If it walks like a duck is it a bull?

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When can we start calling some bull on this recovery?  First we had a “jobless recovery”. Now I’m calling for a consumer-less recovery.  We are clearly in a growth-less recovery. So how is this exactly a recovery?

We’ve been sitting on 2.42 support for a few days now and the consumer is doing its collective best to propel us off that support and back towards the lower end of the range.  A positive Monday opening would certainly confirm that much.  A close below 2.37 is necessary, 2.35 is great, 2.32 is fantastic for the projects of a solid bounce.  

If I get out of the micro view for a second, I’d like to go back to my 1/27 post, which is linked here for your reading pleasure.


As I indicated on that day, I’m putting a ton of stock in the consumer this year.  Given the “less recovery” I outlined above, at what point do we call bull on this recovery altogether and get back to the realization that things aren’t broke, they are just different.  The Fed’s inability to read this phenomena has done nothing but create huge Fed induced spikes in rates followed by an almost immediate sustained drop in rates.  This great for traders and vol seekers who are on the right side of it, but not the economy, which is what the Fed’s decisions are intended to best serve.   

Another shameless plug, here’s a link to that post:


What does all this mean?  I’ve been calling for a 70/30 lower rates.  I’m still there.  I’m skeptical about the next 30-60 days as this period tends to be generally bond unfriendly. Particularly with the help of a May jobs number that we get in early June.  Brexit helped us last year, but I’m not sure we’ll get that help this year from and unexpected event.  I’d lock/float the range/ranges I’ve laid out in previous posts.  

For today, I’d lock anything that you are breathing a sigh of relief on.  As for the others, it makes sense to give it another day and play it day by day thereafter.  We’re at a pivot here, there’s another about 50 bps beyond that.  Therefore I’m roughly 65% lock here and 85% lock at that next gap down in yield.  To hold out the Mid-April low in yields should be reserved for late June closings or beyond.  #BullsAndBears

In the end, maybe the economy is just a bit of an ugly duckling that we have to learn to love. Hey, ugly ducks need love too…  

#LowerForLonger #WhatRecovery #IfItWalksLikeADuck #UglyDucksNeedLoveToo

-Philip Mancuso

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