since Fri Jul-22 Obama/Boehner beef, bond outperform stock!

[cabronjames]

Friday Jul-22 evening our plutocrat clowns Obama (D) & Boehner (R) had dueling press conferences/beef on the debt ceiling.  IIRC Boehner stated he wished to resolve the (fake?) crisis by Sun Jul-24 night, as to not "crash the Asian stock markets".

As of Thu Jul-28, there is no progress towards raising the debt ceiling.  These incompetents might actually both

1 damage the US credit rating AND

2 slash the elderly social insurance programs (Social Security, Medicare) people PAID into.  Aka it's OK to default on poor or middle class grandma who was taxed for 30+ yrs of working into these programs, but not to default on the plutocrat special interests.

Although if it's true that Wall $treet special interests own both parties & their elected PR men such as Obama & Boehner, why haven't they "ruled" the politrickians to raise the debt ceiling yet?

Anyways, out of curiosity, I checked the price change of PP assets since then, using VTI, TLT, SGOL.  I expected LT bonds to be down the most, but surpisingly to me, stocks are down the most

Ticker, Fri Jul-22 price, Thu Jul-28 price, % change
VTI, $69.71, $67.22, -3.57%
TLT, $96.05, $96.02, -0.03%
SGOL, $159.10, $160.36, 0.79%

Question: do you think the price movement to be expected or unexpected  I have 2 possible hypothesis here.  Do you think either is valid, or have a 3rd possible hypothesis I'm not aware of?  Would love for yall gurus to chime in with your $0.02 (or 2 pence I suppose in the case of Clive).

Expected: Although the treasury bond market might have some problem (delayed payment, default, etc), there is an ironic "flight to quality".  The US economy in general would be hurt by a default &/or damaged "confidence in the US trasury" &/or a credit rating agency(s) downgrade.  This decline in the US economy would hurt US company stocks moreso than the US Treasury.  Eg some might fear a US stock decline & reallocate some of their US stock holdings into US Treasuries.

Unexpected: the financial markets are unpredictable &/or manipulated &/or influenced by non-public information.  This Jul-22 - Jul-28 price movement may be an example of this.  This may be a concrete example of why it's best to invest the money you cannot afford to lose in a all-terrain portfolio that as a package will rarely lose money in real inflation-adjust terms & will also have real positive returns.  Also the best example of such a portfolio which has done so historically by far is the HB Permanent Portfolio.

What do you think?

[MediumTex]

I admit I am very surprised to see the House passing TWO bills that everyone knew/knows were DOA.

I'm surprised so much time would be wasted just posturing in this way.

The new House Republicans also scare me a little.  Some of them seem to think that cutting off your nose to spite your face makes for good policy.

[Pkg Man]

I admit I am very surprised to see the House passing TWO bills that everyone knew/knows were DOA.

I'm surprised so much time would be wasted just posturing in this way.

The new House Republicans also scare me a little.  Some of them seem to think that cutting off your nose to spite your face makes for good policy.

Agreed.  While I think cooler heads will prevail, occasionally in a game of chicken no one swerves.

[cabronjames]

update on Fri Jul-29, 1 wk since then the Fri Jul-22 plutocrat intra-party beef bt Obama & Boehner

LT Bond have actually been had the best return, exceeding both gold & stock!

Meanwhile there is no, at least public knowledge, solution to the Tue Aug-02 debt ceiling.  It makes me wonder if there is a private agreement between the plutocrats (large T-Bond holders like GSachs-type bank$ters, Saudi Royals, etc) & their workers/PR hacks (Obama & Boehner).

Ticker, Fri Jul-22 price, Fri Jul-29 price, % change
VTI, $69.71, $66.85, -4.10%
SGOL, $159.10, $161.36, 1.42%
TLT, $96.05, $97.92, 1.95%

[Storm]

TLT is $98.60 today... This is funny - like MT said, "the bond market is about to punk the parrots."  People think a presumed default or risk of a default would be bearish for LTTs, but in fact, the safe haven effect seems to be working.  I would presume in a default the coupon payments would still get paid (#1 priority of the Treasury) which means LTT bond holders would still be made whole.  Just because some Federal employees might get their paychecks delayed a few days or some entitlement plans might temporarily stop paying bills and give IOUs instead, in the end treasuries are still (to use another brilliant MT quote) "the best horse in the glue factory."

[Jan Van]

And right now it still holds, tlt and gld up, vti down... 

But it makes you wonder (even more), what do our congress peoples know??? They keep blabbering about how a "default" has been avoided. We weren't going to default anyway. Well, maybe they mean their own finances would have defaulted, because they would not have been paid. i'm sure any US treasury bond holder would have been paid in full.

The thing that does irritates me is that the president didn't come ou two weeks ago to declare that there would be no way we would default. That he would use the powers invested in him to see to that. Wouldn't that have cut all this nonsense short?

