Post Tagged with: "investing"

More Thoughts about Japan and US Treasuries

More Thoughts about Japan and US Treasuries

If China wants to accumulate reserves, it will have to buy US Treasuries, even if not every month. Japanese institutional investors are thought to be attracted by the high yields available in the US Treasury market.  But, the wider differentials at short-end make hedging the currency risk more expensive

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Proof that bonds are moving more because of the Fed than China

Proof that bonds are moving more because of the Fed than China

2018 has started with a lot of angst about bond yields. And there is some cause to be concerned. But this owes to an economy that is growing more briskly and to the Fed that has been and probably will be more hawkish than you think.

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Gundlach vs Gross: Here’s how a bond bear market starts

Gundlach vs Gross: Here’s how a bond bear market starts

It’s semantics whether 2.50%, 2.63% or 3.00% is the right level to declare a bear market in bonds. What matters is that the two best-known bond market investors are now saying we are in or near a bond bear market.

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Italian Election–Two Months and Counting

Italian Election–Two Months and Counting

Italy’s election has the potential for some surprises. The Five Star Movement, which is polling first in surveys, has pledged a referendum on the euro if Brussels does not change its fiscal rules. Berlusoni’s Forza Italia and Salvini’s Northern League are critical of the EU and EMU, but rather than jettison the euro, they talk about having a parallel currency.

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Grantham: US asset bubble to pop in 2019

Grantham: US asset bubble to pop in 2019

Veteran value investor Jeremy Grantham says that we won’t see an imminent end to the US bull market. He expects a melt-up, not a meltdown. But Grantham goes on to say that we will see an asset bubble implosion in 2019, with as much as 50% downside.

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Minsky’s financial instability hypothesis and the Fed’s reaction function

Minsky’s financial instability hypothesis and the Fed’s reaction function

As the Federal Reserve meets today to decide how to communicate its messaging on future rate hikes and balance sheet reduction, financial stability will play a key role. The risk of overheating was real. So let’s put some framing around this issue and ask how the Fed reacts as the data come in down the line.

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Places to avoid for commercial real estate investment

Places to avoid for commercial real estate investment

Recently I have indicated I see a lot of problems in asset markets despite the economic acceleration in Europe, Japan, and the US. Commercial real estate is a problem that I want to highlight briefly since I believe it will be a locus of distress in the next global downturn.

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Technology shares priced for perfection

Technology shares priced for perfection

Today’s Wall Street Journal shows that large-cap technology stocks are priced as if economic and earnings growth will continue for the significant future. However, this late in the cycle, the probability of a hiccup increases, making share prices vulnerable.

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Market jitters and fake liquidity in leveraged loans and high yield

Market jitters and fake liquidity in leveraged loans and high yield

With the US treasury yield curve flattening to almost 60 basis points between 2 and 10-year maturities, we need to ask where are the vulnerabilities in the market if this spate of good news ends. I believe we should look at high yield, leveraged loans and commercial real estate

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Overbought

Overbought

“I had to cover my shorts.” That’s what my friend Matt told me after the company came out with its quarterly earnings and issued upbeat projections. I asked Matt, “how long are you going to keep shorting these companies. This is like the 10th time you’ve been forced to cover.” I don’t remember anymore how Matt responded. But I do […]

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Policy divergence revisited

Policy divergence revisited

Three years ago, the Fed had begun tightening and all other central banks were still on easy street. Now, we are at an inflection point where other central banks are likely to tighten more than the Fed. That’s negative for the US dollar and positive for longer duration US Treasuries.

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More on why Trump’s woes aren’t driving markets

More on why Trump’s woes aren’t driving markets

This is a brief follow-up on the last post I wrote about how markets aren’t freaking out about the Trump scandals. I wrote that “this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.” And we see that this is true today.

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