Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

June 9, 2019 | Why You Should Pounce on 2.57% Yields

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

Stocks took another bold leap Friday, heedless of payroll data that suggest U.S. employers pulled back on hiring in May across all sectors of the economy. Their clear concern is a global slowdown in China and Europe that appears to be deepening. Copper and crude oil quotes have signaled this as well with a 12% fall in the former and a 20% plunge in the latter. So has the Ten-Year Note, which is close to slipping below 2% for the first time in more than two years.

Despite this, Wall Street was its blithely exuberant old self on Friday, closing out its best week in months. The Dow tacked on 263 points, bringing the five-day gain to 1142 points. Not bad. But not good, either, since it was just reflex reaction to talk of Fed stimulus that can hardly be expected to prop up the economy while our major trading partners go down the tubes.

A Capital Gains Kicker

Are investors perhaps counting on U.S. stocks to attract increasing sums of safe-haven capital as the global economic picture darkens? If so, this promises to be a great bet until the day it isn’t. Our advice is to lock in 2.57% returns on the 30-Year Bond while you can, since that rate could look pretty juicy when flight-to-safety money from around the world eventually panics into T-bonds, as it inevitably will. Were you aware that T-bond holders can rack up annualized gains of 20% or more when long-term yields fall hard? That’s not bad just for playing it safe.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

June 9th, 2019

Posted In: Rick's Picks

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.