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Jim Bianco Profile picture
@biancoresearch
Jul 31, 2021 • 6 tweets • 3 min read • Read on X
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The latest from Japan.

The Olympics have 8 more days and the spike in cases continues.
@JackFarley96 @acrossthespread

1/5
And speaking of the Olympics ... is this as important as the medal count?

2/5
Japan is under a "state of emergency" and as Apple mobility shows, they are severely restricting their movements (the Olympics started July 23).

(Apple aggregates location data services for various areas)

3/5
Google also aggregates movement of their phones and they similarly show Tokyo businesses have essentially closed, mass transit is empty and even walks in the park are down since the opening ceremonies (July 23).

4/5
What did Tokyo get from the Olympics?

* $Billions spent on sports facilities that will rarely get used again

* massive disruption life and business, lost income

* no tourism

* A spike in delta variant cases that will last a while

The blowback will be big and profound.

5/5
Worth noting that former Prime Minister Abe was strutting around like a Peacock in front of the world at the closing ceremonies of the Rio games in 2016 celebrating that the next games would be in Tokyo.

He did not even attend the opening ceremonies last week.

nuff said

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More from @biancoresearch

Jim Bianco Profile picture
Dec 29, 2024
1/3
The repost below expresses a common belief that risk assets are effective inflation hedges.

History suggests they are not.

This chart shows that the inflation of the 1960s and 1970s wiped out 64% of the after-inflation stock gains by 1982 (meaning inflation beat stocks by 64%). And all inflation-adjusted gains of the previous 27+ years (back to 1954) were gone (meaning inflation beat stocks over the previous 27 years).

It took until 1992, 28 years later, for stocks to finally start beating cumulative inflation since 1966.Image
2/3
Too many vastly underestimate the devastating impact of inflation.

Since the 2021 peak, when the Fed called inflation"transitory," stocks have only beaten inflation by just 15% (with dividends).

So a 10% to 12% correct and a little bit more inflation and four years of relative purchasing power is gone (meaning you are no better off than four years ago).Image
3/3
As I argue here, the crypto crowd also forgets inflation when they make their long-term forecasts.

Read 4 tweets
Jim Bianco Profile picture
Dec 28, 2024
1/6
🧵on yields and yield curve
---
The 30-year yield made a new 2024 close high yesterday.

Now, the highest yield since November 2023. Image
2/6
The 10-year yield is just eight basis points away from a new 2024 high.

Two trading days left this year. Image
3/6
The 2-year funds spread is the narrowest since March 2023 (bottom panel).

The massive reversal to negative in March 2023 was driven by the string of bank failures highlighted by Silicon Valley Bank. These failures were driven by fear of unrealized bond losses. So, while the Fed subsequently hiked three more times through July 2023, this spread inverting signaled the "end is near" for the rate-hiking cycle.

Now, at just -5 bps, this spread is the narrowest it has been in ~20 months and close to signaling "the end is near," if not already done, on the rate-cutting cycle.Image
Read 7 tweets
Jim Bianco Profile picture
Dec 25, 2024
1/3
What is TLT Signaling?

TLT is the iShares 20-Treasury ETF, one of today's largest and most influential bond ETFs.

I've been arguing that the bond market rise in yields as the Fed cutting rates has been a rejection of the easing cycle. The bond market is saying the Fed has the wrong policy.

Monetary easing is not necessary given the strength of the US economy (See Atlanta Fed GDPnow) and the coming "Trump Stimulus. Fed easing is raising inflation expectations and driving yields higher.

Here is a chart of TLT's price (black) and cumulative flows (red).

From the day the Fed started hiking (March 16, 2022) to the November 7, 2024, FOMC meeting (labeled), cumulative inflows were steady, totaling over $55 billion.

A reasonable interpretation is that bond investors agreed with the Fed's policy from March 2022 to November 2024, even if it was hiking, as it was fighting inflation.

However, since the Fed cut again in November, bond investors have reversed and fled the bond market. Almost $10 billion has left TLT.Image
2/3
The bottom panel is a rolling 30-day flow into TLT. The last 30 days have seen a cumulative outflow of $8.69B, easily the largest 30-day outflow in TLT's history.

Again, this outflow started with the November 7 Fed cut, which I interpret as the market screaming "no" at the Fed about its move.Image
3/3
The chart below shows TLT's volume since 2023. The blue bars label the six highest-volume days in TLT's history. No volume day was over 80 million before 2023.

Thursday, December 19, was the record volume day at 99 million. This was the day after the Fed cut. The previous record was November 6, the day before the Fed cut on November 7.

The market is focused on the Fed meeting, not payroll or CPI days. Investors believe the Fed is making a mistake by cutting rates when it is not needed.Image
Read 4 tweets
Jim Bianco Profile picture
Dec 20, 2024
1/6
Good Q, I will answer why.

The market is signaling the Fed is not serious about inflation.

10-year yields during rate cut cycles since 1981 (the 100-year inflation and yield high).

2024 (black) is the biggest yield rise in a cutting cycle in at least 40 years. Image
2/6
However, the 2024 yield move (black) looks similar to the yield moves during pre-1981 rate-cutting cycles.

In the 1960s and 1970s, the market worried about inflation.

When the Fed cut, the market screamed "no," and long-term yields rose—like 2024 (black). Image
3/6
The dotted vertical line is the first-rate cut in September.

Look at what inflation expectations have done! Image
Read 6 tweets
Jim Bianco Profile picture
Dec 15, 2024
1/7
The study below says the 60/40 portfolio is dead. Everyone should now be 100% invested in stocks.

However, they recommend 33% in U.S. stocks and 66% in int'l stocks.

Quick 🧵

tl:dr The U.S. has the most momentum and is also the world's most expensive stock market.
2/7
About a 66% Int'l allocation.

The U.S. (upper blue) has outperformed the rest of the world, while everyone else is underperforming the world average (black).

Momentum is a potent drug for investing, and the U.S. has it. It works great—until it doesn't—and it often doesn't without warning.Image
3/7
However, another consideration that often gets ignored when chasing momentum is valuation.

Wall Street's favorite valuation measure is the forward P/E ratio (the estimate of the next 12 months' EPS divided by price).

So, while the US has big-time momentum, it is also the most expensive stock market in the world (upper purple line), recently exceeding India (brown).Image
Read 7 tweets
Jim Bianco Profile picture
Nov 16, 2024
It turns out that the biggest soap opera in Trump's nominations is the Treasury Secretary. As the graphic below shows, it is as close to 50/50 as it gets.
---

My Take

The Treasury Secretary gets to sit in the room and opine on policy. And their voice will be taken seriously.

But they do not set the policy; the President does. When the president says what they will do, they expect the Treasury Secretary to sell that policy as if it were theirs.

The second part, selling something they don't believe in but are told to do, is something Jamie Dimon will never do, so he will never be the Treasury Secretary. (Dimon wants to tell everyone else what they should sell).

Lutnick will sell whatever you tell him and do it with gusto! Bessert will do so too, but he does not command the room like Lutnick.

In other words, the Treasury Secretary is the administration's chief spokesman. This is a sales job, and it needs a salesperson.

The problem with Yellen was that she needed to be a better salesperson. Yes, she is an outstanding economist, but she was never a good spokesperson for the Biden Agenda.

She would have been a better National Economic Council head, the "smart person in the shadows advising the President."

If I had to guess ....

Lutnick = Treasury Secretary
Bessert = National Economic Council headImage
Read 4 tweets

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