muscleman

I've been reading public pundits saying this a lot lately which gets me confused. Why would 2 year treasury yield ever be higher than 10 year? Who would be dumb enough to buy the 10 year notes then? And how would this always be the precursor to recession?

He means if good news and price goes up, it is bullish. If good news and price goes down, it is bearish. If bad news and prices goes down, it is bearish. If bad news and prices goes up, it is bullish.

It just cancels out. It's all digital. Thank you! I didn't realize that when they create cash from thin air, they book a matching liability at the same time. However, since they use this cash to buy treasury bills, which pays an interest, eventually they will be paid back to cancel that liability, and at the same time, the interest payment from the treasury bills will be earnings onto FED's balance sheet, right? Am I right that this interest payment is the drain on liquidity from the economy? It makes the total amount of cash circulating in the economy less than before QE, and the interest + principal repayment to FED is the total cash reduction when we measure from end of QE to after full repayment.

I know FED uses the new cash to buy treasury bills, which means treasury will have more liabilities. But how will that also be liability for the FED?

Another relatively dumb question. When did QE end? In wiki, it says QE3 ended in October 2014, but I also see this article in September 2017. https://www.ft.com/content/caf45d6a-9e28-11e7-8cd4-932067fbf946

If FED prints money to buy treasury bills, and grow its balance sheet to 4.5 trillion, then after a while, treasury will have to repay the obligations, which means FED will have 4.5 trillion cash? Then what? It can't just distribute the cash to ordinary people like you and me, so will it just keep buying more treasury bills? These bills have interest payments, so eventually won't FED have an infinite amount of cash? It seems to me that the stimulus effect is temporary because it is not giving treasury cash but buying bonds from treasury, and later treasury has to pay it back plus interest payment, so the higher the interest payment, the worse drain on the economy's circulating cash. Is that true?

https://twitter.com/realDonaldTrump/status/1066116263649382400 I actually saw Trump's twit first before seeing the WSJ article. It is hard to say. Trump said nice things about a few people but then fired them later anyway.

https://www.wsj.com/articles/trump-expresses-dissatisfaction-with-treasury-secretary-1543006250?mod=hp_lead_pos2 What do you guys think of this?

I can't find it. What's the link?

Sessions resigned. Will Judge Brown be nominated to DOJ ? ::)

Thank you! I do notice that BIL steadily goes up and then at the beginning of each month, drops back when a cash distribution is made. For money market mutual funds, the price seems to be always $1. If they pay out a cash interest at the beginning of each month, does that mean buying one day before the end of the month is the best?

I remember reading a Peter Lynch book saying never to invest in a mutual fund near end of the year, but I don't know any details. Could anyone share some thoughts? I am interested in buying some Vanguard Money market fund. Since it is money market, do I just enter at $1 and exit at $1, and pay the tax on interest only? Or do I have to pay tax like the equity mutual funds? https://investor.vanguard.com/mutual-funds/list?filterAllAssetClasses=false&filterMoneyMarket=true&filterFiftyThousandAndUp=true&filterLowCostInvestor=true#/mutual-funds/asset-class/month-end-returns I was also considering to buy BIL, but I noticed that there is a 0.01 bid/ask spread, so if I sell it a few months later, i am essentially paying 0.02 bid/ask spread. Is there any bid/ask spread that I have to pay for entering the mutual fund?

There are many ways to success in this game. The only problem is that none of these methods are easy to be found..... Don't under-estimate pure technical traders. Richard Dennis ran his $400 stake to $100m by purely using technical analysis. Look at the futures market. I don't believe any fundamentalists can make serious money at all.

Yikes.... I found this prospectus that showed negative performance for BIL for quite a few years...... Can't believe that's happening for 3 month treasury ETF. https://us.spdrs.com/public/SPDR_SERIES%20TRUST_FIXED%20INCOME_PROSPECTUS.pdf

I called TD and found out that BIL is a commission free ETF, so that seems to be the way to go. The only problem is that if I sell within 30 days, I'll have to pay commission on both buy and sell. They also recommended that I check out FTSM and NEAR. What do you think of these ETFs? What puzzles me is that BIL only has 1 star rating but FTSM has 3 stars and NEAR has 4. I see NEAR has higher expense ratio than BIL and also invests in corporate bonds and foreign bonds, which doesn't seem as safe as BIL. FTSM also has a lot of stuff riskier than cash.

