APR 30 TTTs

1.) RATES
2.) COMMODITIES
3.) VOLATILITY

Episode Transcript

Speaker 1 (00:00):
Now here's your care for my wealth guy, Chris Cline, Hello,
and welcome today's triple t. If you don't know what
that is, it's just basically three things that I think
are important. Top three things, right, most important three things?
What have we got? Rates, commodities, and volatility. So yesterday
I commented on how the longer end of the yield curve,

(00:20):
the ten twenty thirty year yields, continue to dance around
their trend levels. Today, the US ten year treasury yield
trend level is at four point one seven Again, remember
when I say trend, it's not just one some single
factor moving average thing. It's actually the rate of change
of price, volume and volatility over a period of time
longer than three months. Yesterday, the US tenure treasury hit

(00:43):
four point one six percent, It bounced this morning, it
touched four point one four percent, and is now running
right around four point one seven percent. So will the
trend level hold and push rate slightly higher maybe, or
will they break down in signal a recession. That's also possible.
But something that's new about this yield this morning and

(01:05):
so far through the day is that it's now starting
to signal a lower high and when I say signal again,
that's again the rate of change of price, volume and
volatility of that yield, and so that lower high is important.
April eleventh of the yield closed at four point five percent,
and like I said, this morning, signal now has a
lower high at four point four one percent. So could

(01:29):
the bond market be pricing in the potential for a recession.
It's possible. This morning's negative GDP report is the first
step for that. And then the negative GDP report of
course should not have been a surprise to anyone, either
following my emails or just paying attention to the cycle.
But we're going to have to see how yields close today.
If they break that trend and hold, bonds are going

(01:50):
to look good and you should probably hold them right now.
For us at Capsture and Wealth Management, our largest holdings
are seven to ten year treasuries. How about the commodities market. Interestingly,
the CIBE Commodities index failed right at trend right after
another China slowing PMI print overnight. That data point slowed
from forty nine in April excuse me, two forty nine

(02:12):
in April from fifty point five in March, and so
on that, we continue to get oil crashing, which just
looks frankly like the US two year treasure yield again crashing,
but it's taking its current crash in oil down twenty
five percent since January's growth and inflation accelerating cycle high.
So oil is signaling lower lows for the cycle at

(02:33):
fifty seven point seven seven that's for WTI West Texas
intermediate crude versus its April eighth closing low of fifty
eight point thirty four. So if we've got oil falling,
oil is a big growth component. If oil's falling, it
is indicative of growth slowing. And we here at Capstone
have no commodity exposure currently. Could that change, yeah, of course.

(02:58):
But how about volatility. Well, interestingly, I'm getting a buy
signal this today on vix vix, and that's the first
time I've seen that since the end of December. Now,
a buy on the vix is not a buy for stocks,
but it's not necessarily a cell either. It just simply
means that we should expect an increased volatility as people

(03:19):
start to buy protection. So I wouldn't be surprising to
see a spike out of vix and it wouldn't be
surprising to see it tap thirty three. Of course, if
that kind of move were to happen short term, it
would be hard on stocks. But I think that the
spread between the VIX and the S and P five
hundred one month realized volatility is important. And right now

(03:40):
it's at its third largest gap on record, and the
other two gaps we're back in two thousand and eight
and twenty twenty, and of course back then those were
not buy signals for US equities. So right now we
hear at Capstone are very hedged. We've got very limited
stock exposure. But if we do get a dip, this
could be a very good opportunity to buy the dip

(04:02):
simply because of last week's breadth thrust that happened. That's
brea d thh breadth thrust. Those don't happen very often.
I mentioned the last couple of updates that I gave you,
I've happened seventeen other times in history, and every single instance,
over six and twelve months, market returns were positive. I

(04:24):
hate the words of this time is different when it
comes to people's psychology and how they react to markets,
and that, frankly, is a big player on how prices move.
So let's see how markets move today, Let's see how
this vix plays out. But that's what I'm thinking about
right now, and that's what I'm considering, and so we'll
continue to watch this as it develops. If you have

(04:46):
any questions, email me info at carefromiwealth dot com. That's
info at carefromwealth dot com. Or you can call me
and chat the old fashioned way six, which is eight
six six five nine six ninety eight eighty. Thanks so
much for your attention, hope it's helpful. God bless and
have a great day.