You Haven't Gotten Away With it Yet

It has been five years since I stuck my neck out with a strongly held view that Treasuries had topped out, back in the late-summer/autumn of 2021. At the time, very few folks even acknowledged that a top in Treasuries could be possible. After all, we had the Jerome Powell Fed hellbent on letting "it (the economy [and markets]) run hot," as absurd as that was (and still is, perhaps even more so). 

But TLT did indeed top out back then, and has been in a clear bear market downtrend ever since, despite how many bond bulls are adamant that another bull run is imminent.

Of course, I fully acknowledge and have for quite some time that equities defied my expectations to eventually buckle under the weight of higher rates on the long end of the curve, as the Nasdaq has been on a mission to build a Tower of Babel for years on end. 

And that brings us to the present, where there is still a strong feeling that Powell's alleged soft landing success means he evaded the worst effects of his disastrous COVID policies and subsequent decisions. I reject the notion that The Fed "got away with it."

In fact, I reckon the worst is yet to come, by a country mile, even with Warsh is at the helm now instead of Powell. 

Today we have TLT printing multi-decade lows, while rates on the 10-Year are a stone's throw away from multi-decade highs, all the while Brent is north of $107. In addition, the current national average for diesel fuel is closing in on $6 per gallon, which is the lifeblood of the American economy. 

Another actionable point today is that even with Apple rallying more than 3%, catching that apparent safe haven bid, the dispersion trade is nowhere close to the potency it displayed this summer as we have weakness in too many sectors to name, be it REITs, housing, semis, small caps, etc.. 

In sum, I intend to see my bond bear view through. The bond market has been a sleeping giant for decades and is slowly waking up. There are Wall Street veterans in their 60s who have no idea just how vicious a bond-led bear market can be, since all they have known is Greenspan/Bernanke/Yellen/Powell print parties with subdued inflation.