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Old 2013-01-23, 04:33   Link #121
SaintessHeart
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Japan raises economic view as PM pushes "Abenomics"

Quote:
(Reuters) - Japan raised its view of the economy for the first time in eight months on Wednesday as private consumption held firm and business sentiment improved, in a sign that Prime Minister Shinzo Abe's policy of easy money and big spending, dubbed "Abenomics", has begun taking effect.

Improvement in exports and recently compiled economic stimulus steps will likely put the economy back on a recovery path, but a slowdown in overseas economies remains a risk factor, the government said in its monthly economic report.

Abe, who led his Liberal Democratic Party to a landslide election victory in December, has called for aggressive monetary easing and heavy fiscal spending to beat persistent deflation, helping to drive down the yen and boosting share prices

The government also said it expects the Bank of Japan (BOJ) to take bold steps to meet a 2 percent inflation goal that the government agreed with the central bank on Tuesday as part of a bold push to escape nagging deflation and to revive the economy.

"The economy is weak, but signs of bottoming out can be seen in some areas," the report said.

That marked an upgrade from last month, when the government said the outlook was weakening due to a slowdown in overseas economies.

Abe's cabinet approved a 10.3 trillion yen ($116.3 billion) stimulus package this month, while the BOJ, in its most determined effort yet to end years of economic stagnation, on Tuesday decided to switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.

"(The government) expects the Bank of Japan to promote bold monetary easing so that the price stability target will be achieved as soon as possible," the monthly report said.

Japanese economics minister Akira Amari, talking to reporters after the approval of the report by the cabinet, said the improved outlook reflected the positive impact a softer yen and firmer stock prices were exerting on corporate sentiment.

Hiroaki Muto, senior economist at Sumitomo Mitsui Asset management, agreed.

"The yen has depreciated by about 10 percent (against the dollar) thanks to "Abenomics", and expectations (for economic recovery) are running high," Muto said.

"Higher expectations aside, the yen's softer trend will have an impact on the real economy. That's a major factor behind the upward revision."

SOLID CONSUMER SPENDING

In the monthly report, the government raised its view on private consumption for the second month in a row, saying consumer spending is holding firm.

"Auto sales bottomed in October and were on the rise in November and December. Car production is recovering as well. Private consumption is showing signs of bottoming out," a Cabinet Office official in charge of compiling the report said.

"Corporate leaders' views on business conditions are recovering against the backdrop of a recent correction to the yen's appreciation and gains in share prices," he said.

The risk of overseas developments negatively affecting the Japanese economy has diminished, he added, as the U.S. government has averted triggering automatic spending cuts and tax hikes known as the "fiscal cliff", and Japan appeared to be past the worst of its diplomatic row with China.

Sino-Japanese relations deteriorated sharply after the Japanese government in September bought disputed East China Sea islets, known as the Senkaku in Japan and the Diaoyu in China, from a private Japanese owner, triggering violent protests across China and a boycott of Japanese goods.

Although Asia's two biggest economies are still sending patrol ships to waters near the islands, raising worries that an unintended collision could escalate into a broader clash, anti-Japanese demonstrations have subsided.

Japanese automakers including Toyota Motor Corp (7203.T) and Nissan Motor Co Ltd (7201.T) saw a slow recovery of sales in China in December as the bruising effects of the territorial spat waned.

To keep the recovery trend going, analysts said,the government needs to tackle such tasks as deregulation and possible participation in the U.S.-led Trans-Pacific Partnership (TPP) free trade pact.

Businesses want Japan to join the pact so that Japanese exporters can better compete with overseas rivals, but politically powerful agricultural lobbies oppose the participation for fear of the influx of overseas farm products.

