The Bond Bull is Back

Published on
May 29th, 2019
Duration
18 minutes

The Bond Bull is Back

Trade Ideas ·
Featuring Dr. Komal Sri-Kumar

Published on: May 29th, 2019 • Duration: 18 minutes

Dr. Komal Sri-Kumar, president of Sri-Kumar Global Strategies, returns to Real Vision to update his bullish bet on bonds from last year. Sri correctly forecasted that trade wars, slowing growth and low inflation would ultimately lead to lower yields and falling stock prices. He now reviews where he thinks the U.S. 10-year Treasury yield is headed next, in this interview with Jake Merl. Filmed on May 24, 2019.

Comments

Transcript

  • KJ
    Kelly J.
    2 June 2019 @ 19:14
    An excellent, clear, logical and detailed presentation by Kumar, who seems like he's on the right track and correctly assessing the risks to his views. His timing for the recession is interesting and more pushed out to the future (the second half 2020) than most people I follow who like bonds. In that sense, he may encompass both the view of bulls that the (almost certainly double) Fed rate cuts coming up will 'save' the economy and boost stocks, at least for a bit, and the bearish view that ultimately they won't save stocks or avert a recession. My own view is that the Fed is already running behind and is less likely than Kumar thinks to turn the economic and market tide. In 2007, the Fed tried to surprise and jolt the market & economy by dropping a full 0.5% in its first rate cut from 5.25% to 4.75% after its multi-year tightening cycle, as Kumar suggests they might try to shock markets higher even in June meeting in 2-3 weeks with a first cut if this selloff steepens before then. The dynamics are different now than then, but it's worth noting that the 2007 'shock drop' first cut came on Sept. 18th, 2007 with the S&P well into a second half bounce upward already, (probably anticipating a coming single cut). Within a month, on Oct. 9, the S&P hit its multi-year high, and the nine cuts that followed over the next 14 months chased the market down as it plunged ~60%. I don't expect a plunge like that, but the question of 'what's next?', and 'have central banks finally become impotent again vs markets?" IMO are likely to get existential once again at some point, after not being as existential since 2009.
  • MN
    Michael N.
    1 June 2019 @ 19:28
    great interview, so much for all guns on china as now mexico back under it
  • HM
    Harold M.
    1 June 2019 @ 00:05
    Great explanation and reasoning for bond outlook. Would like to see more of him.
  • Hv
    Hannah v.
    30 May 2019 @ 22:07
    What a delightful guest! Please showcase him regularly.
  • PC
    Peter C.
    30 May 2019 @ 00:17
    👍
  • DS
    David S.
    29 May 2019 @ 23:24
    The yield curve is inverted slightly now. It may be more about world trade-war risk and low bond rates elsewhere than a recession in the US. It has taken the Fed many small hard-fought raises to get to the current Fed rates. IMO the Fed should remain on hold and take themselves out of the stock market equation for now. Rates are low enough for any corporate investment hurdle rate. The major investment risks are political. DLS
  • DS
    David S.
    29 May 2019 @ 21:24
    Thanks for your insights. Always a strong combination of wisdom sharpened with practical knowledge. Looking forward to your next visit. DLS
  • TC
    Thomas C.
    29 May 2019 @ 19:46
    Terrific guest!
  • T
    Thomas .
    29 May 2019 @ 17:07
    Very convincing!
  • ag
    anthony g.
    29 May 2019 @ 14:45
    Good points - bring him back again ?
  • PJ
    Peter J.
    29 May 2019 @ 08:25
    Excellent summary of his view with well reasoned justifications
  • KN
    Konstantinos N.
    29 May 2019 @ 06:51
    A very interesting and structured thesis - really enjoyed it