Salient to Investors: Denmark’s Economy Minister Margrethe Vestager said world reaction to talk of Fed tapering clearly shows how addicted people have become to record-low rates and a reminder that low borrowing costs are still underpinning demand across much of the globe. The IMF said Denmark’s record debt levels make them more vulnerable
READ MORE... →Salient to Investors: Caroline Baum writes: Tapering seems fully priced into the market, and time is not on the Fed’s side. Vince Reinhart at Morgan Stanley said Fed officials have already paid a high price in terms of market volatility for showing their desire to end QE. Long-term interest
READ MORE... →Salient to Investors: Caroline Baum writes: Arvind Krishnamurthy at Northwestern and Annette Vissing-Jorgensen at Berkeley found that Treasury purchases themselves have had limited beneficial spillovers to private borrowers, i.e. the Treasury was able to borrow at lower interest rates but not the rest of us. The researchers found that the
READ MORE... →Salient to Investors: Caroline Baum writes: Markets all along understood that tapering and raising the federal funds rate were two different animals. Central bankers have fallen in love with their own voices, and communication has become a policy tool. Benn Steil at the Council on Foreign Relations said new BoE
READ MORE... →Salient to Investors: US corporate-bond trading volume in August have fallen to the lowest since 2008 despite soaring company debt. Exiting from fixed-income securities is getting tougher as the biggest bond dealers adapt to new capital standards by reducing inventories by 76 percent since the peak in 2007. The 21 primary dealers reduced
READ MORE... →Salient to Investors: Adrian Miller at GMP Securities said 2 weeks of Fed-speak have laid the foundation for a September tapering. Bill Gross at Pimco said no more QE mean no more bull markets. The 30-year bond yield was 3.91 percent on August 19, the most since August 2011. Vincent Chaigneau at Societe Generale said 10-year
READ MORE... →Salient to Investors: James Paulsen at Wells Capital Mgmt said concern that a surge in US bond yields will curb US growth is overblown because higher borrowing costs coupled with gains in confidence are a healthy sign for the economy. Paulsen said confidence is at the center of everything here and that since 1967, stocks
READ MORE... →Salient to Investors: US companies have issued $241 billion in junk bonds this year, more than twice the amount during the same period in 2007. US stocks are near record highs. Investors’ use of borrowed money to buy stocks is up one-third in the past year to a near record. Housing prices are surging in
READ MORE... →Salient to Investors: William D. Cohan writes: Janet Yellen favors staying the course on QE. Larry Summers apparently prefers to begin winding down QE. The Yellen-Summers debate is the latest example of a decades-long tug-of-war between those inside The Club (Summers) and those excluded from it (Yellen). Almost all of
READ MORE... →Salient to Investors: Richard Fisher at FRB of Dallas said: The US economy is improving, employment is picking up and the housing market has turned. US companies are lean and mean and ready to go with stronger balance sheets. We have artificially suppressed rates, and this cannot go on forever. 65 percent
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