Spoony Love said:

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That's not a question. Learn us something.

Please.

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Coming off the last high in rates, we had a significant drop from 5.02% to 3.78% in the 10Y. Since then, it's moved up in choppy fashion. The chart off the 2020 bottom is not clean and very hard to decipher. This happens in many stages on many different instruments, especially in periods of sideways chop. Trying to identify channels and waves can be really really hard. When things get this cloudy, it's usually best to just avoid it until some clarity starts to present.

While the long term chart is still unclear (I can make a case for this moving to 7%-10% just as easy as 2%-3%), the short term has become quite clear. Since I'm not one to pound the table anymore on definite targets, I like to run 2-3 charts simultaneously as long as all of them stay within the confines of the rules and make sense. And this one has 3 potentials that I'm watching, all focusing on the 2024 action since the last low.

1. The first is a topping pattern where the move down into the recent low was our A wave, the first of 3 waves in a correction. We are working on the top of the B wave "retrace" back up. Next up would be a drop below the last low, likely down to 3%-3.5% range for the C wave.


2. Nearly completed leading diagonal. A LD is a 5-wave move that tends to be more choppy and overlapping than a standard lightning bolt impulse. It usually moves in 3-wave patterns instead of 5-wave patterns, making it hard to track as every single move is "corrective" in nature. But they usually adhere to clear channels or trend lines. They are either contracting or expanding in most cases. I won't go over all of the rules. Type in leading diagonal in google and you can find many resources explaining them. But just know that no rules are broken here.


3. This option is a larger LD. And this is my preference as it's the cleanest chart. This says that we are topping in the 3rd wave with a swing down for the 4th on the horizon before the 5th wave tops at 5%.


The one thing I'm not tracking is a potential for very large spike up. I don't see it as imminent. But if it starts to look like that, I will have to start tracking it.

So let me get this straight: my great, great grandkid is going to be paying for today's spending?

Ain't no way we can cover those interest payments for that rate sustainably.

LMCane said:

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my buddy created a chart showing the yields of $10,000 with 1 month Treasury bonds at 5.3%

it comes out to $17,134 if you keep rolling that over for an entire year.

are we missing something here?

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I'm gonna need to see the math on that. A 5.3% bond will pay you about $44 and change in interest the first month.

Sounds like the FED needs to let go and let God.

Good grief folks: start growing your own food or know someone who does.

If you can get your hands on about 6-7 acres, you can grow just about anything you would eat. No need for a heard, just raise a steer at a time. Raise meat chickens and layers. Build garden and put food away. Put some fruit trees in the ground and wait (but prune to increase yield). Let a pig tear up ground for the gardens then process. All it costs is sweat and a few bucks.

FishrCoAg said:

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LMCane said:

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my buddy created a chart showing the yields of $10,000 with 1 month Treasury bonds at 5.3%

it comes out to $17,134 if you keep rolling that over for an entire year.

are we missing something here?

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I'm gonna need to see the math on that. A 5.3% bond will pay you about $44 and change in interest the first month.

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Very clearly someone forgot to divide by 12 when determining the monthly gain.

Hell, if they could make that we would all be full bore into treasury bills.

Heineken-Ashi said:

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Spoony Love said:

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So let me get this straight: my great, great grandkid is going to be paying for today's spending?

Ain't no way we can cover those interest payments for that rate sustainably.

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I'll just copy a post I made this morning on the "we don't need to worry about inflation" thread..

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I can't put into word how much fun and enjoyment that thread brings me every time it's bumped, especially when the dip**** OP bumped his own embarrassing thread.

ETA: Here's the thread in the event some here doesn't know what we're referring to. Just read the OP before you read the replies.

The reason we should not be concerned about inflation - Page 25 | TexAgs

LMCane said:

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my buddy created a chart showing the yields of $10,000 with 1 month Treasury bonds at 5.3%

it comes out to $17,134 if you keep rolling that over for an entire year.

are we missing something here?

