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hey welcome back to two superg guys TR Sox I'm Dylan and I'm Vinnie and I have bad news for anyone doing the TLT or Bond or zeros any ETF with bonds any bond trade there is something that has literally never happened in the history of the stock market that just occurred and it is likely this trade is not going to go near as won't be as fruitful as we were originally thinking let's go with that um I'm sure you're familiar with all these headlines we absolutely crushed the job report yeah yeah yeah I mean stock market was ripping higher on Friday you know that which is sexy yep and I I've done a couple a couple videos now on how the TLT shoot up or Bond shoot up was really dependent upon the jobs Market I think they they were projecting like 140k or 160k and they got 2504 they killed it it's yeah like wild so unemployment rate also fell not good for the bond play um the TLT weekly charts right here you could see you know little bit of a correction we're we're still quite low and then the daily chart obviously it's more devastating when you zoom in but look at that yeah well and I was watching it on Friday because I want to say that 10year treasury yield was like 3.9 uh at the open and and shops like four like you know it it was a pretty dramatic move for a treasury bond um you know as far as yield rate to to you know move on news like that you could tell the market was not expecting it yeah essentially it's just echoing what Jerome Powell was saying on the economy is actually very healthy we could stay at these Lakes longer if we need it may be better so m not good for the TLT trade but good for the economy um now here here's the yield curd on inversions one thing I just want to draw to is you can see how when they pass sometimes they're unbelievably steep you could have a little correction where they pass came back down Steep and then same thing this is over the course of like eight months though so that would have been kind of nerve-wracking here we were and we're actually coming back down interesting if it were a stock chart you would be looking at it and going like oh okay maybe now it's going to retest this level from the top side to set up a new Baseline before it you know kind of takes off but like I know these things don't really trade yeah quite like that logic right these are a little bit more weird um before I get to the juicy news uh I just want to make sure people know I've done multiple videos overlaying the stock market with unemployment and the bond market and typically as unemployment shoots up bond market usually does quite well hence the origin of the TT trade in addition to the fact that we have to continuously decrease rates from where we're at um this is just showing that you could see this is I I can explain this I've done this before but basically this is a one anytime this Falls below one bonds outperform um the spy and you can look at the dates on when this has happened these are all recessions or unemployment hikes all right okay now what's that what's that indicator Vinnie oh the Som Ru that we're talking about explain that uh if unemployment three-month average is uh half a point above the lowest point in the last 12 months that's when the s activated now you know she's a Fed governor and she even came out herself and said like that doesn't necessarily mean that recession is like imminent in this particular case she's like this may be one that breaks the trend if you will but that that that's the historical rule about unemployment and recessions and using that rule it was correct in the 12 is it 12 12 previous recessions okay it actually has not failed and essentially she was saying this is the time it fails all right maybe yeah May Welling like it is what yeah you're leaning towards today yeah so here is I I actually have the values that we're going to look at in a full chart that's interesting part so one the gray is recession all right now real quick uh not that gray recession now this corresponds with the unemployment percentage the S rule does not usually tick right at the start their session it's actually usually in the middle so what I did is I gathered all the data that the Som R has ever been positive meaning above a 05 value I then charted nine or 10 months after that the unemployment rate to see if there is a pattern okay using the unemployment rate and the Som Ru recession indicator so these values are going to be overlaid on top of each other okay okay all right so every single time time theom rule has ever been positive at a 0.5 value that is the first month in this column okay so all of these the S indicator was hit all right okay now the red is this is an arbitrary value I just did a jump of 0 4% or more in unemployment okay okay so all I want you to look at for instance 1948 4.3 to 4.7 continuously goes higher towards about it lot 1953 full percentage jump now that means we were just positive for the first time and then a full percentage jump then obviously keeps going higher same thing 6 percentage jump keeps going higher this one it just actually kind of gradually went higher for a straight Year all right okay now these two stayed the same this is a little bit of an anomaly and then each had a large jump 0 4 then another point .1 and another 6 and a 6 this one 6 6.1 they all had massive jumps look where they started look where they ended okay this one it kind of just gradually went up but continuously went up same with these two now here's where we are let me make you smaller now this is the only time in history where the S rule actually ticked off the following month we actually lost which has literally never happened yet again the following month lost again also literally never happened not good the okay the the odds now look with you know it's impossible to predict the future I don't know what's going to happen but jome Powell did say a recession is looking not likely at all I the data is fairly damning I'm going to have to agree it's this has literally never occurred and unfortunately the two things that were propelling TLT to be a great great trade where a we know rates are going to decrease thus TLT has to go higher the problem is if you're in the TLT trade like I am would you have been better off just putting your money in the Spy it is possible right cuz the other leg of the TLT trade is the S rule following every single time in history it has ever occurred since you know they started recording in 1948 um it you know it is what it is it's not it's not doing what we wanted it has broken so that makes sense you're proposing the deal amendment to uh um the basic idea of the S rule where if you now have two negative months in a row after the S Rule's been hit then it's you know no longer um gonna be uh in effect I mean first of all even one negative has never happened but I would say two negatives would be safer now granted I want to be wrong so bad so I'm like if if unemployment shoots up TT shoots up I've done I've done multiple videos on that it's just I don't know it just happens it's it's just looking increasingly unlikely not zero but increasingly unlikely if we had a 100 data points I would say unbelievably unlikely but you know we have 12 yeah yeah I mean you know they have been advocating for potential soft landing and you know po has been saying that he thought that labor market could come into balance by a reduction of available jobs rather than people actually being laid off which is kind of the indicators we're seeing evolve um so maybe this time is different I mean I'm sick and tired of being in the one and only episode of something in human history but the co recession shortest recession come on um now I will say it really depends on where you bought in because if you bought in in TLT at like the 80 range and you sell in the 11 10 120 range you're still probably you're still going to beat the Spy that's a 50% increase so that the the buying is unbelievably important for instance I'm at 91 I think I'm at 91 now full disclosure I going to buy more but I should I should throw that out there um purely because I'm now looking at as I have a lot of money in stocks and a lot of money in TLT and it just gives me protection I won't gain as much but it gives me protection in case this does reverse so you're more hedging your portfolio at this point fair enough all right guys that's not what we think y
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