I checked SHV, BIL and other money market ETFs. Do you know if the monthly distribution given to me is categorized as interest payment or dividend payment on my tax filings? I notice that on the day of distribution, the price of SHV drops by the equivalent amount. So this means if I buy now at 110.43, and in early November it becomes 110.26 and i got 0.17 distribution, I'll have to pay taxes on that 0.17, and then if I sell SHV on that day at 110.26, I'll have a short term loss of 0.17 which I can't use to offset that 0.17 distribution. Is that right?

Does anyone know US investor's tax implications for buying into these money market mutual funds? I know in general mutual fund investing is tricky for tax reasons, and Peter Lynch advised not to buy any mutual funds near year end because people will have to share with other people the funds' gain in the whole year. Does that apply to money market mutual funds as well?

I understand that the SEC requires maximum maturities of 13 months or less and average maturities of less than 90 days for money market funds. For your curiosity, the times, they have been changing. https://fred.stlouisfed.org/series/TB3MS https://www.bloomberg.com/markets/rates-bonds/government-bonds/us Wow this is mind blowing. How can the short term rate be so close to 30 yr rate? Hmm... Indeed. But is it fundamental or is it sentimental? Luckily, after all the fundamental work, was able last night to finally figure out the interest rate conundrum and will be able to follow Spekulatius' advice to stop worrying about "economics". The path of interest rates is related to the central bank leader's stature: https://forbesfinancialonline.com/will-hawks-take-control-2018-bond-market-perspectives-october-24-2017/ Still a nagging thought though because mind-blowing has two meanings: -overwhelmingly impressive. or -inducing hallucinations. The money market is dead, long live the money market. I called TD and disappointedly, they don't support using the above two vanguard funds as cash sweep vehicles. Their own money market sweep vehicles have expense ratio of 0.78%, which is ridiculous, and the yield is only something like 0.36% after taking that ridiculous expense. Maybe I should just transfer back to IBKR to avoid worrying about these problems. Could you please share some thoughts on interest rates and what you have figured out? I appreciate it!

I understand that the SEC requires maximum maturities of 13 months or less and average maturities of less than 90 days for money market funds. For your curiosity, the times, they have been changing. https://fred.stlouisfed.org/series/TB3MS https://www.bloomberg.com/markets/rates-bonds/government-bonds/us Wow this is mind blowing. How can the short term rate be so close to 30 yr rate? Hmm...

Thank you for the recommendations. I'll call TD to see if they can setup the sweep vehicle using one of these. Could you please tell me why these two are the best in the game? How did they do in 2008 during the run on money market funds? I see this one has 100% in us treasury bills, and has over 99% daily liquid assets. Is this a good one too? https://investor.vanguard.com/mutual-funds/profile/portfolio/vusxx

I just need a cash sweep vehicle to park my cash temporarily as I am looking for stocks to buy. I am not looking to hold cash over the long term. Same here. :) But basically what you're asking is if it matters if you wear sunglasses when crossing a narrow and quiet street (vs being hit by a car). The risk remains extremely low but, from my point of view (risk and reward), I don't see why you should hold commercial paper in your cash-equivalent vehicle. Black swans are rare by definition but occasionally weird things happen. https://www.bbc.com/news/blogs-news-from-elsewhere-45938724 Yeah.... That's my concern here. It seems to me that these high yield money market funds all hold a large portion of assets in commercial paper. I am curious how this money market fund is able to get 1.5% yield by investing only in US government obligations. I am sure money market funds can't invest in long term US treasury bills right? https://investor.vanguard.com/mutual-funds/profile/portfolio/vmfxx

Wouldn't it be interesting if TSLA bought FCAU or some other automaker and started selling the cars online bypassing the dealers. I'm not sure if there is some kind of contractual thing that would prevent it from doing that, I've never looked much into the auto industry and how it works (or doesn't work). Also it could offer its selfdriving feature on every car as a $5K option. Cars need maintenance. If you look at dealership's financial reports, like AN, they don't make much money from selling cars. Their biggest recurring rev is from maintenance rip offs. Margin was ridiculously high. Therefore I don't see the point of by-passing dealerships for selling cars. Also, doing this would piss off these dealership, and how would you handle after sale services?

That's not how the market works. If TSLA buys FCAU, the market will no longer assign this ridiculous premium to TSLA shares.

I just need a cash sweep vehicle to park my cash temporarily as I am looking for stocks to buy. I am not looking to hold cash over the long term.

Thank you! I see this one seems to have 45% in commerical paper. So this is usually a bit more risky than money market funds in US government debt only right? http://www.federatedinvestors.com/FII/mutualfunds/details/portfolioCharacteristics.do?fundshareid=1825&basketid=2761