It seems like yesterday that pessimists bemoaned our record budget deficit. However, the economy improved over the past few years and allowed the US Treasury to collect more income taxes. The debt is shrinking and the Treasury may stop offering the 3-yr. note.
2 comments:
Debrah, I loved your book, but I am confused by one thing. Your comments seem bullish right now even though the curve is inverted. In the book you said that August 2000 was a sell because "inverted yeild curve, VIX = 16", and now the yeild spread is the same as then and the VIX is around 10 (and has dipped even lower).
Earlier you mentioned the bullish indicator of troop call-ups over the summer, but I believe that those call-ups were only troop rotations that take the number of troops back to the levels of most of 2005. Does that mean that even relatively modest troop call-ups (<10% "increase") trump bond yield indicators?
Thanks
Great question; simple answer. Yes. Troop call-ups trump all. Especially since Congress voted $70 billion new funds for defense last fall the and Fed has stopped tightening.
We can be more bullish when the curve normalizes; high-quality large-cap stocks are probably the best now.
Best regards,
Deborah
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