![]() The play is not to buy long bonds, but rather to buy those equities which have been beaten down the most due to the movement in yields - despite maintaining revenue, earnings power and cash generation. On Friday, I joined Charles Payne on Fox Business to discuss this very idea and how to benefit from it. I do not expect that magnitude of a rally, but we are looking for the trend to reverse in coming weeks and months. ![]() The problem with this is the fact that everyone is crowded short into the same trade - just like they were in 2018 before we had a monster rally in the 10yr (compression in yields). The red line represents the large traders/speculators/hedge fund managers who think they see something no one else does. The facts are that when everyone is thinking alike, they are probably not thinking: Perhaps this manager will turn out to be correct, but we're going to take the other side of this crowded trade by burdening ourselves with the facts. If you look at the black line - which represents TLT (20yr treasury ETF) - you'll see that it was a near bottom tick. The blue horizontal line represents the day the headlines hit that the "major manager" announced his bond short. We anticipate that will persist and it has broad ranging implications - which we discussed in extensive detail on our three media appearances this week. With the exception of one day, yields have stayed below the level when the "big announcement" was made. On our podcast|videocast that day we said that this particular hedge fund manager probably called the bottom in bonds and the top in rates by "shorting in the hole" one of the most crowded trades in history. ![]() So what's ailing the market? On August 18, there were big headlines that a "major manager" had just put a huge short on bonds - expecting yields to blow out.
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