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flashplayer said:

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FishrCoAg said:

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LMCane said:

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my buddy created a chart showing the yields of $10,000 with 1 month Treasury bonds at 5.3%

it comes out to $17,134 if you keep rolling that over for an entire year.

are we missing something here?

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Very clearly someone forgot to divide by 12 when determining the monthly gain.

Hell, if they could make that we would all be full bore into treasury bills.

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You are exactly right. It's a common mistake, but they learn when they try to implement their plan.

Brewmaster said:

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Spoony Love said:

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Sounds like the FED needs to let go and let God.

Good grief folks: start growing your own food or know someone who does.

If you can get your hands on about 6-7 acres, you can grow just about anything you would eat. No need for a heard, just raise a steer at a time. Raise meat chickens and layers. Build garden and put food away. Put some fruit trees in the ground and wait (but prune to increase yield). Let a pig tear up ground for the gardens then process. All it costs is sweat and a few bucks.

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Amen brother. Is it wrong of me to look at north of Bryan and south of Hearne area as prime real estate for something like this? it is amazing how cheap it is up there, I know it's a dump, but wow. All of central TX will eventually get caught up (real estate prices).

Red Pear is actually helping us now, looking at a property not far from downtown Bryan. Definitely not a homestead type of property, but it's a big lot, could do plenty there.

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As a country veterinarian I'm still trying to figure out the raise a steer at a time plan!

FishrCoAg said:

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Brewmaster said:

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Spoony Love said:

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Sounds like the FED needs to let go and let God.

Good grief folks: start growing your own food or know someone who does.

If you can get your hands on about 6-7 acres, you can grow just about anything you would eat. No need for a heard, just raise a steer at a time. Raise meat chickens and layers. Build garden and put food away. Put some fruit trees in the ground and wait (but prune to increase yield). Let a pig tear up ground for the gardens then process. All it costs is sweat and a few bucks.

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Amen brother. Is it wrong of me to look at north of Bryan and south of Hearne area as prime real estate for something like this? it is amazing how cheap it is up there, I know it's a dump, but wow. All of central TX will eventually get caught up (real estate prices).

Red Pear is actually helping us now, looking at a property not far from downtown Bryan. Definitely not a homestead type of property, but it's a big lot, could do plenty there.

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As a country veterinarian I'm still trying to figure out the raise a steer at a time plan!

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Why raise one when we can just shoot one for you?

Some random futures charts showing long term trendlines. Yello is more recent. Green means if broken it could go higher. Red if broken could go lower or would be a bottom. So many are either at or near inflection points or have already broken a trendline and pointing up.

Bloomburg Commodity Index


Hot cup of cocoa - yikes!


Lean Hog - Nearing a decision


KC Wheat - missed a red trendline, but it might not have bottomed yet


Gasoline - FJB


Sugar - broke down through a trend, but not out of the woods. Up from here could be bad bad.


Oats - Down would be good. Bounce here and through the green and oh boy..


Rice - Coiling up. Decision time approaching


Will try and follow up with cattle, milk, and cotton, but they are very similar.

As long as you like tough stringy meat!

Brewmaster said:

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Spoony Love said:

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Sounds like the FED needs to let go and let God.

Good grief folks: start growing your own food or know someone who does.

If you can get your hands on about 6-7 acres, you can grow just about anything you would eat. No need for a heard, just raise a steer at a time. Raise meat chickens and layers. Build garden and put food away. Put some fruit trees in the ground and wait (but prune to increase yield). Let a pig tear up ground for the gardens then process. All it costs is sweat and a few bucks.

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Amen brother. Is it wrong of me to look at north of Bryan and south of Hearne area as prime real estate for something like this? it is amazing how cheap it is up there, I know it's a dump, but wow. All of central TX will eventually get caught up (real estate prices).

Red Pear is actually helping us now, looking at a property not far from downtown Bryan. Definitely not a homestead type of property, but it's a big lot, could do plenty there.

