US Federal Debt has been particularly attractive in this economic downturn as more than ever investors are concerned about the prospect of deflation. At present, a 10 year bond offers a yield of just 2.64%, and that’s probably about as low as we’ll see in our lifetime. Read more…
Bond investors have been all over the new Build America Bonds as created by the 2009 economic stimulus package, and it should be no surprise that American cities are as well. The new bonds allow for the Federal Government to subsidize the interest expense on new projects funded with debt, and cities are sure to grab as much of the subsidies as they can. Read more…
Bond investors know it too well. Overleveraged fixed income traders fear it. And the shorts love it. The bond maturity wall is coming up, and quickly, to the tune of $1.2 trillion. Read more…
As 10-year treasury bonds cross the important 4% yield, high yield debt is still in vogue. Ford, perhaps one of the riskiest borrowers of them all, dumped $1.75 billion in 5 year debt. And believe it or not, the company earned the lowest interest rate yet at 7%. Read more…
Irony alert! The Federal Reserve, which has long been the source of most bubbles, is going to complete its own internal investigation as to why speculative bubbles form. Unfortunately, the early answer from the FED is that regulations can end bubbles. They couldn’t be more incorrect. Read more…
When it comes to the alphabet AAA and AAA are exactly the same. But when you compare US debt to that of American businesses, investors aren’t so willing to say AAA and AAA are exactly the same. Read more…
Long term bond prices are on the brink of collapse. With record high borrowing ahead in 2010 as well as indication from the Fed that it wants higher rates whilst promoting inflation, bond yields are set to soar while prices crumble. Read more…
Quantitative easing is such a beautiful word for such an ugly subject: inflation. With record amounts of Treasuries up for maturity in 2010 and huge amounts of new issuance, the Fed will be forced to again ease the fixed income markets. Read more…
Exchange-traded funds are loved by investors for their tax advantages, especially when it comes to capital gains. Because most funds are indexes that track the returns of a subset of stocks/bonds/commodities and rarely buy or sell holdings, capital gains are almost never incurred on the operating end. Usually, a trader will only have to pay taxes when a capital gain is generated on his/her side after the position is sold. Unfortunately, this isn’t exactly true for bond funds, which had to move funds around in a very volatile 2009. Read more…
The treasury bubble has officially began its burst. A recent government auction of treasury bonds was a virtual flop, and the Chinese have slowed, nearly ceased, all additional purchases of Treasury bonds. The bond bubble’s burst is near, very near, and the actions taken to keep it from bursting has only made the bubble that much worse. Read more…
Treasuries are in bubble mode, investors were snapping them up like subprime mortgages in 2007 after the credit crunch began. The once safe flee to US dollars will come with a price, near zero returns and worries about the US government’s own credit standing as it faces trillion dollar deficits. Read more…
Looking back through the past few years it seems now that we’re exactly where we began seven years ago. The stock markets were tanking, one bubble was ending and another beginning. Then it was the tech industry and after that the real estate boom, today its real estate bubble bursting and the treasury bubble beginning (and soon ending.) Read more…
I am convinced that the bottom of the stock market is dependent entirely on low LIBOR rates. The Libor rate, or the rate at which banks lend to banks, represents the best and easiest source of funding for banking institutions. I firmly believe that by timing these events we can accurately time a bottom in the market. Read more…
With recession and a global slowdown comes the need for investors to get smarter about the way they invest. The current market climate is unlike any we’ve seen in decades. Fortunately for the modern investor, this downturn brings many investing opportunities. In the past few days I’ve been all over DXO and SLX as excellent 2009 trading opportunities, but I believe the best investment and ultimate hedge is in this trade right here. Read more…
Cash equivalents have never been so high. Currently there is around $9 Trillion stored in cash equivalents such as treasuries, CDs and money market accounts a total that hasn’t been seen since the recession of 1992. Now with so much money being parked in fixed rate investments, rates are dropping and investors are tired of it. Why invest for no return?
The most promising part of the $9 trillion in cash equivalents is that $9 Trillion is actually 75% of the current worth of the stock market. If that money were to pour back into stocks, stock prices would double. Read more…
Fixed rate interest investments are a staple of recessions as investors turn to conservative investing strategies to protect their capital. CDs, Treasuries and money markets have returned the most since the year began but as investors pour into fixed income and government backed investments, yields are dropping rapidly.
The Atom processor for Intel is flat out hot. After the MacBook Air set the precedent for smaller computing devices, the industry has been pumping out both small and light computers to meet the demands of consumers. The new laptops are nothing more than for surfing the web or word processing on the go but their low price points and seemingly high powered XP devices are catching on quickly. Read more…
It’s hard to imagine the scale of the losses that the credit market and the overall market in general have seen over the past year. Certainly this credit crisis is larger than most of us have seen even in the duration of our lifetimes. Looking back at the past year we’ve seen plenty of negative news but very little to actually compare the size and scale of our current credit crunch to anything in history. Read more…
Poor timing, too low price points? No, it appears that Yahoo might be avoiding a Microsoft buyout solely for sentimental reasons. Now that Jerry Yang is the CEO, it appears he’s wanting to hold onto the company he worked so hard to start back in his own college years at Stanford.
Yang owns about 4% of the company that is currently worth $1.5 Billion, his stakes are huge and he’s still drawing the infamous $1 salary that is common with many tech giants. His wealth has been derived in its entirety from the growth and capital gains he’s received as a huge shareholder in Yahoo. As CEO and a founder, it seems that his own unwillingness to sell might lay in a dislike for Microsoft and sentimental views of Microsoft rather than what shareholders want. Read more…
Bonds, ETF, Forex, Futures and Commodities, Investing, Real Estate, Round Up, Stocks
Just like personal credit scores, the bond markets have their own credit system that decides a corporations credit rating or score. Bond ratings range from D all the way to AAA, the top of credit score. Read more…
While horror stories about high-yield bonds may be in the headlines these days, you should not get rid of these funds quite yet. The worries about hedge fund meltdowns and too many of them in existence as well as the history of tight spreads is not going to take down these high yield bonds. Read more…
Last week the yield on the 10-year Treasury bond spiked above 5% and bond prices slumped even further. For this reason it is a good idea to invest in short-term bond funds now. On the other hand, you should wait for a while before locking in your mortgage. Read more…
