People “in the business” don’t talk about stocks much anymore. Many have been blown out by the algo guys — those program computer traders — or they have decided it isn’t worth it to be anything but conservative. No heroics, with the exception of the one or two stock hunches or something exciting enough to merit selection. Who can blame them? After a hideous week, one, it seems of many, we are starting to recognize that the 10-year Treasury yield at 4.4% or the 20-year Treasury yield at 4.7% are about as good as you are going to get right now. In an uncertain corporate world, where the Federal Reserve is not going to let up, despite what so many strategists and hedge fund managers think, it’s difficult to have much confidence in stocks. Treasurys are our nemesis. We’ve been stuck in a period of “wrongness” to make up a word that defines how ridiculously incorrect almost everyone who talks about stocks has been. Remember when all we talked about was the 20-year Treasury yield at 3%-and-change signaling an imminent recession? Remember the endless chatter of the tale of the inverted yield curve with its hard landing outcome for the U.S. economy? Could the people who let that thinking color their stock picking been more wayward? The strangest thing is the irony of it all — with the 20-year obviously, at least to me, having to go above the fed funds in yield during this cycle, you don’t need to commit to the 20-year now. Rates can still rise. Why not wait? The federal funds rate is the overnight lending rate that banks charge each other. It’s controlled by the Fed and it’s what everyone talks about when referring to “interest rates.” After the September meeting pause last week, the target range for the fed funds rate remained at 5.25% to 5.50%. Central bankers signaled one more rate hike this year and fewer than previously projected cuts next year. Translation: a higher-for-longer scenario. The problem for me is that the fortunes of the stock market may be…
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