"What's important is how much headway the government will be making on these fronts." Sumitomo Mitsui's Muto said, noting that government could be wary of taking measures that could impact voter sentiment ahead of elections for the upper house set for July.
Cmon grow you damn Japanese yen! Stop making figurines so expensive!
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Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-02-01, 11:08   Link #122
willx
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Bill Gross (PIMCO) on the "Credit Supernova"



http://www.pimco.com/EN/Insights/Pag...Supernova.aspx
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Old 2013-02-02, 01:13   Link #123
DonQuigleone
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Quote:
Originally Posted by willx View Post
Bill Gross (PIMCO) on the "Credit Supernova"



http://www.pimco.com/EN/Insights/Pag...Supernova.aspx
My gut instinct is that debt is something to be avoided except for the following:

1. Capital investment. IE whereby your debt is going towards something that will lead to greater returns (or savings) then the cost of the interest.

2. Making large cash intensive purchases, whereby it might not be practical to provide all money up front (IE a house, or a car, though those two can count as 1, depending on your living situation).

I've heard peers casually talk about going into debt in order to go on holiday, or buy clothing. Madness. A person can only be the loser in such a transaction.

Debt is only "good" if it's going to something that can "grow", in which case your financier and yourself are sharing in that growth, case 1. Case 2 is to overcome pragmatic difficulties (most people, even if they're diligent savers, can't provide large quantities of cash upfront).

Banking institutions that encourage consumer debt are being irresponsible, I think. They're normalizing an unhealthy practice. I think it's also a bad move long term, as people who get used to consumer debt spending, are going to eventually end up bankrupt, as eventually reach a point where they can no longer afford to pay more interest, as the debt only encourages them to unsustainably live beyond their means. It's better for banks to do due diligence and ensure the money they provide is going towards a worthwhile investment.
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Old 2013-02-02, 05:45   Link #124
Bri
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The figure is misleading as it involves absolute values. (Not surprising as it basically part of an advertisement). One would have compensate for economic growth and inflation. That's why expressing debt as percentage of GDP usually provides greater insight.

Debt can also be used to effectively lower taxes on capital. Another use is to increase risk and payoffs. Debt is not inherently bad but, like any other powerful tool, can cause a lot of damage if poorly used.

Last edited by Bri; 2013-02-02 at 11:24.
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Old 2013-02-02, 06:44   Link #125
Solace
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Relevant to discussion:

http://www.gmo.com/websitecontent/JG...rALL_11-12.pdf

Always interesting to see what investment firms think of the future.
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Old 2013-03-06, 10:58   Link #126
SaintessHeart
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It seems that, regardless of how the market is trending, Wall Street always finds a way to make money.

Fear indexes on the rise on global stock markets

And just one of the many strategies they have used :

Letting the VIX tell us when to get out
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-03-06, 11:02   Link #127
willx
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Oaktree's Marks Warns Pre-Crisis Behavior is Back

Quote:
LOS ANGELES (Reuters)—The chairman of the world's largest distressed debt investor on Tuesday [March 5] warned that the "unsound practices" of before the financial crisis are creeping back into credit markets, with private equity firms bidding increasingly high prices for companies.
Howard Marks, co-founder and chairman of Los Angeles-based Oaktree Capital, told a conference that investors, in their search for returns, were becoming overly confident while the economic background was still gloomy.

In a presentation titled "Investing in Uncertain Times," Mr. Marks noted the ease with which lowly rated companies were issuing debt this year, how companies were paying out record dividends to their shareholders and the increasingly high debt-to-equity multiples private equity firms were paying for companies amid a resurgence in deals.

http://www.hedgeworld.com/open_news/...er_share=70193
This is from the same man that wrote a very simple and easy to understand piece on the price (intrinstic or not) of gold: http://www.oaktreecapital.com/MemoTr...2012_17_10.pdf

PS: I don't have the data on me, but I ran a historical analysis of U.S. recessions and the price of gold. They were actually relatively poorly correlated, but I did find some research showing that gold responds to systemic shocks. IE. Gold is a poor inflation hedge but has been a decently good "crisis" hedge.
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Old 2013-03-06, 11:10   Link #128
SaintessHeart
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Quote:
Originally Posted by willx View Post
Oaktree's Marks Warns Pre-Crisis Behavior is Back

This is from the same man that wrote a very simple and easy to understand piece on the price (intrinstic or not) of gold: http://www.oaktreecapital.com/MemoTr...2012_17_10.pdf

PS: I don't have the data on me, but I ran a historical analysis of U.S. recessions and the price of gold. They were actually relatively poorly correlated, but I did find some research showing that gold responds to systemic shocks. IE. Gold is a poor inflation hedge but has been a decently good "crisis" hedge.
Before you signed onto this forum, I posted this before with regards to gold. Gold doesn't have much correalation other than that towards fear. Maybe it might be related to volumes? I don't know.

