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A couple of weeks ago, famous investor Bill Gross called the bottom for regional banks. Regional bank stocks have basically gone straight up since his call. They seem to benefit from interest rates falling (as opposed to rising) which is counter-intuitive. It is said that banks make profits on NIM, however rising interest rates does not necessarily mean rising NIM, it could be compressed or shrinking NIM depending on circumstances. Perhaps the falling yields over the past weeks have relieved pressure on regional banks that were getting squeezed earlier in the year. Also, the value of their bond portfolios that were deeply underwater 6 months ago may have recovered a bit as interest rates fall.
Last edited by SoundAdvice4U; 12-15-2023 at 01:59 PM..
I guess my point is your so called “statistical models” are no better than guessing or staying long.
You don’t have a point, you are unaware of any statistical models I have or use. You are rambling about nothing at all while sprinkling in make believe things that weren’t said
A couple of weeks ago, famous investor Bill Gross called the bottom for regional banks. Regional bank stocks have basically gone straight up since his call. They seem to benefit from interest rates falling (as opposed to rising) which is counter-intuitive. It is said that banks make profits on NIM, however rising interest rates does not necessarily mean rising NIM, it could be compressed or shrinking NIM depending on circumstances. Perhaps the falling yields over the past weeks have relieved pressure on regional banks that were getting squeezed earlier in the year. Also, the value of their bond portfolios that were deeply underwater 6 months ago may have recovered a bit as interest rates fall.
at least it was a better call then he made when he devastated pimco returns making bad calls on interest rates…he sold off huge amounts of treasuries right before they slid to the lowest levels in history .
then he went to janus and made one bad call after another l
now we have gundlach and gross arguing where rates are going down to , both still playing the predictions game .after all if you are going t predict, predict often .
Jeffrey Gundlach at DoubleLine Capital says US 10-year yields will fall toward the low 3% range as the central bank is likely to slash its cash-rate target by a full two percentage points next year. Former Pimco bond king Bill Gross dismissed such euphoria, saying the yield is already about where it should be at just on 4%.
“We’ve broken down the trend lines and there’s a lot of room” below the current 10-year yield level, Gundlach said in an interview. “The economy is going to undershoot the downside and that is going to create a response. We will have to have a lot of money printing.”
Gross, who formerly managed the world’s largest bond fund, said forecasts for 10-year yields to fall to 3% next year are “farcical,” even if the Fed does cut rates as much as Gundlach projected, according to a posting he made on X.
at least it was a better call then he made when he devastated pimco returns making bad calls on interest rates…he sold off huge amounts of treasuries right before they slid to the lowest levels in history .
then he went to janus and made one bad call after another l
now we have gundlach and gross arguing where rates are going down to , both still playing the predictions game .after all if you are going t predict, predict often .
Jeffrey Gundlach at DoubleLine Capital says US 10-year yields will fall toward the low 3% range as the central bank is likely to slash its cash-rate target by a full two percentage points next year. Former Pimco bond king Bill Gross dismissed such euphoria, saying the yield is already about where it should be at just on 4%.
“We’ve broken down the trend lines and there’s a lot of room” below the current 10-year yield level, Gundlach said in an interview. “The economy is going to undershoot the downside and that is going to create a response. We will have to have a lot of money printing.”
Gross, who formerly managed the world’s largest bond fund, said forecasts for 10-year yields to fall to 3% next year are “farcical,” even if the Fed does cut rates as much as Gundlach projected, according to a posting he made on X.
I think both Gundlach and Gross can be right. Their predictions are not necessarily contradictory. Gundlach a few months back was very bullish on bonds short-term, especially 2-year Treasuries yielding 5% plus, but bearish on bonds longer term. His thesis was in the short term (next 6-12 months or so) bond yields would peak and decline sharply, while longer term they would normalize and go slightly higher. Longer term this is very bearish for bonds. Gross's prediction may have been longer-term that yields will remain elevated (relative to the zero-interest years). Gundlach was basically saying buy bonds now while they yield 5%, but sell them once yields fall to 3%, as longer term they will trend higher.
He is right,investors are shunning longer term T bonds ,thats why US Treasury have been issuing more treasury bills lately.
But borrowing more short term to meet our long term needs is not a good solution .
demand for 20 year bonds has been crazy which is one reason the 20 year pays more then the 30 year. .
all these long term etfs run around 20 year so record billions have flowed in.
tlt has doubled in money invested in 2023 going from 17 billion to almost 50 billion in size
The 20-year bond currently yields above 4%. The issue I see here is that while rates may fall further, it may be a temporary dip for the next months. Then what happens longer term? Do you honestly see long term bond yields going sub-4% and staying there forever? Buying and holding a 20-year bond yielding today's rate around 4.20% may be a poor investment when long term rates may stabilize around those levels. Gundlach made a point to this effect in his recent statements. He is bearish on bonds longer term.
The 20-year bond currently yields above 4%. The issue I see here is that while rates may fall further, it may be a temporary dip for the next months. Then what happens longer term? Do you honestly see long term bond yields going sub-4% and staying there forever? Buying and holding a 20-year bond yielding today's rate around 4.20% may be a poor investment when long term rates may stabilize around those levels. Gundlach made a point to this effect in his recent statements. He is bearish on bonds longer term.
predicting is about very specific time frames with very specific actions to be taken by investors over that time frame .
just predicting one day it will change off in the future is not an actionable prediction.
it is like saying we will have a recession in the future.
what i think will happen and i would never act on what i think , is the yield curve will start to normalize.
historically after inflation and taxes short term interest has been a negative real return. most of history .
that says unless inflation reignites higher , long term rates are where they should be based on inflation .
short term rates are way to high . so i think we will see longer term rates hold where they are within a half percent or so while short term rates come back down .
the result will be a normal yield curve instead of the crazy inverted one where long term rates are lower then short term rates
but like i say , that is a guess not a prediction and i certainly wouldn’t make portfolio changes based on what i think.
average duration on all my bond funds combined is a relatively short 3.25 years.
based on gunlachs prediction i would back up the truck and load up on tlt .
based on bill gross’s prediction i would shun tlt and instead load up on shorter term bond stuff since that will take the biggest cut in interest.
personally i wouldn’t bet on either outcome , i still invest for what matches the portfolio i use and my purpose for that portfolio
Last edited by mathjak107; 12-17-2023 at 08:33 AM..
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