n var ord = window.ord || Math.floor(Math.random()*10e12); document.write(''); google_protectAndRun("ads_core.google_render_ad", google_handleError, google_render_ad); Beyond 3.5%, The 'Rotation' Becomes Disorderly Submitted by Tyler Durden on 08/14/2013 10:39 -0400 Bond Equity Markets Exchange Traded Fund Institutional Investors Volatility A low cost of capital is the underpinning of much of the exuberance that shareholders are showing for stocks as management are able to lever-up (in the face of deteriorating fundamentals) to reward shareholders (via buybacks or state-sponsored dividends). With rates surging in the last few days, a critical question is how much will it take to accelerate outflows from bond funds and lead to significantly wider credit spreads for corporations? As BofAML notes, the consensus is now that a 3.5% 10Y rate is enough to trigger a disorderly rotation by which institutional investors are unwilling (based on risk expectations) to bid for the yieldier credit market debt as retail flows out. This is crucial since if the credit markets sell-off, firms will be unable to fund the expectations priced into equity markets and lead to a shift back to the sidelines from risk-assets in general. Via BofAML, With a 14bps move higher in 10-year interest rates over the past two days, the key question is how much will it take to accelerate outflows from bond funds enough to lead to wider high grade credit spreads? While we already expect outflows from (non-short term) funds to increase based on the move in interest rates so far (see Figure 4 at the end of this piece), clearly a move to 3.0% on the 10-year over the next several weeks would lead to much more meaningful outflows. Whether such scenario actually leads to wider credit spreads depends on the extent of institutional buying interest at the new more attractive levels. That in turn depends on whether interest rates are perceived to stabilize at the new higher levels – thus the other key variable to watch is rates volatility. Our latest Credit Investor Survey, conducted July 8-11, showed that 3.5% on the 10-year is most commonly thought of as the trigger of a disorderly rotation – i.e. higher interest rates leading to outflows and wider credit spreads – among high grade investors. Put differently, 3.0% on the 10-year will not lead to overall wider credit spreads if there is enough buying interest from institutional investors (though note that the 10s/30s spread curve would flatten further, as mutual fund/ETF holdings are concentrated in the belly of the curve, whereas institutional demand is disproportional in the long end of the curve). However, if the probability of a further move higher in interest rates to 3.5% is high – which will be the perception if interest rate volatility is high – certain institutional investors will choose to remain on the sidelines. Thus there may not be enough institutional buying interest to mitigate retail fund outflows and contain overall high grade spread levels. The bottom line is: if firms are unable to borrow cheap to fund the buybacks and dividends that investors have become so enamored with (and conditioned to); a disorderly rotation from rates will in fact have a major negative on equity prices as capital costs surge making shareholder-friendliness uneconomic... considering by far the greatest aspect of EPS beats has been a reduction in the float via buybacks , the fear should be that the much-hoped-for rising rate scenario (lauded by so many as indicative of great things ahead) is in fact nothing but flow-driven abd will crush EPS . Average: 5 Your rating: None Average: 5 ( 2 votes) From Great Rotation To Disorderly Retreat - Where's The Line In The Sand? The End Of 'Orderly And Fair Markets' Gold Demands Trend (Q1 2012) - Enter The Dragon Guest Post: QE Canaries In The Coal Mine? Guest Post: Of Mountains And Molehills
The Widening Chasm Submitted by Tyler Durden on 05/08/2013 12:58 -0400 Corruption ETC Gross Domestic Product Guest Post recovery Unemployment Submitted by Charles Hugh-Smith of OfTwoMinds blog , An independent, critical account of the American economy would soon raise questions about the structural causes of inequality. That some sectors of the economy will be doing better than others is natural. If you're a landlord or mobile-apps coding genius in San Francisco, the economy is excellent. Those working in the vast North American oil-patch are experiencing a boom economy. Realtors in resurgent markets such as Miami are having their best year since the top of the bubble in 2007. This can be viewed through any number of lens, one of which is the inherent inequality of capitalism: capital and labor flow to what is most profitable at this point in time, and capital and labor left stranded in low-yield, declining sectors suffer poor returns and lower wages. This inequality can be seen as the systemic cost of a dynamic economy in which capital and labor are free to move to better opportunities. It can even be argued that the more dynamic and fast-changing the system, the greater the inequality, as those who move fast enough to take advantage of new opportunities reap most of the gain (The Pareto Distribution of 80/20 is often