Dow hit 14,000 again. Not a surprise that the bulls (and their shit, excuse my sarcasm) are back. I certainly hope it will not be another Black Tuesday, though it would be great if the reinstated the Glass-Steagall Act.
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-03-06, 11:29   Link #129
willx
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Quote:
Originally Posted by SaintessHeart View Post
Before you signed onto this forum, I posted this before with regards to gold. Gold doesn't have much correalation other than that towards fear. Maybe it might be related to volumes? I don't know.

You whipper-snapper! Check out my join date! I was just .. on hiatus ..
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Old 2013-03-07, 10:06   Link #130
SaintessHeart
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Quote:
Originally Posted by willx View Post
You whipper-snapper! Check out my join date! I was just .. on hiatus ..
Go eat a moose. I ninja-ed you 2 years! Swear fealty!
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-05-03, 10:46   Link #131
willx
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So, I haven't posted in this section in a while, but in light of conversations that I've been having with many people in all aspects of "high finance" .. I'm going to put some of my thoughts down. These are just preliminary mental ramblings but it'll be good to have them in a place I can reference them.. and for people to critique and challenge me on them.

As a preface, I sound very cold and emotionless in this analysis, and I am .. but do not take that as me viewing emotions as being irrelevant to this topic. Emotions .. consumer and corporate confidence in the future whether it be job security, social safety nets, economic activity .. it is this sentiment that drives the ebb and flow, the waves if you will, of the economic cycles.

Rates & Liquidity / QE(Infinity) & Abenomics

Spoiler for Wall O Text:


Anyways, this is my first "thought dump" on this and other varied economic topics. I'm pretty sure I don't have everything down yet. A simple summary is that it's not a case of "the worst is yet to come" but more of a "things got really bad, haven't really gotten better, and what severity and in what form will the pain take"

I'm in the process of rebalancing my own personal portfolio. I'll talk about that more when I get to my next topic re: treasuries, corporate yields and equity markets.

Relevant Recent Readings:
http://blogs.marketwatch.com/thetell...ney-investing/
https://www.gmo.com/America/CMSAttac...j9wkBRE6RIiPGQ
http://money.cnn.com/2013/04/23/news...ics/index.html
http://www.forbes.com/sites/realspin...-currency-war/
http://worthwhile.typepad.com/worthw..._source=feedly
http://worthwhile.typepad.com/worthw..._source=feedly
http://www.calculatedriskblog.com/20...alculated+Risk)
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Old 2013-05-03, 13:48   Link #132
oompa loompa
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Quote:
Originally Posted by willx View Post
So, I haven't posted in this section in a while, but in light of conversations that I've been having with many people in all aspects of "high finance" .. I'm going to put some of my thoughts down. These are just preliminary mental ramblings but it'll be good to have them in a place I can reference them.. and for people to critique and challenge me on them.

As a preface, I sound very cold and emotionless in this analysis, and I am .. but do not take that as me viewing emotions as being irrelevant to this topic. Emotions .. consumer and corporate confidence in the future whether it be job security, social safety nets, economic activity .. it is this sentiment that drives the ebb and flow, the waves if you will, of the economic cycles.

Rates & Liquidity / QE(Infinity) & Abenomics

Spoiler for Wall O Text:


Anyways, this is my first "thought dump" on this and other varied economic topics. I'm pretty sure I don't have everything down yet. A simple summary is that it's not a case of "the worst is yet to come" but more of a "things got really bad, haven't really gotten better, and what severity and in what form will the pain take"

I'm in the process of rebalancing my own personal portfolio. I'll talk about that more when I get to my next topic re: treasuries, corporate yields and equity markets.

