I'm surprised there isn't already a thread on this. I've been waiting a long time for this, curious which way you guys see this breaking.
I don't see how markets can stay at this level with the Fed turning off the tap. Will EM retreat keep domestics aloft? Dabbling in some long-dated QQQ SPY puts and am completely out of domestic equities. Same question re: rates, as I'm short Treasuries (small amount) but it's been a loser so far. Thoughts on where VIX is heading? It seems too quiet?
Would appreciate some more plugged in / knowledgeable monkeys chiming in on what seems like an actionable moment in the markets.
What the Fed taketh away, the BoJ giveth, so to speak...
BoJ, Draghi, PRC, etc etc etc. if we're talking bonds, trying to play that is a losers game. I'm betting foreign demand and lack of issuance keeps rates lower for longer. let me put it to you like this, when Franco 10s are yielding less than 2 and USTs are yielding the same as Spanish bonds and over twice German bunds why the hell wouldn't you buy treasuries?
as for stocks, we're still invested but very conservatively. I think the Fed stuff will hurt EM more than US, plus the economy seems to be getting better in the US (albeit glacially). we see selective bargains but nothing broad based. also, EM retreat wouldn't necessarily keep US aloft, but a good earnings season & GDP numbers will.
gold is a fear trade. if it's owned for inflation, I can see that but I'm a gold bear so take what I say with a grain of salt. for a fear trade I'd prefer the 10y.
what you all are forgetting is that the Fed has not once said that it's selling bonds, so yes the "tap" has been turned off but the sink has been plugged the whole time. almost all of the Fed's mortgage backed stuff is over 10 years, so to think that this stuff is going to expire overnight and then the bond market is going to be flooded with issuance is just asinine.
also curious about what @"GoodBread" and @"Bondarb" have to say
I am not playing anything... It's a very confusing and difficult macro environment. I have no idea which way things go from here and I am not afraid to admit it.
We are way overbought for sure. Load up the truck on OTM IBB puts and profit when the VIX moves back towards 20.
On another note, unbelievable how low Gold has went. If I had real money (50K+) I would be loading up GLD calls that are 9-12 months out.
Also unreal how fast the market snapped back after the sell-off. Listened to a couple different pro's say this was the biggest and fastest snapback they have ever seen. Amount of money that could have been made if you played the VIX the right way when it hit 30.
I made a small bundle on the VIX spike but didn't see things smoothing over so quickly so gave most of it back in the end. What's your recommended method of getting short VIX exposure? Was in VXX at that time, but read more about how bad the decay is on that ETN so now I have puts on the actual index.
Care to give more color on your GLD view? No stimulus -> rate increase -> inflation returns -> gold climbs ?
Tech's overbought. Everything else looks decent to me. Not sure about energy.
Damnit, I feel so helpless. If you guys are unsure then wtf are us non investment-management, non finger-on-the-macro-pulse types to do. Reading this, I feel like I should be in 98% cash (currently probably ~70%) except for some swing for the fence puts.
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this is why it's good to be long term. sure, Shiller will tell you that 10 year returns are shit for equities, but if you're in your 20s, you have a 40 year time horizon, and the real returns in any postwar 40 year period are pretty great (off the top of my head, not actually crunching the numbers). if you want to make money trading, I'm not your guy, but if you invest for the long haul, you should be fine. uncertainty is good. it's very good. when everyone's certain about something is when you should be 98% cash. in my PA, I'm 80-90% invested (US & int'l stocks), with the remaining 10-20% as dry powder. I'll probably be this way forever unless we have another 2008, but I think this is the way to go.
Yeah I definitely hear you on the long-horizon as a young professional. I didn't start making money / investing until recently so missed the whole post-08 run up, but feel like it's foolish to put all my newly acquired money in now when it feels like the upside / downside trade is unfavorable. Thoughts? I mean you just recommended to have large exposure to stocks, but you're probably up huge over the last 2-3 years and have some downside cushion whereas fresh investment could go negative real quick (in my mind I see a large downside). Mostly word vomit but maybe a thread of rational thought in there somewhere.
Appreciate all your thoughts.
I think the bond market is in an "in between" period right now in the US....it is still too far away from actual fed hiking to be selling, especially given the carry in the belly of the US curve both outright and especially relative to other markets, however I also think the blow-off top we saw a few weeks ago is likely to be the low yield that we see for this cycle. I have no large position in any fixed income product right now, I think that at this time next year we probably will have signifigantly higher US rates, but I don't think it is likely to happen until H2 2015. I also do think that the Fed will be in at least attempting to hike next summer which used to be consensus or even on the dovish side, but now qualifies as a "hawkish" view given the shift in sentiment...I am always wary when my opinion doesn't change but market sentiment shifts drastically such that my opinion relative to the "herd" changes by alot.
Just curious, do you focus on mainly short-term, perhaps primarily technically-driven moves when you have no large positions on? Or do you express your longer term views in very small size, and add to them when the environment changes? I guess you can have trades that work regardless, but basically when there's a lot of near-term uncertainty do you mainly trade opportunistically/tactically or mainly sit and wait (e.g. in cash)?Thanks.
I would never be comfortable with shorting Treasuries in a ZIRP environment.
I don't really see anything interesting on the fixed income side. As Bondarb sayd it's a bit of an "in between" period.
The strong dollar seems like the biggest thing going on at the moment. While it gives the Fed another excuse to wait on hiking rates (especially given what everybody else is doing), the dollar is very clearly King Kong right now. It remains to be seen if a clear majority in Congress means bigger US deficits, but that probably has only a marginal impact on US dollar strength perceptions at the moment and won't be obvious for a while.
Shorting equities with large fx exposure is interesting at the moment. Especially the guys who've been relying on international markets and EMs for earnings growth because their US operations have reached maturity. Not only are a lot of EMs and Europe weak right now, profits get hit by the strong dollar as well.
The commodity side is tricky. I doubt oil is going to make another big leg down and most big oil traders agree. But it could be stuck in the current range for a while. Coal and iron ore could still fall a lot more given the attitude of the majors ex-Glenstrata (trying to put the squeeze on higher-cost independents).
I don't follow gold too closely but it seems like only a combination of QE in Europe and Fed hints a first rate hike would come significantly later in 2015 would do the trick for gold to catch a serious bid.
any thoughts on tsla earnings?
they're gonna be negative
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