I guess that the main feature of this market in the last 12 years is Financial Represssion (look the the actual real yields, Fed Funds minus core CPI) and Corporate Moral Hazard (debt garantees as you said, Buybacks, over leveraging...etc). Off course the QE and money being put in the hands of financial institutions, wich can ONLY BUY FINANCIAL ASSETS also helped this market.....LOL
All this has ''monetized'' financial assets, turning them into stores of value, because public debt was toxic overall.
you seem Russell, in Japan, there was no equity BID because bond yields were low, AND ALSO INFLATION was very low.. so real interest rates were at around zero.
The variable that triggers monetization of financial assets is the real interest rate, not the nominal one...
Or is it just the sector mix - given that how much tech there is in US and that is the only sector which has returned consistent earnings over the last 10-12 years? Of course, counterargument could be that long duration assets benefit disproportionately from low real rates, but that would still not take away their earnings delivery.
Would be very curious as to what you think of the JNK/TLT breaking out of its ~20 year trend in the last several trading sessions. Implies to me that risk-on from the bond side is returning. What are your thoughts on this relationship?
Would be very curious as to what you think of the JNK/TLT breaking out of its ~20 year trend in the last several trading sessions. Implies to me that risk-on from the bond side is returning. What are your thoughts on this relationship?
Russell- really love the length of these. The cycle from Capital to Labor has commenced! Hope you’re well.
Tyler
I really need to learn how to make clickbait titles like this. Great read otherwise, thanks for sharing.
If the content is good - can you really call it clickbait?!?
The answer is that there's high-quality clickbait :) Watch this, trust me it's worth 20 minutes of life juice: https://www.youtube.com/watch?v=S2xHZPH5Sng
Very interesting Russell...
I guess that the main feature of this market in the last 12 years is Financial Represssion (look the the actual real yields, Fed Funds minus core CPI) and Corporate Moral Hazard (debt garantees as you said, Buybacks, over leveraging...etc). Off course the QE and money being put in the hands of financial institutions, wich can ONLY BUY FINANCIAL ASSETS also helped this market.....LOL
All this has ''monetized'' financial assets, turning them into stores of value, because public debt was toxic overall.
Does that make sense?
Cheers buddy, yours is always excellet work
you seem Russell, in Japan, there was no equity BID because bond yields were low, AND ALSO INFLATION was very low.. so real interest rates were at around zero.
The variable that triggers monetization of financial assets is the real interest rate, not the nominal one...
Does it make sense?
Or is it just the sector mix - given that how much tech there is in US and that is the only sector which has returned consistent earnings over the last 10-12 years? Of course, counterargument could be that long duration assets benefit disproportionately from low real rates, but that would still not take away their earnings delivery.
Great comments. Thoughtful and force you to think. Well done.
Really like these thoughtful pieces that are backstopped by data.
No.
Although, you can say some idiots are macro investors :D
Yours truly is one of them.
Would be very curious as to what you think of the JNK/TLT breaking out of its ~20 year trend in the last several trading sessions. Implies to me that risk-on from the bond side is returning. What are your thoughts on this relationship?
Would be very curious as to what you think of the JNK/TLT breaking out of its ~20 year trend in the last several trading sessions. Implies to me that risk-on from the bond side is returning. What are your thoughts on this relationship?
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