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merenkov 2016 posts  |  Last Activity: May 26, 2016 11:56 AM Member since: Jun 7, 2004
  • As Rick Santelli just pointed out on CNBC, this morning the Department of Commerce revised down all the core durable goods data going back to 2014. Specifically, they stripped away about 4% of the nominal dollar amount in Durable Goods ex-transports (the March print dropped from $154.7 billion to $148.3 billion). Capital goods orders (nondefense ex-aircraft) were lowered by a stunning 6%, taking the March print from $66.9 billion down to $62.4 billion, the lowest absolute number since early 2011. By revising down the March data, of course, it made this morning’s April data look that much better comparatively, but how can anyone trust those numbers now?

  • merenkov merenkov May 24, 2016 2:59 PM Flag

    Oil will be the key driver in the short term. For each of the past two years, WTI has rolled over in the first week of July. In a few weeks, we'll see if history repeats...

  • Reply to

    Sold 50% of my TLT today

    by bob.bull99 May 23, 2016 5:50 PM
    merenkov merenkov May 23, 2016 8:45 PM Flag

    You've been bashing TLT for over a year, so why didn't you just sell 100% of of your imaginary holdings?

  • merenkov merenkov May 23, 2016 11:41 AM Flag

    And yet iron ore, steel rebar and hot rolled coil steel futures are all down about 30% in the past month. Maybe it was all just a dead cat bounce caused by Chinese speculators? In the meantime, the dollar appears to have broken its downtrend and is now trending upwards.

  • Reply to

    btw Any AAA Corporate Bond you've got on Radar?

    by the_entitled May 20, 2016 11:51 AM
    merenkov merenkov May 22, 2016 9:54 PM Flag

    Wow, a century bond. The price on those things must be seriously volatile with that kind of duration. I wonder how liquid the market is for those MIT bonds, any idea? Not for the faint of heart, to be sure, and practically designed for the interest rate gamblers out there...

  • merenkov merenkov May 22, 2016 9:47 PM Flag

    Since I think we’re going to be stuck in a low-interest rate environment for a very long time, I like 30Y Treasuries, but I also like a handful of REITs and MLPs for the same reason. The Cohen & Steers REIT index has been trending above its 200 day moving average since the end of February, and the Alerian MLP Index recently crossed above its 200-day for the first time in about 18 months. If the Alerian closes the month above the 200, it might really take off (although I still think the price of oil might experience another summer swoon, so I’d still be cautious there). I have a finance degree, and used to think most technical analysis was voodoo, but I’m a believer now and pay attention to things like the 200 DMA (although I don't think it's that helpful analyzing the bond market).

  • Because I find Jeffrey Gundlach wildly entertaining and provocative (even though I don't always agree with him), I listened to his 5/12/16 webcast (you can find the 50-minute presentation on the DoubleLine website). Here are some highlights:

    - He thought there was a 50% chance of one rate hike this year, and 50% chance of no rate hikes;
    - The correct trade in recent years has been to fade Fed hawkish rate talk;
    - He made no mention at all of the yield on 30Y Treasuries;
    - In response to a question, he said he expected to see a 2% yield on the 10Y before we see 1.5%. According to Jeff, the line in the sand is 1.64%. If the yield breaks below that, though, Treasuries could go on a big rally;
    - He’s convinced that we’ll eventually see “helicopter money” from the world’s central bankers;
    - He likes Puerto Rican bonds because they are priced for default; the risk is real, but it’s priced in; the munis to worry about are places like Illinois, where it’s not priced in;
    - He thinks headline CPI falls for the next 3 months (and then presumably rises due to the “base effect” of low oil prices from last year;
    - He thinks gold eventually goes to $1,400/oz, but it’s been a slower grind up than he expected; and
    - He eventually expects a Great Awakening: when central banks finally realize that “negative interest rates don’t work, that negative rates are by definition deflationary, and that you can't fight a deflation problem with more deflation"

    The rest of the webcast was mostly devoted to DoubleLine’s closed end funds, DBL and DSL. DSL actually sounded intriguing to me, with its 10% current yield and 5.6% discount to NAV.

  • Reply to

    btw Any AAA Corporate Bond you've got on Radar?

    by the_entitled May 20, 2016 11:51 AM
    merenkov merenkov May 20, 2016 1:16 PM Flag

    By the way, if you really want AAA corporates, you're looking at a tiny universe now (only MSFT and JNJ, I think, as XOM bonds were recently downgraded). I was intrigued by 40Y MSFT bonds back in October when they were yielding 4.35%, but I never pulled the trigger. It wasn't really the yield that attracted me, but rather the 40Y maturity. If one is betting on a drop in long-term rates, the longer duration just gives you more kick (although it works both directions, of course).

