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Eight after all the turbulence of the stock market in recent weeks treasury yields have been moving to record lows.
Treasuries rallying what does that mean for your money and the future of this economy Robert Kessler is CEO and founder of -- companies.
Joining us from Denver -- is terrific to see you particularly in this environment.
That's the thinking is and we have a rally in the stock market today is that with treasury yields so low.
People will essentially be forced to move into riskier assets like stocks.
You don't buy that -- No I don't but high day it's nice to see you again.
We we generally believe that as rates come down that telling you something that telling you that.
Inflation is coming down unemployment is staying high and Ben Bernanke recognizes that and where are now sitting in a what appears to be the onset of a global.
Deleveraging or recession or whatever you wanna call it and and those are things that don't really help.
Equity markets so that fact that.
Securities like treasuries are coming down.
Which are the benchmark to everything -- those two things really aren't too good out there and you probably shouldn't be taking the risk of buying equities right.
People always look at the yield on a longer term treasury and -- a lot not making that much money but if that yield continues to fall you can make a great deal of money which you see opportunity in particular in the thirty year.
What what we've talked we've talked about treasuries out for.
Or five years in and they're probably the most maligned.
Of all the asset classes in yet treasuries have outperformed.
The S&P index commodities.
And just about every asset class for the last 351020.
So what we're looking at now in the treasury market is of the ten year treasury at around 220.
We'll go down into the low of 1% range.
Believe it or not that's kind of the historic average about one and a quarter percent over whatever the cost of money is which is.
Zero so we're probably looking at a ten year treasury going to one in a quarter percent.
Which is a 1% move and the thirty year treasury if it's simply goes back.
To where it was in 2008.
Would drop down to 250.
That would make about a 30%.
Return on your money if you happen to own the thirty year treasury strip now that's an awfully big return.
Four owning something that is consider -- the best credit in the world regardless of what they're rating agencies feel at the moment.
Speaking of the rating agencies before we go when does that start to matter the fact that the US hasn't no I no longer has a AAA.
What -- what we have some history.
Beyond this we actually have attempt plate we know that.
Countries have been downgraded.
Over the last decade or so and within the next month or 75 days.
We've seen an improvement.
In their sovereign debt market.
And the reason for that the reason rates go lower is because when you get a downgrade what happens is everyone does exactly the opposite of what they should do.
They've become very austere and in the United States we're seeing that in congress we're seeing that in Europe so when you become austere and you Begin to tighten.
When you should be probably listening in a little bit trying to.
Create jobs -- sector when those things happen rates come down and they keep coming down even further and that's kind of what we're looking at right now.
So it's a great environment for the treasury market regardless of the fact that Wall -- not telling you that Robert.
It was fantastic to see you as always and you events.
Spot on about treasuries in the last several years every time you've been on here what you have said has come true.
So thank you for coming on again we'll see -- and Robert Kessler thank you -- was nice seeing you take care.
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