I have a sad announcement for all of my #fintwit friends who post frequently about real yields and the market's long term #inflation expectations

It's fake, and its staring us right in the face

The @federalreserve
is in near full control of this "market based" signal

Proof
1/
Anyone who needs a reminder, the breakeven rate is the yield on a nominal treasury bond less the yield on treasury inflation protected securities

It's an approximation of the market's expectation of future inflation over the duration of the bond

Yield and price move inverse
More buying of nominal bonds pushes nominal yields lower

Same for TIPS

When more buying power comes in, the price of any asset moves up

Powell continually says that he's only concerned about inflation if long term inflation expectations become "untethered"
The way we measure those expectations is by looking at long term breakeven rates

If the market thinks that future inflation will be higher, they will buy more TIPS and less nominal bonds, driving the TIPS price up, bond prices lower, and the breakeven rate higher
Tons of algos and models utilize these breakeven, real rate, expectations

But what happens when the signal that Powell is looking at is captured by the fed? How is it a market signal if it's not a free market?

Lets look at 20-year breakeven rates
Using bonds with maturities 18-22 years out, at the end of October the fed owned:

57.5% of the 18-22 year treasury bond market
53.0% of the 18-22 year TIPS market

The controls over half the market at the 20yr maturity

And why is there a gap in ownership of bonds vs TIPS?
If they dont intervene equally, then they are impacting the signal of breakeven rates

Breakeven inflation rates would be higher if the fed had to either sell some of these normal bonds or buy more TIPS to equalize holdings

But here's comes the best part:
Walking backwards in 6-month intervals just a few steps, the impact of this intervention becomes clear

Here is the percentage of each market the fed has controlled over the past 2 years: Image
If you subtract fed ownership of 20-year TIPS from that of 20-year bonds, you get the orange line shown below

You can plot this next to the 20-year breakeven rate in blue,

Then you see this is a fed controlled and captured market

The fed controls the #inflation signal Image

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More from @ThHappyHawaiian

29 Oct
I have a friend who helps manage wealth for clients net worth $500m+

They all have loans against their holdings at 0.1%, fixed five year terms

That’s the money they live on

They never sell, when they die basis is adjusted via step-up and they never pay cap gains

Tax free life
What about estate tax?!

No one pays estate tax, you set up a series of trusts and your heirs get all the money estate and cap gains tax free

$20 billion annually is collected via estate taxes, of $140 trillion in wealth

The only way you pay is if you have very poor planning
Normal people pay 10-40% of their annual income taxes and have little wealth

We tax poor people trying to build a small nest egg and the ultra wealthy pay next to nothing

“What about the income tax stats showing the top 1% pay 35% of income taxes?!”
Read 11 tweets
28 Oct
Let's talk #Gold and #Silver price targets for the current bull run, follow along and see if you're picking up what I'm putting down

Start with long duration TIPS ETF, $LTPZ

Just broke out of a perfect cup and handle, and using the basic extension puts it on a path to $99 Image
Next look at #Gold relative to long duration TIPS,

the $PHYS / $LTPZ ratio

It's been on an steady uptrend since 2015, and if you ignore the covid period, has a solid upper resistance as well, which if it touched in the next 6 months, would be a ratio of roughly 0.1750 Image
Combining these first two elements you'd get roughly $2200 for #Gold

And if we look at the Gold / #Silver ratio, plotted with fib levels, you can see the red trendline would get us to the 1.618 extension in late Q1 2022, or a 51 GSR

Using $2200 gold gives us $43 silver Image
Read 6 tweets
27 Apr
The fact that @PeterSchiff defended unallocated #silver accounts again on his show, but without adding anything of substance, shows what a great job the true precious metals community is doing

Keep educating people as to what these accounts are, get a refund, buy real metal!
I’m clearly not alone in saying this, but the metal just isn’t there

And #perthmint & @Kitco_Metals dont hide that fact either

You are lending money and paying a shitload of fees to do so

You have little to no rights in these contracts. It’s simply a terrible product
@PeterSchiff and his bank EuroPac collect massive fees to push you into it

Just because he says you should diversify doesn’t mean he didn’t recommend putting part of your money into the single worst precious metals product that exists, for his own gain

He’s sold a bag of goods
Read 9 tweets
25 Apr
$BTC longs looking to park money during the bear market should consider #silver

Another dollar-bear, inflation hedge, scarcity asset play

21 million total bitcoin, only 2 million of the 1000 oz silver bars. Respective prices are ~$50k vs ~$26k

10x as scarce, 1/2 the cost
not to mention the fact that a majority of annual silver that gets mined is used in swiftly growing high-tech industries such as EVs, solar, chips, batteries, satellites, etc

It has a baseline demand that's functional and burns supply
As you will prefer a highly liquid, digital form, $PSLV is one of the easiest ways

Some sites do direct crypto to silver when ordering physical, or keep it tokenized and go with Kinesis or other crypto-focused platforms

I buy $PSLV because that's my personal favorite
Read 4 tweets
25 Apr
I listened to you discuss oil on the Silver Fortune podcast @SRSroccoReport

I have a couple of questions on that energy outlook

1. What about the countervailing trend of increased energy efficiency, better MPG, reduced electricity usage in lighting and AC, electric vehicles?
Over the last decade alone I saw in another report the ‘bite’ of higher oil prices has been reduced by 30% due to the last decade of progress, why will this not continue?

2. As oil prices rise, it incentivizes renewables to proliferate faster, and scale makes them cheaper
3. Impacts of increased remote and virtual work?

4. Impacts of high density indoor farming, and localized energy production via solar/wind reducing need to transport food and carbon based fuels?
Read 7 tweets

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