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B of A basically calling for inflation to fall off a cliff.#FOMC pic.twitter.com/QcXQkv9tqX

— Carl Quintanilla (@carlquintanilla) April 5, 2023

Spread between 10y and 3m Treasury yields continues to take out its recent lows, decisively falling below troughs seen before/during pandemic, GFC, and tech bust recessions pic.twitter.com/7E6pVSl3rE

— Liz Ann Sonders (@LizAnnSonders) April 5, 2023

There are basically two narratives you can have at the current moment. The consensus view is that now that inflation is under control, the bear market is over and stocks are on the verge of a new bull market. The dissenting view is that the Fed’s tightening is still working its way through the system and is in the process of choking the economy.

If the former is correct, you want to be long stocks – especially high beta ones like technology. If the latter is correct, you want to own long term bonds. In either scenario – however – long term bonds are likely to go higher. In the former, TLT can probably go marginally higher – say $120. In the latter – however – it could go much higher as deflation sets in. My 12 month price target is $150.

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