Wednesday, January 10, 2018

MarketWatch skewers Jamie Dimon

Oh so delish. Get woke, Jamie.

Tuesday, January 9, 2018

Bill Gross Says Bond Bear Market Confirmed

I am not as sure about a bond bear market as Bill Gross. Today, the 10-year treasury closed above 2.5%, but I would not call a bear market until it breaks 4.0%. With a fair amount of my IRA in a bond ladder, higher interest rates just mean the next rung on my ladder will earn a higher rate. I own individual bonds, so even though the market price will move inversely with interest rates, I plan to hold all of them to maturity. It doesn't make any difference what the market price of the bonds is as long there are no defaults. I don't own crazy synthetic mortgage tranches, just A and AA corporates and AAA treasuries.

If we do have a bear market in bonds, the higher rates should attract more money and that might drain money from other investments. It could mean a bear market in stocks and/or other asset classes. High rates killed the stock market in the late 70s and early 80s. The Fed is rumored to have 2-3 more rate hikes in store for 2018. I'll be looking to see if we have any curve inversion as rates move up. It will be interesting to watch.