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Red Pear sucks

I've helped someone buy property Hearne before. Granted, it was 12 years ago. But the house had a pipe burst and flood everything while under contract and I was able to navigate through that for the buyers.

Jamie is a beast, a good friend, business partner, and someone I have 100% trust and faith in. Both personally and professionally. You couldn't be in better hands. Luke is a close second.

Twisted Helix said:

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Ashi is it too late to start buying metals? They've had quite the run up.

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The max gain potential is too late unless we get a huge retrace. I don't see that happening. But no, it's not too late. We're just at the point where any entry can be followed by a retrace of some sort, and the time for gentlemen's entries is likely gone. When metals start to run, they can get fierce and hit upside extensions that you wouldn't imagine.

GDX is lagging behind gold right now. Barrick still has room to run. And lots of juniors minors have just started. They are usually last to rise.

It doesn't matter where. If I lived in town, I would try to have access to a big lot as you mentioned, or a handful of acres to grow things, and make it a habit to in your schedule to take care of animals. In a big lot in town, you could easily handle veg and eggs.

Just watch the chicken math. I'm clearing 3 dozen eggs a day which is nice until you either try to eat them or have a hard time selling. I'm even selling cheaper than HEB.

Twisted Helix said:

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Ashi is it too late to start buying metals? They've had quite the run up.

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I added to GOLD (Barrick) recently. Look up the weekly chart and see what it did in '08/'09 and where it's at now, plenty of room to run.
FSM is a silver miner - I missed my entry, but would add on any pullback to $4 or so

Red Pear Luke (BCS) said:

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Bonfire.1996 said:

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flashplayer said:

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Fed is going to have to sink some banks and crank up the interest rate another 25-50 bp. The optimism that they will be able to sit on their hands and watch inflation slowly drop looks far fetched each time new numbers come out and with the eye test each month when we pay bills.

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As long as Fed funds at 5.3% is in excess of inflation, policy is technically restrictive. So they will be able to maintain the pause. A climbing 10 year and continued deposit drain at regional and small banks will cause failures due to simple math. That will lead rates back down.

Biden will be running on bank failures and restrictive FED policy.

Good luck.

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Proof is in the pudding and you can look at the deposit rates NYCB is offering as an example of what Bonfire is saying to perfection. Offering 5.55% yield on deposits just to keep cash on that bank's balance sheet is a symptom of the market forces working.

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Nailed it. Top of market rate offering on CDs? That's a signal that they have $0 to lose in liquidity. Let this be a lesson to everyone, what I hypothesized is coming true. You all know about NYCB and their near failure, and you see how they are protecting liquidity. Watch for this at other banks.

The jolt to the 10 year is absolutely terrible for banks already bad bond portfolios. But remember, these are only true losses when they have to be realized. And they will only have to be realized when liquidity drops to trip up certain capital ratios.

Unfortunately for banks, persistent inflation is causing everyone's deposit bases to wither away. That is the banks liquidity. When it withers to a certain point, they must generate liquidity through new deposits or selling off investments. Can't sell off investments at $0.70 on the dollar and raise meaningful liquidity without the domino effect of tripping capital ratios with that realized loss, so banks will offer top of market rates to generate deposits - just like NYCB is doing right now.

NYCB and Steve Mnuchin looked at the dot plot two months ago and said,"we just need a little liquidity before the Fed drops rates and solves our math problem for us." Oops.

Mega banks with ample liquidity will be the FDIC's go to for bargain basement priced regional bank mergers so their already insufficient FDIC fund doesn't need to get tapped.

Ride this wave down and buy these banks: JPM, FHN, CFR

And to tell you guys how bad this is: my bank I work at is not immune. We bought nearly $0 in treasuries and other investments. But our deposit drain is very significant. Significant enough that it's causing us to question loan duration decisions.

And we are raising deposit rates to defend our liquidity.

We are incredibly fiscally disciplined, and even we are affected.

This will be the FED

Spoony Love said:

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This will be the FED

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Correct. But only after the 10 year drops below 4%. Lots of carnage to get there.