Santelli: 10 year treasury at 13% in 7 years

[momoney]

Rick Santelli warns the Fed is running out of tricks as he charts the path of higher yields

CNBC's Rick Santelli joins 'Fast Money' to talk rising bond yields and what they mean for the Federal Reserve as he see the Fed running out of options.

Can someone explain to me like I'm 10 what this means for an early retirement portfolio? I'm just looking for an explanation of what a higher 10 year treasury does to the economy and portfolios.

(I'm sure a lot of folks won't agree with his projection.)

 

[jebmke]

10 is the new 5?

 

[Landolink]

I worked around 20 feet from Santelli on the floor of the CBOT. He never traded. He was a phone clerk. He is Chicken Little. His fear mongering started during the financial crisis and went to extreme levels when Obama was elected. His Tea Party rant marked the bottom of the equity mkt in 2009. He is a deficit hawk when Dems are in the WH.

 

[Dtail]

Don't really agree, but if he is right, I would not want to be in a longer duration bond fund.

 

[FREE866]

is it possible? sure, but not probable. Like must draconian fear mongering outbursts.



But to me this guy is the quintessential carnival barker that should be put on mute. Man, there is so much noise out there.

 

[audreyh1]

I worked around 20 feet from Santelli on the floor of the CBOT. He never traded. He was a phone clerk. He is Chicken Little. His fear mongering started during the financial crisis and went to extreme levels when Obama was elected. His Tea Party rant marked the bottom of the equity mkt in 2009. He is a deficit hawk when Dems are in the WH.

Good summary.

I never thought Rick Santelli credible or even logical, just loudmouthed.

Fortunately I no longer watch CNBC.

 

[momoney]

He says they ran out of tricks. What are the options to get a $2 trillion dollar deficit under control?

 

[Fermion]

Could the USA service its debt at 13% rates? Seems highish.

 

[Midpack]

This YouTuber, who’s pretty good IMO, says rates could peak at 6% and she’s only buying and rolling 26 weeks bills for now. So am I with my treasury holdings. She, and I, intend to buy longer duration treasuries when we seem to be close to peaking. IIRC she’s guessing 2024-25.

 

[momoney]

Could the USA service its debt at 13% rates? Seems highish.

I don't know. Will they even pay down any principal in our lifetimes? How high can the deficits go?

 

[teej1985]

I'd go all in on 10 year treasuries if that happened. Seems doubtful.

 

[OldShooter]

... But to me this guy is the quintessential carnival barker that should be put on mute. Man, there is so much noise out there.

I've got them all on mute. I never heard of the guy. Sig line explains.

 

[Gumby]

I worked around 20 feet from Santelli on the floor of the CBOT. He never traded. He was a phone clerk. He is Chicken Little. His fear mongering started during the financial crisis and went to extreme levels when Obama was elected. His Tea Party rant marked the bottom of the equity mkt in 2009. He is a deficit hawk when Dems are in the WH.

Since I heard his Tea Party rant back then, I have never listened to another word he says.

 

[frayne]

I put Rick Santelli in the same category as Jim Cramer, nothing more than financial porn, somewhat entertaining at times but would not act on either's advice, ever.

 

[MichaelB]

Could the USA service its debt at 13% rates? Seems highish.

If the 13% made it through the whole yield curve and remained there for a couple of years I’m doubtful the US could service the debt. I’m also doubtful households and businesses could service their debts either.

Unless, of course, inflation hit the same level and also stayed there for a couple of years.

For debt servicing, I think positive real rates over 2% - 3% would represent a real challenge to our entire economy.

 

[pb4uski]

is it possible? sure, but not probable. Like must draconian fear mongering outbursts.



But to me this guy is the quintessential carnival barker that should be put on mute. Man, there is so much noise out there.

My thoughts too. He is like the Jim Cramer of fixed income.

 

[pb4uski]

I don't know. Will they even pay down any principal in our lifetimes? How high can the deficits go?

Thing is that it doesn't matter if the US government ever pays down any principal ever. Most large US corporations perpetually fund their operations with debt that just gets refinanced at maturity and nobody blinks an eye as long as the debt isn't excessive and their interest covered ratio is good.

I don't understand why so many people think that the debt ever needs to be paid. It doesn't. The US government is a perpetual entity, similar to a corporation. As long as the debt isn't excessive in relation fo GDP then no problem.

Now all of that said, US debt is close to becoming excessive, but if we just increased taxes and reduced spending so be had a balanced budget then the debt would level off and GDP would grow and our ratio of debt/GDP would gradually decline.

Unfortunately it will never happen, especially the first part of increased taxes. IMO somethign is wronwhen a married couple can have $120k of income and if it is the right kind of income they pay zero tax. Crazy. It might have mad sense back when the corporate tax rate was 35% but not when the corporate tax rate is 21%.

 

[Healthy Lifestyle]

My thoughts too. He is like the Jim Cramer of fixed income.

I put Rick Santelli in the same category as Jim Cramer, nothing more than financial porn, somewhat entertaining at times but would not act on either's advice, ever.

Over the years these talking heads wore me out and eventually I learned they are all full of ($%&T) nonsense.

 

[Exchme]

I'm not going to give any of the clowns on TV a click, but if he says interest rates will go to the moon, seems like there's a good chance they are ready to fall. Maybe we should back up the truck and fill it with long bonds.

 

[youbet]

Will they even pay down any principal in our lifetimes? How high can the deficits go?

No. The real question is will the deficit stop growing during our lifetimes?

 

[jebmke]

No. The real question is will the deficit stop growing during our lifetimes?

late 90s. I was alive then. Will see going forward.

 

[harley]

but if we just increased taxes and reduced spending so be had a balanced budget then the debt would level off and GDP would grow and our ratio of debt/GDP would gradually decline.

Ahhh, laughter is the best medicine. Thanks for the booster shot.

 

[copyright1997reloaded]

Gradually, then suddenly

One of my favorite authors as a younger pup was Earnest Hemingway. My mother bought me a hard cover series of his books, and after reading the first one I was hooked.

Anyway, in the Sun also rises, he states:
“How did you go bankrupt?"
Two ways. Gradually, then suddenly.”

This is also frequently the fate of nations and empires, where the economic and other rot is at first ignored, first small. That can go on for a long time, until all of a sudden it doesn't.

The issue isn't whether we have debt, or even if it is ever paid off. The fundamental issue is our system is built where the risks of that debt are ignored compared to the call of the voters and special interests desires to have the goverment spend ever more, "fix" ever more, do ever more.

So the debt will never be paid off, and I doubt (and am bettting more and more) that it (the need for government to pay more in debt service and/or print more money) won't be fixed...until something catestrophic forces it to be "fixed".

Unlike us peons, the US Government doesn't ever have to default. After all, we have a printing press that can print an infinate amount of money (especially it just being bits in a computer). So in that sense, no worry. But in the sense of what that money will buy, yes worry.

Maybe for some here on the forum (including myself), the gradually part will be long enough that it won't matter (for us). But it will eventually matter for our decendants, and ya never know, that "suddenly" part might be sooner than we think.

 

[pb4uski]

Ahhh, laughter is the best medicine. Thanks for the booster shot.

You stopped reading too soon, because you were probably laughing too much.

...but if we just increased taxes and reduced spending so be had a balanced budget then the debt would level off and GDP would grow and our ratio of debt/GDP would gradually decline.

Unfortunately it will never happen, especially the first part of increased taxes....

 

[alaska55]

Did anybody watch the YT clip?

He said worse case was 13% and he doubts it would go there, he was comparing charts from the late 70's and 80's to present day. It would be a idea to watch it before commenting.