A powerful gale is coming from the east (extra Dickens) and it will blow out your piker portfolios straight out of the waters. The markets have traded sideways for more than a month now, unable to break out of its tight range–frustrating ardent longs and the canaille pretending to be important, who are instead from the Third Estate.
Morgan Stanley is out with a note suggesting to ignore the Federal Reserve, them and their petulant ham and eggers, faking hawkishness. Instead of selling bonds, like a moron, and getting long stocks, Morgan suggest that you board the ark and reserve seating next to the giraffe and the leopards.
“We found little at Jackson Hole to sway our view on the U.S. Treasury market,” Morgan Stanley strategists Matthew Hornbach and Guneet Dhingra wrote in a client note. “While August payrolls present an obvious risk, we continue to believe market-implied probabilities for a September rate hike will end at zero, not 100.”
There are several preferred ways to play this. I will highlight some of my favorite ideas.
For a straight forward allocation into long duration treasuries, without leverage, buy TLT. It pays a monthly divvy, annualized at around 2.5%, and is at the epicenter of all large money managers daily buying programs.
If you’re not interested in the income aspect of treasuries and only want the price action, go with the zeroes, ticker ZROZ.
3x long datedTreasuries: TMF
2x long dated Treasuries: UBT
US Treasury strips: EDV
7-10 yr Treasuries: UST
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I wonder what they think about pet rocks?
I expect good job numbers. Bull proceed