The following is an excerpt from the 1/24 premarket comments. There is only one market in the world which I am bearish on – bonds – and I continue to hold March 125 TLT puts. That is discussed below, along with my view over the last few years. The $, gold, and Bitcoin are also discussed. This thing with bonds is truly concerning:
From 1/24:
There’s a new post here.
Doing this business well is purely hard work, and consistency. And believing in that work thru all of the struggles.
From November:
“But it is this chart which is by far the “scariest” chart in the world. I did a post over a year ago about how I believe the US 30 year bond represents, in graphical terms, the current up-to-date state of the confidence level in CBs. And that level itself is in its last hurrah (automatic rally), along with bonds. I laid out in this post that belief of a secondary rally in TLT, with, for me, the next shorting opportunity above 127.50 into the gap at 128.60. Bonds are in the biggest distribution area I’ve ever seen. You’d have to go back to bonds in the 1930s-40s to see one as big. And that led to a bear market which didn’t bottom until September 1981. I expect this won’t be any different.”
And December:
“…. is my discussion on 12/6/17 about shorting TLT (red arrow), via buying 2018 March 125 puts. There is only one bubble market in the world, that is the bond market, and it is wildly bearish. In October, after covering another TLT long put position, I wrote this piece explaining that trade exit, and also explaining well ahead of time, my belief of where the next top in bond prices would be. And how to profit from that, by buying those TLT puts. Bonds are in a MASSIVE distribution area, (yield bottom). Yields on the 1 month, the 3, the 6, the 1 year bills are in huge uptrends. The 2 year, the 3 year, the 5 year note yields have also all broken out. The 10 year is next, to be followed by the 30 year yield. The 30+ year secular bond bull, which began in October 1981, ended in October 2011 on the short end, and in July 2016 on the long end. This is 1942 all over again, with the massive secular uptrend in yields starting. Yields did not top until October 26, 1981 at 15.21%. The big bond bear will destroy central bankers’ “powers”. The CBs have no idea how little control they actually have, they are not omnipotent, although they believe they are, and they are in for a huge surprise. All of this is extremely bullish for all the other big markets (except for the fiat currencies), as the capital slowly diffuses out of the biggest market in the world, and into the others. And I am still long TLT puts (short bonds):”
Tops and bottoms in markets are a process (any time-frame) – a process. The top in bonds is the biggest top I’ve ever seen. They are the biggest market in the world and move very, very slowly. For years, I have been chronicling my belief in that top.
Again, “Yields on the 1 month, the 3, the 6, the 1 year bills are in huge uptrends. The 2 year, the 3 year, the 5 year note yields have also all broken out. The 10 year is next, to be followed by the 30 year yield.”
I have said that thing over and over, about how these yields would be breaking out one after another – now the 10 year yield is breaking out.
I totally disagree with the unanimous belief that CBs across the globe will keep bond yields low forever. And I’ve been watching patiently the foreign yields, which almost everyone has given up on that they will ever go up again. Well, it has been my belief since 2016 that the July 2016 low in 30 year US yields, and the huge spike into the Dec 2016 high, was the first leg of the SECULAR bear market in not only US long-term yields, but across the globe. Bond yields across the globe will be starting to break out this year. The bottom has been in for 18 months, and one by one, the foreign yields will follow the same script as the US. First up is Germany.
The volatility in assets will follow this year, for it is the low bond yields, especially for the last few years, which has greatly helped to dampen volatility.
Beyond my pay scale, but wouldn’t the only recourse for for a bond sell off be for the Fed to continuously up its purchase of all government debt including city bonds just to keep the streets from filling up with garbage? Can that reflect in a positive outlook for the dollar with foreign investors?
David everything for me stems from my belief in the massive distribution (price), the breakouts (in yield) in 2015, the reaccumulation (yield) and studying past bond cycles. The CBs are going to lose some of their magic as the bond bear progresses. Yes they can buy garbage, they’ve done it, the ECB is doing it, and it will continue. But they will be in a situation of no longer buying into falling yields, but buying into rising yields. That’s why I said that a long time ago, about how CBs will be able to slow it down, but not stop it. And yes, the $ sentiment will be shifting again, but to me it is still in a huge multi-year topping process overall.
Thank you from the bottom of my heart. I’m learning so much!!
I may have missed it, but could you detail how you go about trading the bitcoin? I know your comments on stocks that benefit, but it seems by your comments that you are trading the coin directly
Thanks
Peter
Hi Peter. Yes, if you mean the process of how to trade the coins? You need to have an account, like with stocks or futures. Same deal there. So you can use GDAX or it might be easier to set up a Coinbase account, and then GDAX. GDAX is really the one for trading itself, fees, platform, etc. The account setup can be a bit of a hassle BTW. Let me know if you need more info.