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   PastimesThe Philosophical Porch


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To: Real Man who wrote (23043)8/3/2024 3:11:00 PM
From: Rarebird
1 Recommendation   of 23982
 
The economy is slowing, but is not yet in the crapper. Will it get there? Yes, but who knows when. The A/D line on Friday was only 3:1 decliners over advances. On Thursday, it was 2:1 decliners over advances on the NYSE. When I see two consecutive days of 7:1 decliners over advances, then it is time to head for the hills, but we are not there yet. This smells correction, which can extend to 10-15% in regard to SPX. SPLV and SPHD have not even corrected. BTI and JNJ have been rallying. Sure, it is possible that the market corrects till the first rate cut is delivered. BBB bonds fell on Friday. AAA, AA, A bonds were flattish. I adjusted.

What bond fund are you in?

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To: Real Man who wrote (23043)8/3/2024 3:17:59 PM
From: Rarebird
   of 23982
 
Also, I think the Top is likely in for the vast majority of foreign markets. That is why I sold all of them on Friday.

Taiwan has been headed lower since Trump said he was going to charge them for protection. Japan has been tanking big time since the BOJ raised rates again and the Yen has been rallying hard. France and Germany have been declining since their right wing parties have gained in popularity. Now France is ruled by the extreme Left.

Not a favorable foreign economic set up.

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To: Rarebird who wrote (23044)8/4/2024 7:59:39 AM
From: Real Man
   of 23982
 
reddit.com

Don’t know what SAHM rule is, says we are in recession already, not acknowledged yet.

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To: Rarebird who wrote (23044)8/4/2024 8:10:17 AM
From: Real Man
   of 23982
 
fred.stlouisfed.org

Bloomberg US aggregate bond fund index tracking fund

blackrock.com

Yield is 4.53%. As you know, bonds do have a change in price and also yield.

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To: Real Man who wrote (23046)8/4/2024 8:42:25 AM
From: Rarebird
   of 23982
 
The Sahm rule is an infallible indicator; it has never been wrong!!

Sahm rule says that if unemployment rate goes up .5% or more over a three month period, economy is already in recession. Unemployment rate needed to rise to 4.2% to trigger the Sahm rule. It went up more than that to 4.3%.

Sahm came on CNBC on Friday and said she does not think economy is already in recession. But I think she was trying to prevent panic.

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To: Real Man who wrote (23046)8/4/2024 9:12:38 AM
From: Rarebird
   of 23982
 
I sold slightly more than half my portfolio on Friday so that should tell you something.

I am now in 25% pure equities and 75% pure income related equities, TLT and other higher yield bond alternatives. The later held up very well over the past two days except for the BBB, BB and B related corporates. I dumped the later except for BKLN, which I have held for well over a year and which has performed very well for me. HYG, which I don't own, was down .33%

Things may get a lot uglier. I really don't know. Maybe the major indices go down more than the average stock..

I plan on initiating some short positions early next week.

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To: Rarebird who wrote (23031)8/4/2024 1:33:15 PM
From: edward miller
   of 23982
 
Could be a stale message. Thinking of how we were at virtually zero rates not that long ago.

The only way I can make sense of that message is if Schwab combined the risks for all Treasury issues, regardless of maturity. Seems stupid to me, but what else makes sense? The only risk in 6 month bills is inflation eating the value of money, and that is not much. Better than market risk right now.

Disclosure: I am >80% T-Bills.

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From: Rarebird8/4/2024 5:59:31 PM
   of 23982
 
Recent sell off is all about the reverse carry trade in regard to the Japanese Yen.

By lowering rates, the Fed will make the short squeeze in the Yen worse as interest rate differentials narrow.

That would spark more leveraged selling by borrowers of what was formerly cheap Yen in risk-on assets.

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To: Rarebird who wrote (23051)8/4/2024 6:08:38 PM
From: Rarebird
1 Recommendation   of 23982
 
I will strongly consider buying Bitcoin as a hedge once it hits 44K.

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From: Rarebird8/5/2024 2:49:46 AM
   of 23982
 
Reverse carry trade is gaining lots of steam tonight. If this continues, there will be a global margin call and a massive credit event.

To think that on Wednesday, the A/D line hit a new all time high.

All of a sudden this happened with talk of a rate cut.

I sold slightly more than half my portfolio on Friday.

Maybe I should have sold everything. But I did derisk my portfolio tremendously. A lot depends on how AAA and AA corporate debt performs tomorrow.

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