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Linus Wilson

 
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  • 0% Rates And QE Forever? [View article]
    I like your tip about the Barrons data.
    Oct 21, 2014. 10:03 AM | Likes Like |Link to Comment
  • 0% Rates And QE Forever? [View article]
    bookmdano: JasonC below makes a good point about the "quality" of jobs. If anything the long-term trend is towards more employment for the skilled and less employment for the unskilled and lower paid.

    The St. Louis Fed FRED site has data on the workforce participation below age 55. That shows a much lower decline in participation than the number including people at or near retirement ages. I think that indicates most of the workforce participation rate decline is mostly caused by the baby boomers entering retirement.

    The Fed cannot affect structural or demographic employment issues with monetary policy. Our economy is becoming more complex not less. Besides the baby boom trends, people are spending more time in post-secondary education than ever before. That is a drain on workforce participation. Those who don't have in demand skills and find it too hard to obtain them leave the labor force entirely.
    Oct 21, 2014. 09:58 AM | Likes Like |Link to Comment
  • 0% Rates And QE Forever? [View article]
    Also...Jason C, you may be omitting liquidity premiums and ignoring the call options embedded in the bonds, but not the notes. A pure expectations model may not be ideal if you really are fine tuning bond positions.
    Oct 20, 2014. 05:56 PM | Likes Like |Link to Comment
  • 0% Rates And QE Forever? [View article]
    I think this post http://seekingalpha.co... disputes your conclusion that the bond market is pricing in short rates of 3.5% to 3.75%. I suspect the author is using a slightly using a more complex model or different data to get the 3.11% peak forward rate.
    Oct 20, 2014. 05:34 PM | Likes Like |Link to Comment
  • 0% Rates And QE Forever? [View article]
    That was a little too much info for me, but was good material for an intro to bond valuation lecture. The 2 year rates are way inconsistent with the Fed's interest rate forecasts. (The ten year is too, but forecast error is large after 2 years.) See http://seekingalpha.co... or the note which does the strip math you are talking about at http://bit.ly/ZLTmBp . If you think market prices are always efficient, you should buy an index fund. I don't think the market is always priced efficiently.
    Oct 20, 2014. 03:22 PM | 1 Like Like |Link to Comment
  • What The Plunge In U.S. Treasury Yields Means For The Next 10 Years [View article]
    As for inflation, consumer's expectations of inflation 2.8% are much higher than the bond market's or the Fed's target of 2.0%.
    Oct 17, 2014. 10:54 AM | Likes Like |Link to Comment
  • What The Plunge In U.S. Treasury Yields Means For The Next 10 Years [View article]
    Nice work as always! I'm going to try to digest the meaning of your scenario analysis, which looks very rigorously done from the surface. A peak forward rate of 3.11% shows the madness of the U.S. bond market. Prices imply that Fed funds in 30 years will never go near its long-term average of 3.75%. These are depression level bond prices when unemployment is 5.9%. I know the many small investors are still shell-shocked from 2008, but I wonder if too many bond traders are 25 and have 0 historical perspective.
    Oct 17, 2014. 10:47 AM | 1 Like Like |Link to Comment
  • Earnings Vs. Ebola [View article]
    I never quoted my fund's performance or discussed my fund in the blog. Accredited investors can request the fund's performance at http://bit.ly/19IphVj or look it up at one of various hedge fund listing services.
    Oct 15, 2014. 03:17 PM | Likes Like |Link to Comment
  • Earnings Vs. Ebola [View article]
    Average earnings beat is 2.3%. That does not sound over optimistic, statistically. That sounds pessimistic on average.
    Oct 15, 2014. 03:09 PM | Likes Like |Link to Comment
  • Earnings Vs. Ebola [View article]
    4.5% is not equal to 25%
    Oct 15, 2014. 02:59 PM | Likes Like |Link to Comment
  • Earnings Vs. Ebola [View article]
    The Factset link. If you think the multiple is too high, don't buy and even sell.
    Oct 15, 2014. 02:36 PM | Likes Like |Link to Comment
  • One Rally That Has Blindsided Wall Street's Throngs [View article]
    Riding the bubble can be profitable until it bursts.
    Oct 15, 2014. 07:29 AM | Likes Like |Link to Comment
  • Forward 1-Month T-Bill Rates Plunge Again, With Peak Down 0.11% At 3.28% In June, 2021 [View article]
    I really appreciate these blogs. The amount of analysis that went into this is very impressive. I think it is great that you are translating your research to a broader audience.

    Since the Fed funds rate since 2001 has been typically about 10 basis points above the 28-day treasury rate, doesn't the forward rates imply that the bond market thinks the Fed funds rate will never hit 3.75% over the next three decades?

    3.75% is the Fed funds' long-term average and the FOMCs long-term target rate according to its quarterly projections. (They project that the Fed funds rate will hit 3.75% in 2017!) Do you think the ten, twenty, or thirty year bonds are a good long-term investment if they price in no liquidity premium over the Fed's target for short rates?
    Oct 11, 2014. 09:49 AM | 1 Like Like |Link to Comment
  • The Dot Plot Bubble: How To Profit From The Bond Market Rout [View article]
    There is no reason for that. I recommend you read the prospectuses before doing any investing. You might also want to seek the services of a qualified financial adviser.
    Oct 6, 2014. 03:54 PM | Likes Like |Link to Comment
  • The Dot Plot Bubble: How To Profit From The Bond Market Rout [View article]
    Which is exactly the same as my disclosure and everything I said. Long DTUS allows you to profit by higher futures interest rates for the 2-year T-note. Higher interest rates means the T-note goes down in price. Good luck!
    Oct 6, 2014. 03:43 PM | Likes Like |Link to Comment
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206 Comments
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