Salient to Investors: David Tepper at Appaloosa Management said: P/E ratios for US stocks are not high and junk bonds are at the mid-point of fair value. The US economy is good. The end of the bond market rally started last month when the ECB unexpectedly cut interest rates and
READ MORE... →Salient to Investors: Christopher Orndorff at Western Asset Mgmt said we are seeing mostly a lack of liquidity in the bond market: dislocation like this exacerbate price movements more than what we would have seen 10 years ago. One person (Gross) affecting borrowing costs worldwide shows the increasing fragility of
READ MORE... →Salient to Investors: The last time consumer-price increases were slowing before the Fed started raising rates was in 1994, when Treasuries lost 3.3% and Greenspan doubled the benchmark rate to 6% despite inflation being at a 7-yr low of 2.5%. Gary Pollack at Deutsche Bank said the critical example for
READ MORE... →Salient to Investors: Kurt Brouwer at Brouwer & Janachowski said Pimco have mishandled their corporate decisions but from a money-management perspective he has no issue with Pimco. Pimco’s Total Return Fund is on track to underperform a majority of rivals for the third year in four. Sanford Bernstein said Gross’s departure may mean
READ MORE... →Salient to Investors: The IIF reported: Emerging markets received $18 billion in total inflows in September versus the $24.4 billion monthly average from 2010 to 2013. Indian and Mexican bond markets and the Brazilian equity market had inflow gains. South Africa, Turkey and Indonesia had reduced inflows. Read the full
READ MORE... →Salient to Investors: Michael Gapen at Barclays Capital said the late 1990s was a very good period for the US economy, with Greenspan making the correct call on monetary policy; but the general consensus is that Fed policy in the run-up to the housing bust prior to the 2007-2009 recession
READ MORE... →Salient to Investors: Richard Segal at Jefferies Intl said Russia’s reserves are too large relative to emerging-market dollar bonds so it will be difficult for it to stop buying US, European and Japanese bonds. Luis Costa at Citigroup said Russia’s bond-diversification plan sounds like posturing as the size of its sovereign-wealth
READ MORE... →Salient to Investors: The resumption of growth in the US and UK is in stark contrast to the 25-yr yield curve for government bonds of the developed economies, which indicate government borrowing real costs of negative or zero for up to 25 years. The contradiction implies investors do not expect
READ MORE... →Salient to Investors: 10-yr T-notes are at the widest yield gap, 0.89%, to their G-7 counterparts since June 2007. Charles Comiskey at Bank of Nova Scotia said people are being forced to buy Treasurys because both emerging-market currencies and stocks are getting hammered. Adrian Miller at GMP Securities said investors are bullish
READ MORE... →Salient to Investors: Stephen Antczak et al at Citigroup said: Each of the 5 times since 1980 that the Fed started raising its benchmark rate, the extra yield on corporate bonds over government debt narrowed in the following 6 months as accelerating growth boosted optimism. Spreads will tighten this time also,
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