Relevant Recent Readings:
http://blogs.marketwatch.com/thetell...ney-investing/
https://www.gmo.com/America/CMSAttac...j9wkBRE6RIiPGQ
http://money.cnn.com/2013/04/23/news...ics/index.html
http://www.forbes.com/sites/realspin...-currency-war/
http://worthwhile.typepad.com/worthw..._source=feedly
http://worthwhile.typepad.com/worthw..._source=feedly
http://www.calculatedriskblog.com/20...alculated+Risk)
I haven't been reading about Japans economy for a while, but wasn't the yen seen as one of the safer currencies? Last time I went there there was serious deflation going on.. but clearly thats changed after just looking at the FX rate. Whats caused this?

AFAIK (or can remember):
As for the government programs, Japan is a bit of an anomaly. The governments stimulus is based on Keynesian thinking, that by pumping money in, and reducing interest rates they can stir investment. The average Japanese consumer however.. just doesn't seem to happy to budge. Apparently its a real liquidity trap, but I wonder if they were trapped from the start due to the odd Japanese consumer behavior. I suppose people were still saving because they didn't have faith in investments after the crash of the early 1990's. I don't think the Japanese people have much faith in their government ( and I can't say I blame them). An interesting thing about Japanese debt to take note of is that most of it is owned by the citizens.

I'm rusty but for those of you who want to get the basic idea behind the monetary stimulus should look up the Mundell-Fleming Model. http://en.wikipedia.org/wiki/Mundell...3Fleming_model (IS-LM-BP). Its not tough to get through and will be a breeze if you've done any keynesian macro before.

I'm not sure I agree with you about deflation showing a breakdown of the economy, in isolation both inflation and deflation can be harmful or beneficial. The constant rate of increase of money supply, (once again, AFAI remember) is backed by keynesian economics. When I say Keynesian economics, I mean that suppliers dont react immediately to price changes, so increasing money supply gives the illusion that people have more money a), and that real prices will increase in the next time period b). The logic says: If prices are increasing, I should buy something today since its going to be more expensive tomorrow, since my wage contract is binding for the period and cannot adjust immediately--> this is the kicker. They might have less, they might have more, they might have the exact same amount.

As far as deflation goes, deflation is often symptomatic of extremely high sustained growth and development, just look at the Japanese currency rate in the 60's to the 80's. If overall production becomes more efficient, you will have higher supply for every given good at a nominal price resulting in deflation. The same trend was observed in the late 1900's in the U.S too AFAIK. In any case, theres quite a lot of literature that points towards monetary policy being totally ineffective --> which is why I hate macro.. no one can agree on anything (don't have a link for this at the moment, but shouldn't be a problem to verify if need be)

Inflation and deflation are often symptomatic of something else, for example like the concept of NAIRU (non-accelerating inflation rate of unemployment) http://en.wikipedia.org/wiki/NAIRU (which states that trying to reduce unemployment below a certain level will cause accelerating rates of inflation, you can see this graphically in the Phillips curve http://en.wikipedia.org/wiki/Phillips_curve . So you can have artificially high inflation but still have very high unemployment if your NAIRU is shifted due to a shock in Aggregate demand. In any case its extremely important to figure out whats causing the inflation or deflation, perhaps for a layman the relationship of inflation > deflation is true, but it doesn't hold true under scrutiny.

Last edited by oompa loompa; 2013-05-03 at 15:13.
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Old 2013-05-09, 00:29   Link #133
Sumeragi
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Amusing for those that deal in metal:



In case anyone is wondering, you can sell US quarters made from 1932-1964 at over $4 each due to the composition of metals (silver).
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Old 2013-05-09, 02:37   Link #134
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A day of reckoning is coming for the global commodities glut

The best investment idea at Ira Sohn 2013 could be all about shorting everything that’s associated with the voracious Chinese demand for commodities, a symptom of policies that attempted to quell–but really just put on hold–the effects of the financial crisis.

