 Hey everyone, this is Dan with my very first video on the exchange traded fund TMV. The market has not been doing well lately, as you might know already. Since the beginning of the year, SPY has been down 6% and QQQ has been down 13%. TMV, on the other hand, is up 43% since the beginning of the year. So what is TMV? Let's get into the details. First of all, to put things into perspective, we need to understand that back on March 17, 2022, the Fed announced that they were going to increase the Fed funds rate by 0.25%. And they expect to be increasing the Fed funds rate at least 6 times for the rest of the year. If you look at the chart for the Fed funds rate since 1980, you can see that it went as high as about 19%, in the last 10 years it's been coming down steadily, and now currently is here, which is about 0.33%. This is the chart showing the movement of SPY, which is packed to the S&P 500, and QQQ, which is packed to the Nasdaq 100, and show how they moved since the beginning of the year. So you can see SPY actually went down by 6.31%, whereas QQQ went down by 13.08% since the beginning of the year. On the other hand, the ETF, TMV went up by a whopping 43%, certainly that would have been a very good investment had you bought TMV in the beginning of the year, although it's not too late to buy it yet. I will talk more about that in the next few minutes. This point here is when the Fed announced the rate hike back on March 17, and after that announcement, you can see that TMV went flat or went down a little bit, and then after that it shot up. And my prediction that it will continue to go up, I will talk more about that. What is TMV? TMV is an exchange-traded fund created by Direxion, and is related to the 20-plus year treasury bills. Basically when the 20-year rate goes up, TMV goes up in value as well. There is an inverse twin of TMV, which is TMF. In other words, when the 20-year rate goes up and TMV goes up, TMF goes down. That's why if you want to swing trade interest rates, you can buy and sell TMV and TMF at different times. In the last couple of minutes, we mentioned quite a few things. We talked about the Fed funds rate, the 20-year treasury rate, and the ETF TMV. The general understanding is that because of high inflation rate as measured by CPI, the Consumer Price Index, which is at about 8% now, the Fed is now compelled to raise Fed funds rate to bring down inflation. As the Fed funds rate goes up, it causes the 20-year treasury rate and other interest rates to go up. Because TMV is paid to the 20-year rate, when the 20-year rate goes up, TMV also goes up. And that's the relationship among these different elements. We will spend the next few minutes to verify whether these rates are closely correlated with each other. We'll look at the charts. We'll also try to predict how high the Fed funds rate and the 20-year rate might go up in the next few months, so that we can predict how high TMV might go up in the next few months. Stay tuned. Let's compare the movement of the 20-year treasury bills and TMV and see how well they correlate with each other. As you can see, since the beginning of the year, this is the movement of the yield of the 20-year treasury bills, and this is the movement of TMV. The two lines look almost identical in shape. That's why there's a pretty good correlation between the two instruments, and the red line here indicates where the Fed made the announcement on rate high back on March 17. During this time, the 20-year yield went up by 40%, and TMV went up by 43%. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe and notification button. This will enable you to be notified when I publish my next video. It will also encourage me to make more videos like this in the future. Thank you very much. Let's continue. These are interesting things to cover in the next few minutes. Let's look at the movement of the 20-year treasury for the last 10 years. Currently, we're at this point with about 2.8% yield, but in the last 10 years, the yield was as high as about 3.7%, that means compared to this peak in the last 10 years, the yield can go up by at least another 20-30%. Similarly, my prediction is that TMV can easily go up another 20-30% in the next few months. Now if you look back further in the timeline, going all the way back to 1994, you'll see that back in 1995, the 20-year treasury yield was as high as 8%, and compared to where we are now, it looks like if we went back to that condition, TMV and also the treasury yield will easily double. Since the Fed is increasing the interest rate because they want to control CPI, let's look at historically how the CPI is correlated to the Fed funds rate. On the top chart here, we're showing the CPI, which is currently at 8%, and on the bottom chart, we're looking at the Fed funds rate, and currently is at 0.33%. You can see that back in the 1960s, the CPI was pretty