Is it possible nobody in congress understands the concept of fiat-currency?

[moda0306]

jmourik,

With TLT up, it's possible I don't understand anything, period.  I thought it would be hammered with this fight dragging on.  I guess I didn't understand that the best horse in the glue factory has 4 hooves, and the "long-term" hoof is looking to be the most likely to overshoot any possible default, and is therefore actually possibly going to benefit from this mess.

This year with the PP is like watching Walter Payton run for a touchdown and out-maneuvering 9 of the 11 players on the opposing team.

[AdamA]

With TLT up, it's possible I don't understand anything, period. 

I'm surprised you say that...based on many of your posts, I would have thought that you may have viewed this as a strong possiblity. 

[moda0306]

I thought LT bonds would do well based on our currency and demographics, etc.

In no way did I think this debt vote (or lack thereof) would be good for treasuries.  I still tend to think we "can't default unless we try to."  Problem is, we have to vote to extend it... which puts us in a really crappy position not of government shutdown (when they can't agree on a budget) but default.

I thought LT treasuries would take a hit in this environment.

[moda0306]

I love the PP today!

[MediumTex]

I love the PP today!

Amazing.

[TBV]

Indeed!!  And that other noise you hear is the sound of VTI mousetraps springing.

[cabronjames]

Tue Aug-02 update, the day DC "resolved" the "debt ceiling crisis"

Ticker, Fri Jul-22 price, Tue Aug-02 price, % change
VTI, $69.71, $64.79, -7.06%
SGOL, $159.10, $164.65, 3.49%
TLT, $96.05, $101.54, 5.72%

btw, EDV is up 10.11% in the same time frame!  Thx again to MediumTex for the idea of the feasibility of holding EDV in 2/3X the amount of the other assets for the bond allocation, on the idea that EDV has 3/2 the volatility of TLT.

Also congrats to MediumTex on his TLT options @ $97.  MT, isn't that like a 500% ROI if you were to sell those options today?

[melveyr]

*puts on his speculator hat*

This balanced budget amendment will kill the US economy. Treasuries are not rising because of a sigh of relief over no default, but because our growth is going to be non-existent in the near future.

The private sector is swimming in quicksand, and the government has decided to walk away.

*puts on action point hat*

Luckily the PP has me covered. 

[MediumTex]

Also congrats to MediumTex on his TLT options @ $97.  MT, isn't that like a 500% ROI if you were to sell those options today?

Unfortunately, I am not nearly that smart.

I sold them at 1.60 on Friday for a 113% profit.

I could have sold them today for 4.50.

[moda0306]

Since the April 15th poker party where my friends thought I was crazy for insisting long-term treasuries were a good deal, they've gone up 11% (even more if google doesn't include interest/dividends.... anyone know if they do?).

That's 3.5 months and up 11%.  I know a gold bug would have beaten me, but it still feels good.

[AdamA]

Unfortunately, I am not nearly that smart.

I sold them at 1.60 on Friday for a 113% profit.

I could have sold them today for 4.50.

MT--

Your options trade has driven me nuts ever since you announced it.  I used to be a compulsive options trader (a bad one) and have since had a policy against any VP activity or speculation, especially options.  I put every last dime I can into my PP.

When I saw your move (which I thought was brilliant) I started salivating and checking out options again and almost bought a bunch of Aug $97 put, b/c, as bullish as I am on Treasuries, I was sure there would be a LTT pullback coming.

I even almost posted the trade here titiled "I did it for Medium Tex."  

Anyway, I'd look an idiot about now.  Just thought I'd share so I could still have the chance to...look like an idiot, I guess.

[MediumTex]

MT--

Your options trade has driven me nuts ever since you announced it.  I used to be a compulsive options trader (a bad one) and have since had a policy against any VP activity or speculation, especially options.  I put every last dime I can into my PP.

When I saw your move (which I thought was brilliant) I started salivating and checking out options again and almost bought a bunch of Aug $97 put, b/c, as bullish as I am on Treasuries, I was sure there would be a LTT pullback coming.

I even almost posted the trade here titiled "I did it for Medium Tex."  

Anyway, I'd look an idiot about now.  Just thought I'd share so I could still have the chance to...look like an idiot, I guess.

I'm glad you didn't make that trade. 

The timing on mine was very lucky, and I obviously left a lot of money on the table.

As you know, getting these trades right is harder than it looks.

[Storm]

This balanced budget amendment will kill the US economy.

The balanced budget amendment is just more political theatre.  It will never be passed.  The new bill just says they have to vote on it.

[Storm]

Congrats, MT, on your well deserved winnings.  I had an amazing lunch with some work colleagues of mine, one of which is just getting ready to buy a house.  He was sure that the house prices are increasing (probably because a very good RE agent told him so).  I tried to talk some sense into him but he started going into the "interest rates are so good right now" speech and I just had to let it go.  Some people just can't be helped...