Stanley Druckenmiller, former managing director of Soros Fund Management, said commodity producers were fooled in 2008, when the Chinese government injected 4 trillion yuan (at the time, $586 billion) in stimulus into the Chinese economy. That created a false demand for goods and for the raw materials to make them.

.......

http://qz.com/82728/trading-idea-a-d...modities-glut/
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Old 2013-10-22, 13:31   Link #135
willx
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Oops .. I never came back to do the second "thought dump" that I said I was going to do.. Ha! Well, since it's been a while, here we go:

Treasuries, Corporate yields and Equity markets:

Spoiler for Wall of Text:


Now having jotted all of that damn in a mad stream of consciousness .. I feel like I jumped a bit ahead of myself without expanding on topics such as the difference between debt and equity, let alone other things that may seem obvious to me but perhaps would be interesting to others ..

Additional Reading:
http://business.financialpost.com/20...-not-dead-yet/
http://www.investopedia.com/terms/m/...oliotheory.asp
http://en.wikipedia.org/wiki/Investm...licy_Statement
http://successfulportfolios.com/wp-c.../07/SA_v15.pdf
http://en.wikipedia.org/wiki/Alternative_investment
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Old 2013-10-22, 21:15   Link #136
Irenicus
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^Just an amateur's opinion but, aren't you pretty high on the fixed income and cash side? Is the Canadian bond market less wtflol than the US one, not as under the mercy of the US Feds? Or is it your choice and personal risk assessment?

Mind, I understand not committing heavily into US equities at this point, even blue chip ones, and if you are bearish on Europe/Asia I can see you'll have problems finding alternative asset classes. The S&P is at such a high that, while the US economy has sound fundamentals -- in the short term, and barring another political murder-suicide attempt -- it is not going to grow nearly as fast as the S&P and that means bubble. Bubble bad.
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Old 2013-10-23, 15:14   Link #137
willx
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Quote:
Originally Posted by Irenicus View Post
^Just an amateur's opinion but, aren't you pretty high on the fixed income and cash side? Is the Canadian bond market less wtflol than the US one, not as under the mercy of the US Feds? Or is it your choice and personal risk assessment?

Mind, I understand not committing heavily into US equities at this point, even blue chip ones, and if you are bearish on Europe/Asia I can see you'll have problems finding alternative asset classes. The S&P is at such a high that, while the US economy has sound fundamentals -- in the short term, and barring another political murder-suicide attempt -- it is not going to grow nearly as fast as the S&P and that means bubble. Bubble bad.
1) I am very much overweight fixed income now. It's performed very well for me over the last 2.5 years but it is definitely a drag on performance currently. My strategy at the time was admittedly an asset allocation one.

2) My view on "alternative investments" and the like might be very different than other peoples.

For example, I work with colleagues who have connections to individuals that may require 2nd mortgages on their family home at 65-80% LTVs but are willing to pay >10% rates on that debt. They may need that money to renovate another home, put it into their business or other opportunities. Sometimes there's other things like multi-unit residential where they are levering the same amounts off base value but putting all the additional into renovations. We do our diligence, review the opportunity and put money into that.

At other times .. I sometimes develop short-medium term personal trading strategies (ie. bull-call spreads, bear-put spreads, bear put-forward spreads multi-leg short delta/theta). My most recent one was the aforementioned option strategy crafted to cover a large chunk of a stock's "downside" portion of it's cumulative probability distribution. I put money into that too (and have also lost money at times too).

Or sometimes I just do selective individual high variability stocks bets. These are probably my least quantitative investments and are based on "I think this segment, this company or this industry" is in for gains or a correction. Personal employee stock loan bets.. etc. I classify all of these things as "alternative" ..

