Influential bond investor Bill Gross of Janus Henderson Investors said on Monday that financial markets are artificially compressed and capitalism distorted because of the U.S. Federal Reserve’s loose monetary policy. “I think we have fake markets,” Gross said at a Janus Henderson event. Investors should brace for higher Treasury bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up “only gradually,” he said.
For a while everything seemed smooth. Indians were the world’s most confident consumers and the $2 trillion economy was the fastest-growing big market. Then, last November, Prime Minister Narendra Modi voided 86 percent of currency in circulation, worsening a slowdown that had started earlier in the year. Climbing global oil prices and a tightening Federal Reserve could also complicate domestic policy making.
The annualized month-to-date realized vol for the S&P is 5.22%, the lowest October we’ve seen on record spanning back to 1928.
A public feud between President Donald Trump and influential fellow Republican Bob Corker could narrow the path for a tax overhaul in the U.S. Senate, where a Republican go-it-alone effort is already showing signs of disunity. Days after the Republican-controlled Congress took important steps toward advancing tax legislation, Trump’s Twitter attacks on Senator Corker over the weekend threatened to further alienate the president from other key Republicans such as Senator John McCain, whose “No” vote was pivotal in the party’s failure to repeal Obamacare in July.
By the summer of 2007, U.S. investment banks and the Federal Reserve were struggling to contain the fallout from the mortgage meltdown, but many investors were still betting a crisis would be averted. The S&P 500 closed at a record on Oct. 9, 2007. It would be its last until March 2013. On Oct. 16, Citigroup Inc. reported a 57% drop in profit after it had to write down bets on mortgage-backed securities and loans to fund deals—showing how deeply the summer’s credit crisis hit its business and driving up anxiety among analysts and investors over its future.
With the QE unwind, the Fed will gradually destroy the money it had created during the phases of QE. It had watered down the dollar during QE with this money creation, now it’s going to reverse the process. Rate hikes impact short-term yields. The QE unwind is designed to raise yields of longer-dated securities. Rising yields would make dollar-denominated bonds more attractive for international buyers stuck with ultra-low yields in other currencies, and when the plow into dollar-denominated securities, they also create demand for the dollar……
Let me be clear. Thaler never puts among his “nudges” a freedom nudge or a leave me the hell alone nudge. He sets up coercive choices then nudges you to the one option desired by the government technocrats. The Nobel Prize in economics has hit a new low.
A surge in household borrowing is paving the way for another financial crisis, according to the International Monetary Fund. In a hard-hitting report published ahead of its annual meetings in Washington this week, the watchdog warned of ‘risks down the road’ from rising levels of debt.
When considering stock valuations, Bogle’s method differs from Wall Street’s. For his price-to-earnings multiple, Bogle uses the past 12 months of reported earnings by corporations, GAAP earnings, which include “all of the bad stuff,” to get a multiple of about 25 or 26 times earnings.
The toll in human terms caused by the war is staggering. Nearly 58,000 Americans and 2 million to 3 million Vietnamese, many of them civilians, were killed in the war. Untold numbers were wounded…..In one of its most serious omissions, the series gives short shrift to the destruction wreaked by the U.S. military’s spraying of deadly chemical herbicides containing the poison dioxin over much of Vietnam, the most common of which was Agent Orange. This is one of the most tragic legacies of the war.