1) "The bear market is likely only over once the economy turns, which is unlikely before the end of the year" . I think the market is forward looking. Usually stock market bottoms before the economy bottoms?
2) You are on the sideline from entering TLT because of temporary inflation fear. But if this is true, shouldn't it hurt your short cyclical trade? Inflation fear = market thinks FED not doing enough = higher forward looking price for commodities = higher stock price for cyclical?
3) Another reason for sidelining TLT is that bloomberg consensus is high for Jan CPI. But shouldn't that mean high CPI is already priced in (consensus publicly known)? If priced in, unless CPI runs even hotter than consensus, how is it bad for TLT?
Once again you hit it out of the park!
Thank you!
Florian:
A few comments:
1) "The bear market is likely only over once the economy turns, which is unlikely before the end of the year" . I think the market is forward looking. Usually stock market bottoms before the economy bottoms?
2) You are on the sideline from entering TLT because of temporary inflation fear. But if this is true, shouldn't it hurt your short cyclical trade? Inflation fear = market thinks FED not doing enough = higher forward looking price for commodities = higher stock price for cyclical?
3) Another reason for sidelining TLT is that bloomberg consensus is high for Jan CPI. But shouldn't that mean high CPI is already priced in (consensus publicly known)? If priced in, unless CPI runs even hotter than consensus, how is it bad for TLT?
Zsoltan Pozsar wrote that FED would have to force long term rates higher. In your opinion, how likely is that and how would be done?