
Now I believe our economy is moving very quickly towards the actual recession we likely would have seen in 2020 - 2022 if we didn’t have stimulus and lockdowns. I personally believe we will see a deep recession now that we’ve broken away from years of low inflation and any major monetary stimulus will likely force us back into inflation again. This will make it hard for the government to fight a recession in the same way they have in the past.
You put money in
???
Profit
I should sell a course
First 🥇
Real question: what is MeetKevin’s opinion on yield inversions?
@@tsijr915 I know I was kidding. I wonder if his plane has got repo’d yet 🤓
oh ok, yeid curve inversion theory is bull then. it happened in 2019, but recession was caused by covid, they're not connected. 98, recession happened in 2000, seems like a long time to have a connection. but i guess clueless youtubers like talking and clickbait
wow i love the federal reserve which isnt federal and isnt a reserve
Hey @inThemoney I had question can you explain how theta decays works on iron condors because I feel like I’m only making 2$ a day off of 1.50 tsla iron condor