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Alphabet Inc. Message Board

merenkov 111 posts  |  Last Activity: Feb 4, 2016 5:39 PM Member since: Jun 7, 2004
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  • Reply to

    hilarious

    by barc37000 Nov 6, 2015 11:28 AM
    merenkov merenkov Nov 9, 2015 12:10 PM Flag

    River, the key words in your sentence are “if the economy is indeed picking up”. With combined debt (public and private) now sitting at around 370% of GDP, I happen to think the economy will never reach the mythical “escape velocity”, and any increase in long-term rates will be short-lived (and a buying opportunity). We’ve averaged only 1.8% real GDP growth for the past 15 years (since combined debt breached the critical threshold of 275% of GDP in 2000), half the rate of the previous 130 years.

  • Reply to

    Why will bonds yields rise on rate hike?

    by cdfmg Nov 10, 2015 9:52 AM
    merenkov merenkov Nov 10, 2015 1:16 PM Flag

    The Fed can affect short-term rates, but has little control over long-term rates. Long-term rates are a barometer of economic activity and inflation expectations. Global growth continues to slow, most US economic data has been disappointing, and Europe, China and Japan continue to export their deflation to us. I happen to think that if the Fed raises short-term rates, it will accelerate all these trends (it will slow economic activity further and strengthen the dollar) and thus result in lower long-term rates. I think the recent increase in long-term rates is misplaced and is providing a buying opportunity.

  • Reply to

    16 PE

    by misterpond460 Sep 2, 2015 7:20 AM
    merenkov merenkov Nov 13, 2015 10:31 AM Flag

    You guys are funny. I bought ED five years ago at $43/share (it was yielding 5.5% at the time), and just forgot about it. With the current dividend, I think of my current yield as 6% (based on my original cost). Utility stocks are meant to be bought and held forever, not traded. And I don't think we'll see a sustainable rise in interest rates for another decade (or two). We're the new Japan...

  • Reply to

    KMI is closely tracking the Alerian MLP Index

    by merenkov Sep 30, 2015 12:44 PM
    merenkov merenkov Nov 13, 2015 11:03 AM Flag

    I posted this 6 weeks ago, and I was worried at the time that KMI would follow the Alerian Index into great recession levels. It's actually proven worse than that, as KMI has dropped 28% in the past 3 weeks, while the Alerian is only down about 9%. Something is horribly wrong here.

  • Reply to

    weak retail sales,china collapsing,oil at 40....

    by barc37000 Nov 13, 2015 9:36 AM
    merenkov merenkov Nov 13, 2015 11:16 AM Flag

    The CRB Commodity Index continues to crash, now down almost 20% year to date. And it's not just energy, it's industrial and precious metals, grains, and soft commodities. So let's raise rates, haha...

  • Reply to

    weak retail sales,china collapsing,oil at 40....

    by barc37000 Nov 13, 2015 9:36 AM
    merenkov merenkov Nov 13, 2015 11:19 AM Flag

    Long-term Treasurys are a leveraged bet on deflation, and that is exactly the place to be right now.

  • Reply to

    weak retail sales,china collapsing,oil at 40....

    by barc37000 Nov 13, 2015 9:36 AM
    merenkov merenkov Nov 13, 2015 12:51 PM Flag

    Keep in mind that commodities have been dropping for the past five years (down 11% per year on average since 2010). It's a symptom of a severely over-indebted world and slowing global growth (in part caused by the over-indebtedness). If the Fed were to raise short-term rates in this environment, long-term rates would most assuredly decline in response.

  • Reply to

    Why will bonds yields rise on rate hike?

    by cdfmg Nov 10, 2015 9:52 AM
    merenkov merenkov Nov 15, 2015 8:19 PM Flag

    The secular trend of lower long-term rates is intact, whether the Fed raises short-term rates or not (and increasing the Fed funds rate would just accelerate the trend). Each iteration of QE, on the other hand, has resulted in higher long-term rates, at least temporarily (contrary to popular belief), because QE increases inflation expectations. I've long said that QE4 will be my signal to sell, but it's possible that the market will eventually realize that QE does not produce inflation (or economic growth) in a sustainable way, and will eventually shrug as the Fed mindlessly repeats plays from its old playbook. At a certain point, we'll be stuck in a lifeless, hopeless, low-interest rate stasis just like Japan...

