Salient to Investors: Danish central bank Governor Lars Rohde said world central bankers need to plan for monetary tightening to avoid feeding asset bubbles. Rohde said there is no short-term alternative to global easing, given the state of the real economy. Jacob Graven at Sydbank A/S said it will be the same
READ MORE... →Salient to Investors: Bill Gross at Pimco said: Asset-price irrationality has risen to 6 on a scale of 1 to 10. Corporate credit and high yield bonds are somewhat exuberantly and irrationally priced, spreads are tight, profit margins are at record peaks with room to fall, and the economy is still fragile.
READ MORE... →Salient to Investors: Wall Street firms are once again selling debt that may be poised to lose value. Wall Street is selling junk bonds at a record pace after they returned 19 percent in 2012, but says it’s obvious that prices will drop when interest rates rise. The amount of
READ MORE... →Salient to Investors: Kenneth Heebner at the CGM Focus Fund has bet 21 percent of his find on a decline in U.S. Treasuries as the growing US economy eventually prompts the Fed to boost interest rates. At the end of 2012, the fund was 29 percent invested in banks, 24 percent in homebuilders. Heebner said
READ MORE... →Salient to Investors: Jeremy Grantham at Grantham Mayo Van Otterloo said: All global asset prices are too high because of Federal expansive monetary policy. US companies, other than quality stocks with stable earnings and low debt, and most global growth equities, are brutally overpriced. US large-caps, excluding quality stocks, will lose
READ MORE... →Salient to Investors: Bank of America Merrill Lynch indexes show the gap in yields between linkers and governments reached a 21-month high of 1.70 percent. Economists forecast consumer-price gains of 2.72 percent in 2013, in line with the 10-year average. Index-linked securities are favored because sovereign-debt returns are being erased
READ MORE... →Salient to Investors: Daragh Maher at HSBC said Moody’s downgrade was not unexpected, and the drop in the pound in 2013 is small when framed in the context of a longer time-frame, so further falls would not represent an overshoot. Maher said the comfort expressed by the gilt market is largely built
READ MORE... →Salient to Investors: Moody’s said the U.K.’s high and rising debt burden means deterioration in the government’s balance sheet is unlikely to be reversed before 2016, and while the U.K. has considerable structural economic strengths, expected slow growth of the global economy and the reduced speed of debt reduction in the
READ MORE... →Salient to Investors: A paper written by Frederic Mishkin at Columbia University, David Greenlaw at Morgan Stanley, James D. Hamilton at the University of California in San Diego, and Peter Hooper at Deutsche Bank Securities said: The Fed’s hold on policy may weaken should possible losses on its balance sheet coincide with high US budget
READ MORE... →Salient to Investors: Bill Gross at Pimco said: Treasuries gained this week for the wrong reason – speculation economic growth will slow as the Fed reduces its stimulus efforts, when instead yields, certainly in the mortgage market, and the Treasury market might rise as well. The Fed will buys bonds through 2013 and says
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