The Most Important Chart for the Markets


We start off tonight with the most important charter in the market. Because of course we would according to one of our traders check out the yield curve spread between ten and two year treasuries at its highest level since february twenty eighteen. So our rates off to the racist. Could this rate shock crush this record rally karen. You flag this yeah. I don't know it will crush this record rally. We don't want rates to skyrocket to quickly. I mean this is a big move but still you know. The absolute is seventy eight basis points but it is sort of telling us that the expectation is that the economy. Oh heat up and we've seen that. The resources traded that tim talks about. We've seen in energy. We're seeing it in the banks Even though they don't really aren't giant to ten spread they do trade that way. So it's indicative of the expectation of a heating economy. Maybe also more stimulus. So that's sort of how position but i also have a big inflation bet on because i do think there is a chance that inflation gets away from the fed and i don't know what they would do in the shorter to medium term the timeframe though tim i mean it's got to be a goldilocks right. Just enough inflation. Not too much inflation. It's gotta be just right. Yeah i mean it definitely not too hot not too cold and you have a case where normalized rates coming out of this and whatever that means also but where we were coming into kobe remember. We're somewhere between one. Forty one seventy five and the ten year so pointed out what the trades that have been beneficiaries or have had the extra boost that comes from this and the resources trade. I mean look coppers three fifty. We haven't been three fifty since march of two thousand and thirteen and some of the trades that look like it's back to the future in the resource look at steel companies. And i'm not just talking about us. Steel look at mattel which arguably the biggest deal company in the world or posco. These you know mt. pk ex. Those are names. you can track over here freeport. We talk about all the time. So i think you have a case where the assessment of all of this to me is more about normalizing. It's not that we're in great shape. And in fact i think we're in a tough place for markets and even some of these trades when we've normalized but we aren't near normalization at this point then later on fiscal even if that's disappointing number Infrastructure to me is is going to continue to rally in these trades member again. you don't buy commodities when you're when they're cheap you buy them when they're running and when they're expensive and i think there's a lot left to do here.

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