  • Reply to

    weak retail sales,china collapsing,oil at 40....

    by barc37000 Nov 13, 2015 9:36 AM
    merenkov merenkov Nov 15, 2015 8:29 PM Flag

    Academic studies from the past few years have reached the exact opposite conclusion. Higher indebtedness in developed countries has resulted in slow economic growth, low rates of inflation and low interest rates. In addition to that, the combination of a major financial crisis and a severely indebted economy has historically resulted in low interest rates that don't reach their nadir until about 14 years after the financial crisis (although the current experience of Japan is extending that timeframe). Read the academic literature before you place your bet!

  • I bought around these levels back in May, and have been waiting over six months to buy at my next yield target of 3.25%, but I'm starting to think that's not going to happen. I'm straying from my discipline (and may regret it), but I'm underweight bonds at the moment...

  • For the past couple of weeks, this is down 1 or 2 cents a day, almost every single day. A hedge fund experiencing end-of-year investor withdrawal requests? May not have that much to do with FNMA specifically, and everything to do with general hedge fund underperformance.

  • Reply to

    Why will bonds yields rise on rate hike?

    by cdfmg Nov 10, 2015 9:52 AM
    merenkov merenkov Nov 18, 2015 11:18 PM Flag

    Well, in the few historical instances where a major financial crisis was combined with a severely indebted economy, long-term interest rates did not reach their nadir until 14 years after the financial crisis, which would imply that we won't see the ultimate low in rates until 2022. Japan's experience now is actually extending that average, so we may not see the secular low until even after 2022.

  • Reply to

    Is now the time to buy?

    by shraplicator Nov 12, 2015 2:44 PM
    merenkov merenkov Nov 20, 2015 7:18 PM Flag

    The price of oil has further to fall, particularly when Cushing, the largest storage hub in North America, approaches full capacity in late January (it's currently 80% full). It costs around $2-4 per bbl to transport crude from Cushing to the Gulf coast, so watch the spot price in Cushing drop as we get closer to the "all-full" level. That's probably around the time we see real pain, capitulation and bankruptcies, and will be the time to buy.

  • Reply to

    but,but,but,but

    by barc37000 Dec 1, 2015 11:58 AM
    merenkov merenkov Dec 1, 2015 1:02 PM Flag

    Long-term rates are going lower no matter what the Fed does, but a rate hike will accelerate the decline.

  • …the rate on the 10Y dropped from 3.96% to 2.48% in a span of about 4 months (from April 2010 to August 2010). This occurred immediately after the conclusion of QE1 (which ended March 31, 2010). (As I’ve said too many times here to count, rates rose during every iteration of QE, and fell at their conclusion, usually quite dramatically.) And for those who have trouble remembering what happened after that precipitous 2010 drop in interest rates, Ben Bernanke announced QE2 at his Jackson Hole speech on August 27, 2010, which promptly sent Treasury yields back up until the conclusion of QE2 in March of 2011.

  • merenkov merenkov Dec 1, 2015 3:01 PM Flag

    Hi chip, I don't post as much as I used to because I got tired of repeating myself, heh. Maybe things will get more interesting when the Fed cranks up QE4 sometime next year (in order to fix the damage they cause by raising short-term rates, assuming they actually do). The long bond is currently pricing in a Fed policy error, not to mention slower growth. In the meantime, I'll check out StockTwits, thanks for the tip...

  • merenkov merenkov Dec 2, 2015 10:49 AM Flag

    And here we are two weeks later, and the trend continues...down one or two cents almost every day. It amazes me that this decline can continue in such a measured, consistent way.

  • Reply to

    A lot of put buying today

    by rangetrader123 Dec 2, 2015 10:57 PM
    merenkov merenkov Dec 3, 2015 10:44 AM Flag

    You were saying the same thing 12 months ago, and yet long-term rates are...exactly where they were 12 months ago. What makes you think you're right this time? Welcome back to the board, by the way...

  • Shareholders who were holding the stock at that time fully deserve $.30/share for the taking that occurred. Not sure about the folks who bought shares after that...

  • Reply to

    A lot of put buying today

    by rangetrader123 Dec 2, 2015 10:57 PM
    merenkov merenkov Dec 3, 2015 11:59 AM Flag

    Twelve months ago, TLT was right around the $120 level. At that time, you were telling everyone to rotate out of Treasuries and into emerging markets and China (how'd that work for you?). You missed the move up to $140, and TLT is right back where is was 12 months ago.

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