visible in these sorts of distributions). Economic systems that can be gamed by bribery or purchased political influence are also inherently unequal, as those with power are more equal than those without power. This is the classic feudal society or crony-capitalist kleptocracy. Those benefitting within the crony-capitalist kleptocracy will of course claim that the society is a meritocracy and their advantages are the result of their own hard work and brilliance (and perhaps luck if they are honest enough to admit to being lucky). As a result, it is difficult to tease apart the capitalist functions of the U.S. economy from the cartel-state, crony-capitalist kleptocracy that I call neofeudalism. What we do know is that the top 1/10th of 1% is reaping most of the income gains. We also know that household debt has far outstripped the growth rate of the economy as measured by GDP, evidence that much of the prosperity is based not on wealth creation or savings but on expanding credit: And we know that real income (adjusted for inflation) has declined. Since this is the median household income, we can project that the bottom 90% are actually doing much less well than shown here, as income gains mostly flow to the top 10%. Individuals are not powerless to change their circumstance. This is the basis of the American Dream (and also the Chinese Dream, Mexican Dream, Iraqi Dream, etc.) The question then becomes: how is the system "wired," i.e. what are the obstacles, incentives and disincentives presented to individuals who are trying to better their circumstance? It's important to ask this question, and to be honest in our assessment of victimhood, oppression and individual responsibility. The widening chasm refers to both the income chasm between the financier class (1/10th of 1%) and the 99.9%, and the chasm between the real economy and the official narrative of the economy. The essence of propaganda is to substitute an officially conjured narrative for independent critical thinking. In the American propaganda narrative, the central state and bank are admirably supporting a "recovery" that though uneven in places is soundly on the path to widespread prosperity. The primary support of this narrative is ginned-up statistics (bogus unemployment rate, etc.) and asset bubbles inflated by easy credit to the masses and unprecedented low-cost credit to the financier class. These are the basic tools of propaganda: choose a metric that you can control or game, and make that the measure of success. In the Vietnam War, the body-count of enemy combatants was the metric chosen by the propaganda machine to measure success. Unsurprisingly, stacks of dead civilians were duly counted to boost morale and to mask the failure of the war's managers. Nowadays the unemployment rate is the new body-count: a metric that can be gamed to reflect an illusory success. Just erase tens of millions of people from the workforce, count every 4-hour a week job and dead-reckon a few million jobs were created outside the statistical universe (the Birth-Death Model of small business creation) and voila, the unemployment rate magically declines even as the economy and the job market stagnate. The other metric of choice is the stock market, which has been inflated by central bank policies and identified as the gauge of recovery by a political class anxious to deflect inquiries into its systemic corruption and monumental policy failures. The official narrative carefully leaves the kleptocracy, crony-capitalism and cartel rentier arrangements firmly in place. As noted above, those benefitting from the cartel-state neofeudalism defend their perquisites as "natural," i.e. the result of meritocracy. This adds another layer of propaganda persuasion to the official narrative. An independent, critical account of the American economy would soon raise questions about the structural causes of inequality by asking cui bono , to whose benefit is the system arranged? If we can honestly say that the system's primary source of inequality is a dynamic economy that rewards the top 10% who are best able to deploy skills and capital, then that suggests one set of potential remediations. If however we find the system is unequal largely as a result of its cartel-state structure, then that suggests a political and financial reset is needed to clear the deadwood of corruption, malinvestment and state/central bank manipulation of statistics, finance and credit. We had to destroy the economy to save it. Indeed. New video with CHS and Gordon Long: Peak Consumption Average: 2.9 Your rating: None Average: 2.9 ( 10 votes) Tweet - advertisements - Republicans: be careful what you wish for. A brewing White House scandal could ruin Obama AND the Republican Party. Login or register to post comments 6333 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Guest Post: Analysis of the Global Insurrection Against Neo-Liberal Economic Domination and the Coming American Rebellion Guest Post: The Gathering Storm Guest Post: The Many Faces Of Deleveraging Guest Post: 2011 - Catch-22 Year In Review Guest Post: The Decline Of The American Saver And The Economy
标签: Account经管大学堂：名校名师名课
京公网安备 11010802022788号
论坛法律顾问：王进律师
知识产权保护声明
免责及隐私声明
