Special edition Treasury post – TLT. Is the long term up trend about to be broken or not? Could we be getting ready for another upswing?
People are claiming Trump is going to be a big deficit spender which of course is a cause for concern in treasury markets. But in a financial engineering economy, that doesn’t seem to matter. You see, Trump borrows (read: prints) a trillion $ into existence to spend on airports and bridges. The people building those, in a financial engineered economy, aren’t going to be spending the proceeds on new or other projects. They’re going to plow the money into stocks or bonds. The employees getting paid by those companies are either going to save the money (more stocks / bonds) or spend it buying stuff from companies with enough slack to also plow that money into the bond or stock market. You see where most of this new money ends up? Financial instruments. Bonds are slowly becoming a better bet than the S&P in terms of yield.
Ultra – slightly oversold – a slightly odd downtrend has emerged in the face of new high after new high in the Dow. Usually for most stocks this doesn’t end well.
Short term – neutral with a very odd lagging behavior in performance relative to the major indexes.
Medium term – neutral
Composite – overbought