  • Reply to

    btw Any AAA Corporate Bond you've got on Radar?

    by the_entitled May 20, 2016 11:51 AM
    merenkov merenkov May 20, 2016 12:43 PM Flag

    hyperinflationhyenas (who was always an excellent poster on this board) would be a good person to pose this question to, but he only drops by here occasionally now.

  • Reply to

    Jeff Gundlach: time to start moving into Treasuries

    by merenkov Apr 26, 2016 11:36 PM
    merenkov merenkov May 20, 2016 10:21 AM Flag

    Again, long term rates (the only ones I care about) fell 50 bps after the Fed hiked rates in December, and they would likely do so again if they hike in June. So what's your point exactly?

  • Foreign holdings of US Treasuries rose by $51 billion to $6.287 trillion in March, a new record. Interestingly, and for the first time ever, this month’s TIC release included a breakdown of the category formerly known only as “Oil Exporters” (this 4-decade “special arrangement” was a concession made by the US government to Saudi Arabia after the 1973 Arab oil embargo). It turns out that the Saudis, who recently threatened to sell all of their UST holdings, hold only about $117 billion of US paper. To put that in perspective, the Fed was buying $80 billion of USTs every month during QE3.
    The link: http://ticdata.treasury.gov/Publish/mfh.txt

  • merenkov merenkov May 19, 2016 10:50 AM Flag

    Your sample size is too small. Take a look at a five or ten year chart of the yield on 30-year treasuries (yahoo ticker = ^TYX). Talk about a trend of lower highs and lower lows…and it’s precisely what one would expect when the arteries of the economy are increasingly clogged by debt.

  • merenkov merenkov May 18, 2016 5:02 PM Flag

    You could say the same thing about a dividend-paying stock, or a REIT, or an MLP. You do realize that TLT's total return to date (based on today's closing price) is about 8.5%, right? Meanwhile, the S&P 500's return is about 1.2% (1% dividends and 0.2% price gain).

  • Reply to

    Gundlach: 30 year yield to go above 6%

    by pigorhog May 16, 2016 3:43 PM
    merenkov merenkov May 18, 2016 4:45 PM Flag

    I've been in and out of the bond market 3 times in the past 6 years. I buy long term bonds as a bet on the direction of rates, not for yield. I think we'll see long-term rates at much lower levels than here, which will provide some nice capital gains (and in the meantime you get paid to wait). I'm not a buyer at these levels, but I'm certainly not a seller. Every asset class has risk attached to it - we could see a 35% correction in the stock market in the blink of an eye.

  • Reply to

    Goodbye $130, was nice to know yee

    by ex.goldbug May 18, 2016 2:28 PM
    merenkov merenkov May 18, 2016 2:47 PM Flag

    You've been making genius posts like this for over a year and a half, and every single time you've been proven wrong.

  • Per Citi, there’s currently about $39 trillion in outstanding Group of Ten sovereign debt. (The G10, by the way, is actually made up of 11 countries, including the US, UK, Canada, Japan and 7 European countries). Approximately $13.7 trillion of this debt is negative yielding (so about 35%). Japan accounts for almost 58% of all negative yielding debt, followed by France (11.33%) and Germany (10.66%).

    And for all the bashers of US Treasuries, the US accounts for an astonishing 60% of all positive yielding G10 debt, including 74% of all positive debt in the 1-5 year maturity range. As if slow economic growth in the US wasn’t enough, the negative-yielding bonds in the rest of the world continue to act as anchors tied around the necks of our own bond yields.

  • Reply to

    Worst

    by hiker200055 May 17, 2016 10:39 AM
    merenkov merenkov May 17, 2016 12:56 PM Flag

    I held Walgreens stock for years (bought around $34/share), and sold it back in February around these levels. I thought I’d buy back in once the price stabilized, but then I read the Fortune article about Stefano Pessina, the relentless serial acquirer, and decided no way. The company needs a quality manager-type, not a restless deal-maker who just makes deals for the sake of deals.

  • Reply to

    Gundlach: 30 year yield to go above 6%

    by pigorhog May 16, 2016 3:43 PM
    merenkov merenkov May 17, 2016 11:15 AM Flag

    I doubt many investors (other than life insurance companies and pension funds) are buying 30Y Treasuries with the intention of holding for 30 years (I'm certainly not). I'm guessing Gundlach is anticipating a desperate Fed resorting to helicopter money sometime in the next 10 years (which would likely stoke inflation). But before we get to that stage, the economy would have to sink to almost Depression-era levels, which means bond yields would have to go much lower before they go higher.

  • Reply to

    Goldman cuts its Treasury yield targets, lol

    by merenkov May 11, 2016 12:25 PM
    merenkov merenkov May 17, 2016 12:51 AM Flag

    Bingo!

  • Reply to

    Gundlach: 30 year yield to go above 6%

    by pigorhog May 16, 2016 3:43 PM
    merenkov merenkov May 16, 2016 8:11 PM Flag

    A decade is a long time. When exactly did he say a sustainable increase in LT yields would begin?

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