tutti i siti delle preparatissime "cassandre" sull'oro, sui bonds etc si stanno prendendo le loro rivincite dopo mesi di previsioni sistematicamente stroncate dalla "manipolazione" del grande vecchio della finanza globale
Bond Market Entering Two Month Crash Warning
Jes Black
Over the past six weeks we have shown an abundance of cycle work for bonds indicating that they were nearing a significant turn date around December. Specifically, bond prices should head down hard during this time.
Our short bond positions in TLT (Lehman iShares) have fared worse than the shorter durations since we first initiated the position back in September. As such, the ratio of TLT:IEF continues to rise (bottom chart), despite the fact that bond yield spreads continue to narrow (thus giving less reward for holding longer dated bonds).
The top chart shows a 9-month cycle top window (blue) and the crash low cycle turns (orange) that follow the violent collapses. The next turn is scheduled for November 25. As you can see, these turn dates have coincided with long-term bonds falling more than shorter maturity ones.
Of course, this fits nicely with our research showing that the diminishing yield differential is not bothering bond investors who continue to prefer sitting further out on the interest rate curve than we can understand why.
But just like the strong reflationary rally of 2003 eventually led to a bond market bust, we are well aware that bonds have not behaved normally over the past two years. Recall that we have often showed a chart of the CRB to Bond price ratio indicating that there was more reflation to come. Here we zoom in on the past three years to show that the consolidation pattern (top chart) has just broken out.
Not only was CPI well above expectations last week but the market has almost completely ignored Fed Chairman Greenspan's comments. So this is reflation at its best. Proving our point is the fact that the Dow to Gold ratio is below its 2003 highs, which indicates that this is another bout of reflation.
Shifting our focus back to the bond spreads recall that the yield spread between the 30-year bond and 5-year note shows whether the yield curve is said to be rising (widening) or falling (narrowing). The enormous 200 basis points spread last year led to great profits in the so-called "carry trade" as traders borrowed short and lent long. Then, even as the economy improved in 2003 it was the shorter maturity yields that began rising to narrow the gap as the Fed began to raise rates from a mere 1%.
This became a point of consternation for many of us, as we expected bond yields of all maturities to rise. What went unnoticed to us until now is that as the basis point spread narrowed this year it also broke channel support as the Fed finally began to raise rates. This led to an accelerated yield narrowing, coming from the five-year note that should have been the focus of our bearish bond bets. Yet we now see key support at 125 bp.
So we present this chart below as if it were a bull market undergoing a correction. The first leg up was from 2000 to 2003. If the yield spread corrects 61.8% of the move in 50% of the time then leg C may equal leg A at 125 basis points.
Recall that our long-term outlook is for yields on all maturities to rise substantially as the dollar's bear market intensifies. If we are correct then it stands to reason that the basis point differential will also rise in absolute terms as interest rates rise.
Yet despite the fact that the yield differential between the 30-year bond and five-year note has collapsed, the price spread between the 30 and five continues to rise and is now testing its June 2003 highs (same idea as the TLT:IEF chart shown above). This means that investors apparently prefer to own long maturity bonds even as the yield advantage has diminished substantially. Meanwhile, the commitment of trader data shows a massive long position in the 5-year note near all time highs above 200k.
So something seems amiss here and it might be that long bond prices are much to high relative to other bonds. Of course only time will tell, but our hunch is that as this spread narrows to 125 basis points a good strategy might be to buy 5-year notes yielding around 4% to collect the interest payment and sell 30-year bonds at 5.5% to capitalize on the possibility of a major decline between December and February.
In our opinion, it simply makes more sense to buy a five-year note around 4% if you think that the economy may slow down. The risk is only five years. Meanwhile, with the dollar falling to new decade lows the risk of lending to the US for 20+ years seems incomprehensible. In all likelihood, the US will pay off its mounting debts with a repurchase program of increasingly worthless paper dollar bills.
Jes Black
Black Flag Capital Partners, LLC
One Henderson Street
Hoboken, NJ 07030
Tel: 646.229.5401
www.blackflagfund.com
Recent Testimonial for FX Money Trends: "I find FX Money Trends' work extremely helpful. As a macro hedge fund manager I base my success on ideas generated both internally and through external research services: FX Money Trends and its founder Jes Black constantly provide ideas which are based both on very clever fundamental and technical analysis and research. FX Money Trend's intellectual independence makes their ideas precious, never obvious nor "late." - Francesco Clarelli, Italy.
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Jes Black, hedge fund manager at Black Flag Capital Partners, specializes in foreign exchange and global macro trends. In the summer of 2004 Mr. Black formed FX Money Trends, a research firm catering to professional traders.
Mr. Black holds a degree in economics from the University of Kansas and an MBA from the ESC in France. His market commentary is often featured in the Wall Street Journal, Financial Times and Reuters. He has also written numerous strategy pieces for Futures magazine. To find out more about the fund's research letter visit
www.fxmoneytrends.com/products.htm. Qualified prospective investors can find out more about Black Flag Capital Partners by e-mailing
[email protected]
Under no circumstances does the information contained in this site represent a recommendation to buy, sell or hold any security.
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- infatti, concordo, tirano la corda e poi vedono che succede...ripeto, la mia perplessità è sulla coperta corta degli americani, vogliono esportare a danno degli altri, e si aspettano che il resto del mondo li finanzi...certo, la bce, come il patto di stabilità, è discutibile...muy discutibile, e quindi c'è chi ce sta a provà...peccato che a valle paghiamo tutti noi 
