• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

Don't close the bond door!

#1
QE may return, the end to the Feds raising rate this year?  Interesting article in Barron's  (Page 34/June 25, 2018) that presents a contrarian outlook to the prevalent thought  I never thought we were out of the woods from 2008 debacle, but this article- Fed Rate Cuts, QE Will Resume Soon  by Avi Tiomkin makes me reflect.  What's your thoughts?  Personally, I am 80% aligned with his thinking.
  Reply
#2
I was on the same thinking path until he used the dollar of 2017. The dollar of 2018 even with all this shouting about Trade War has been on a steady march upward. His thoughts resonate with shades of doom here but I would ask how a strong dollar may reset a lot of plans by a lot of CBs.

Will need look deeper into the points he makes and think if the recession could be sooner rather than later.
  Reply
#3
I didn't catch the 2017 dollar comp issue.  I would assume that was the most recent/verified reference available.
My reservation was the deflationary prediction as he makes the cart before the horse alignment that seemed  out of sequence (intuitively).
I still believe Spring 2019, a recession will be evident.
  Reply
#4
When referencing an article, if you would please post the link so that others may read it in order to comment.
https://www.barrons.com/articles/fed-rat...1529621333

The article states....."Other major emerging markets also have problems. Brazil, Russia, Argentina, and Turkey all have political and economic turmoil."

I am not sure what this person knows about the world he writes about....but suggesting Argentina and Turkey is an emerging country? Not in my view......and suggesting that Brasil which is an emerging country as having political and economic turmoil....Huh????? I mean there is presidential elections here this year, and it is hopeful that the current reigning party will lose and a more business friendly candidate will win. And Economic turmoil??? They are estimating a GDP growth this year of 2.5% and a 3.3% growth for 2019. It makes no sense to me.

We may see interest rates not grow to much more, or if they do they will probably need to reduce them soon after to a low rate.....I think this problem of low low rates are going to with us for a long time going forward for one simple reason....the country is over indebted and can not afford to see higher rates. 60 years of deficit spending is taking its toll on peoples' wealth. Just look at the Japan economy for the last 3 decades of low rates and little to no growth......it is one the most indebted countries in the world as a percentage of GDP. The USA might be following in their foot steps if this deficit spending is not reversed soon.
  Reply
#5
--Lots of USD denominated debt out there.  Lowering rates might make dollars less expensive, and the rollover of USD denominated debt somewhat easier. 
 
--Short-term rates sure could drop,  Barron's is not the only party seeing that potential.  The is a domestic imperative to raise rates --- we are just on the cusp of a retirement savings crisis due to near zero rates for ten years against 8% compounding models.
 
--Perhaps US interest rates were kept low in coordination with the ECB.    The FED as been setting policy as if it was the worlds central bank.
 
--Perhaps Bond Vigilantes will drive interest rates.     On a personal basis I shy away from Municipal bonds -- they are not paying me enough for the risk.
 
Hedgeye is saying the same thing as Barrons.. and they said it earlier than Barron's.

CHART OF THE DAY: A 2018 Crash Chart

There’s a lot of crashing going on out there in 2018:

  1. Crypto

  2. EM Currencies

  3. Levered long EM Debt and Equity portfolios

  4. China’s Stock Market (Shanghai Composite Index)

  5. Philippines Stock Market

  6. European Bank Stocks
  Reply
#6
Yes....I agree....much US $ denominated debt in the world because interest rates are so low and seeming ability to print an unlimited amount of dollars....that is why I keep saying the next recession is likely to be at least somewhat debt related.
  Reply
#7
DoubleDown... I would love to start buying Brazil; any ideas on timing..

PS I added a few Healthcare REITs into my mix yielding around 6% after they got beat up.
  Reply
#8
(12-17-2018, 08:26 AM)Omy Wrote: DoubleDown... I would love to start buying Brazil;  any ideas on timing..

PS I added a few Healthcare REITs into my mix yielding around 6% after they got beat up.

The BVSP index is 18.5% off its 52 week highs....so now is a good time to be looking....there is a lot risk so do your homework and know what you are buying. With presidential elections this October, the market here is likely to continue to be volatile. if a pro business candidate gets elected, the market is likely to soar...for a few decades the labor party has controlled the politics here with a lot of corruption that is currently being cleaned up......I think there is high probability this will change at this election.....that said...probably a good place to start is to look at PBR its largest company.....some stocks that I am holding which might be a good place to start looking...is BDORY, EBR, SBS, and GGB.....others that might be worth a look as well is BSBR, ITUB, CBD, ERJ, and BRFS
  Reply
#9
(12-19-2018, 10:38 AM)DoubleDown Wrote:
(12-17-2018, 08:26 AM)Omy Wrote: DoubleDown... I would love to start buying Brazil;  any ideas on timing..

PS I added a few Healthcare REITs into my mix yielding around 6% after they got beat up.

The BVSP index is 18.5% off its 52 week highs....so now is a good time to be looking....there is a lot risk so do your homework and know what you are buying. With presidential elections this October, the market here is likely to continue to be volatile. if a pro business candidate gets elected, the market is likely to soar...for a few decades the labor party has controlled the politics here with a lot of corruption that is currently being cleaned up......I think there is high probability this will change at this election.....that said...probably a good place to start is to look at PBR its largest company.....some stocks that I am holding which might be a good place to start looking...is BDORY, EBR, SBS, and GGB.....others that might be worth a look as well is BSBR, ITUB, CBD, ERJ, and BRFS

Are there after effects from the recent nationwide strike still lingering of can you see the market drop more of what the DOW is doing here in adding volatility?
  Reply


Forum Jump:


Users browsing this thread: 2 Guest(s)