Near-term, I view economic fundamentals in the U.S. are more positive, but my longer-term view is that the country is still in for a significant shock as grow will be much slower due to continuing consumer deleveraging. That's my thesis anyway.
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Old 2013-10-23, 21:44   Link #138
kuroishinigami
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Personally, I'm bearish on USD denominated fixed income currently. Due to QE these past years, sooner or later, the US treasury rate is going to be increased to curb inflation. When that happens, current yield on fixed income won't be good enough and price will go down. Sure, there is still some potential for low yield decrease in the short term, but for me the risk is too big for such a small reward so I rather put it elsewhere. This is just amateur's view though XD.

Just out of curiousity, any reason why you don't put any weight in Emerging Market Equity/fixed income market? Those tends to give higher yield/return, although also with higher risk.
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Old 2013-10-23, 22:24   Link #139
SaintessHeart
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Quote:
Originally Posted by kuroishinigami View Post
Personally, I'm bearish on USD denominated fixed income currently. Due to QE these past years, sooner or later, the US treasury rate is going to be increased to curb inflation. When that happens, current yield on fixed income won't be good enough and price will go down. Sure, there is still some potential for low yield decrease in the short term, but for me the risk is too big for such a small reward so I rather put it elsewhere. This is just amateur's view though XD.
Well here is another amateur's view; with the effect of Abenomics and China still not willing to raise rates, I see it as some form of economic warfare to see whose printer works the most efficiently.

Inflation would keep blowing out until someone is unable to tolerate the pain anymore and raises rates.

Quote:
Just out of curiousity, any reason why you don't put any weight in Emerging Market Equity/fixed income market? Those tends to give higher yield/return, although also with higher risk.
IMO, after looking at the marketwatch tab of rates on the right, the bond market is quite flat for the past 2 years, with little bits of volatility that would benefit speculators rather than long-term investors. I suspect that many would rather put their money into options and earn premiums instead of sitting on bonds.

As for Emerging Market Equity, I suspect the problem to be Emerging Market Debts. Considering the fact that emerging markets often have a patron currency used in its investment, the rates of bonds have failed to inspire confidence in the major investor currencies (USD, CNY for starters), therefore the invested extract less value from the investment funds to produce for the investors.

There is an opinion written on Reuters 2 months ago which joked about the BRICs as a Bloody Ridiculous Investment Concept that is worth reading; although the ideas are hardly agreeable, due to its lack of data as compared to this, it shares some ideas what the market MIGHT be actually doing behind our backs. Though like any other writing about investments and trading, it is a good idea to do some research into the ideas before taking a stand.

Still, there might be people putting money into the bank or dropping them on really long term investments, so the general direction might be into those sooner or later. This addiction to cheap money will kill us all.

P.S : I am a bear most of the time, so most good news seem like bull to me.
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-10-24, 14:31   Link #140
willx
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Join Date: Feb 2006
Age: 31
Quote:
Originally Posted by kuroishinigami View Post
Personally, I'm bearish on USD denominated fixed income currently. Due to QE these past years, sooner or later, the US treasury rate is going to be increased to curb inflation. When that happens, current yield on fixed income won't be good enough and price will go down. Sure, there is still some potential for low yield decrease in the short term, but for me the risk is too big for such a small reward so I rather put it elsewhere. This is just amateur's view though XD.

Just out of curiousity, any reason why you don't put any weight in Emerging Market Equity/fixed income market? Those tends to give higher yield/return, although also with higher risk.
Right, so as I said, I'm overweight fixed income (both IG and HY) and will need to re-balance in the coming days as yields have been creeping up (dipped again during the shutdown and cliff scare). So, we're actually in agreement on this fact!

I personally am underweight or otherwise avoid Asia right now primarily because, frankly, I don't know it as well as I should. What I do know and am aware of -- between Abenomics, China, India -- does not make me feel bullish.. Albeit looking at how the SSE Composite has moved over the last 1-2 years is at first blush worth doing some more homework on. I'd have to figure out what the currency-swapped real-return in C$ looks like for me though so it's not trouble free.

Here's a quick snapshot on comparative worldwide benchmark bonds:

Images
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