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During what was variously described as a disastrous press conference on Wednesday, Jerome Powell said trade tensions nearly "boiled over" in May and June but "returned to a simmer" in July. The Fed Chair made a number of mistakes over the course of his press conference, and that was one of t...
TIPS outperform regular Treasuries when the market underestimates future inflation The chart below shows the 5-year breakeven rate and actual future inflation. The market has typically overestimated inflation, although 2003 and 2008 were periods when inflation expectations were overly con...
Treasury inflation-protected securities have a reputation for being less tax efficient than other bonds: Source: Federal Reserve Bank of Atlanta Phantom income is why some investors think TIPS are a tax nightmare. Inflation adjustments make up the majority of return in a TIPS bond....
One issue with TIPS is their performance in 2008: Some investors say "TIPS didn't protect you then, so I'm not using TIPS because that's when bonds should work." The Lehman Brothers bankruptcy is at the heart of why the TIPS market acted so strangely. In 2009, the United States Governmen...
Nearly 10 years ago, early in the recovery from the financial crisis, I bought Treasury Inflation Protected Securities, with the intention of holding until maturity. In those days, the interest rate paid on a recent 10-year issue was much higher than now - 1.875% versus only 0.25% for a se...
I've talked quite a bit in these pages about the extent to which 2019 has been a year defined by an epochal central bank pivot, which has reinvigorated the global hunt for yield to the benefit of risk assets. There was a time not so long ago (perhaps five years ago) when the vast majority o...
There's a big difference between volatility and risk. Volatility is the magnitude of short-term price changes. Risk is the potential of permanently losing money. "Uncertainty is not the same as risk. Indeed, when great uncertainty drives securities prices to especially low levels, they...
In 1963, James Tobin said : "Markets do not provide, at any price, a riskless way of accumulating purchasing power for the future." Fortunately, for investors in 2019, we can buy Treasury inflation-protected securities. I rarely see TIPS in prospective client portfolios and the next f...
The Fed is in the blackout window ahead of the July FOMC, and mercifully so. As we saw on Thursday , the market is exceptionally sensitive to communications around the likely scope of the forthcoming rate cut (i.e., "Will it be 25 bp or 50?"). John Williams's fumbled effort to extoll the vi...
Is The Economy Still Slowing? With the S&P 500 ( S P500) pressing new all-time highs, you are probably asking yourself whether the economic cycle is still slowing. Although we all know that the stock market is not the economy, it is logical to link the two and question the direction of e...
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2024-07-24 11:32:00 ET Stock Traders Daily has produced this trading report using a proprietary method. This methodology seeks to optimize the entry and exit levels to maximize results and limit risk, and it is also applied to Index options, ETFs, and futures for our subscribers. This...
2024-06-14 13:14:00 ET Stock Traders Daily has produced this trading report using a proprietary method. This methodology seeks to optimize the entry and exit levels to maximize results and limit risk, and it is also applied to Index options, ETFs, and futures for our subscribers. This...
2024-04-14 13:24:00 ET Stock Traders Daily has produced this trading report using a proprietary method. This methodology seeks to optimize the entry and exit levels to maximize results and limit risk, and it is also applied to Index options, ETFs, and futures for our subscribers. This...