low, and then it started to creep up, and sure enough, the Fed started to raise interest rates to control the inflation rate, and then eventually CPI crossed the 8% line around 1974, and at that point, the interest rate was at 10% already, compared to 0.33% today, and that's why a lot of people are saying that the Fed is already behind the curve, as far as increasing rates to try to control inflation. Even with the Fed being so aggressive raising the rate back in the 1970s, there was still a lagging effect that basically the inflation rate didn't start to come down until at least a couple of months after the Fed has increased the interest rate, as we can see here, and then the rate eventually started to come down, the inflation rate in 1975, 76, and so on, and correspondingly, the interest rate started to come down, and then inflation started to shoot up again, and then the Fed had to follow with rate hikes, eventually inflation went as high as 15%, and the Fed funds rate went as high as 20%, 21%, which is really high compared to what we have today, and then finally the inflation rate went down, and the interest rate went down. Again, the two charts here show us that there's a lot of room for the inflation rate and the Fed funds rate to move up in the next couple years, if the same thing is going to happen like what happened back in the 1970s and 1980s. Let's look at how the 20-year Treasury yield correlates with the Fed funds rate. If you look at the chart here all the way back from 1960 to today, you can see the two lines pretty much correlate well with each other. What will bring down the interest rates? When would it stop? First of all, if the inflation rate is down to 3% to 4%, then the Fed will have no reason to raise interest rates anymore, and that's when the value of TMV will flatten out and eventually it will start to drop. And by the way, I already bought TMV back on March 17, I'm still holding those shares, I'll talk a little bit more about that. The other scenario is that if the unemployment rate gets higher than 7% to 8%, which will cause the Fed to want to stimulate economy to increase employment, in that situation the Fed will probably not worry about inflation for the short term and will just reduce the rate to stimulate economy. Or when there's extreme unrest in the rest of the world, for example, if there's a market crash in Europe or there's a market crash in Asia, then the foreign investors will probably buy you as treasuries as a safety investment, which will then bit down the yield of the treasuries. Usually when that happens, it's a short term phenomenon, it will last for about 3 to 6 months. So this is not a long term type of possible scenario. To get a better understanding of the macro situation, I'd like to refer you to the YouTube video I posted on January 30, when I talked about my outlook for the market for this year. Generally speaking, my outlook is bearish because the fact that the Fed is going to be having 6 to 7 rate hikes this year. In that video, I looked at the month-to-month change in the Fed asset. The green line here is the rate of increase of Fed assets. The rate of increase has been reducing, and I compared that to the SPY. As you can see, the SPY resided the dip since December of last year because of the aggressive action from the Fed by tapering and also now with the interest rate increase. In the same video, I did a step-by-step analysis of the time period between 1978 and 1984 when the Fed was aggressively trying to control inflation by increasing interest rate. As you can see here, I was comparing the CPI with the Fed funds rate with the unemployment rate and S&P 500. During that time, S&P 500 was down at 1.21% before the inflation rate was brought under control. In the meanwhile, the Fed funds rate here indicated about a green line went from about 6% to 7% to as high as 17%. I'd like to suggest that you also subscribe to my Twitter account because with my Twitter account I provide almost daily updates to my subscribers about the latest developments and I also share some of my trades. For example, on February 18th, I said I bought SQQQQ and actually I've been swing trading SQQQQ and I've been making profit, and on February 22nd, I bought UNG, the natural gas ETF, which has been going up pretty nicely. Even on March 17th, I said I bought TMV shares and I still hold those shares so far it's up 12% already. And on March 30th, I bought XLE, which has also been going up in value. Again, I'd like to suggest that you click the like, subscribe, and notification button. As usual, I very much welcome your comments, questions, and suggestions. I'd like to remind you that I'm not a financial advisor. I share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions, and you should definitely consult with your financial advisors before you do so. This wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.