Changing Course At Sea

A few weeks back we played a quick short (via a log TBT ETF) of the chart, below, which is the TLT ETF for Treasury prices. This chart moves inversely to rates, meaning as the chart sells off, rates move higher. Seeing as Fed Chair Powell has been trying to talk up a more lax approach from The Fed regarding inflation, it is not too shocking to see TLT lower since yesterday morning's Jackson Hole virtual speech, even with this morning's minor bounce. 

However, a few points are worth noting: Very few people seemed to acknowledge, let alone care, let alone seem rattled, by the plunge in TLT yesterday on heavy sell volume. That was a fairly aggressive move higher in rates. 

But given how complacent the Nasdaq has been melting higher on a daily basis, with each micro-dip bought as the summer unfolded, combined with general late-summer Wall Street malaise, the face that rates seem to be changing course again seem to have not yet been fully digested by markets. Indeed, that may very well change as we head towards Labor Day and all that awaits us beyond (and it is sure to be a lot if this year is any indication, heretofore). 

For now, the most instructive thing we can do regarding TLT is look back at the height of the March crash and see how TLT's fast descent coincided with extreme stress in virtually all markets. It is not so much the direction of rates, per se, at any given moment, so much as it is the rapidly changing course at sea at such an intense clip that can often rattle bonds and send reverberations through most other markets, too. 

As for equities themselves, I still have AAPL and TSLA as probably the two best "tells" for the health of the melt-up in the short-term. DKNG is in a near-term pickle as sports become more more uncertain the next few weeks if not months. And small/mid-cap biotechs will likely be in our weekend discussion with Members in terms of buyout targets into autumn for possible M&A sprees.