tag:blogger.com,1999:blog-6616959642391988608.post1344928165659786183..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: The Fed is behind the tightening curveScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6616959642391988608.post-77704463589599752432010-02-20T16:42:49.556-08:002010-02-20T16:42:49.556-08:00I'm looking at the cost of corporate debt thro...I'm looking at the cost of corporate debt through LQD and that tells me that it is back to where it was in 2006. <br /><br />While it is still below corporate bond values in 2003. I think it signifies a much better growth profile.<br /><br />---"Why are equity prices unchanged since 1988 despite a doubling of after-tax profits since then?"---- Not sure I get this, but the value ofUFormulahttps://www.blogger.com/profile/04465435765969271043noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-48851027125687896932010-02-18T17:53:30.287-08:002010-02-18T17:53:30.287-08:00Rodrigo: if it were a simple supply-demand story, ...Rodrigo: if it were a simple supply-demand story, why is the price of risk extremely high (zero yields on T-bills) but the price of corporate debt historically low (credit spreads are still very wide)? Why are equity prices unchanged since 1988 despite a doubling of after-tax profits since then? Why is the VIX still relatively high? <br /><br />I think there is a lot more to the story than just Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-52084829245889821402010-02-18T17:12:11.650-08:002010-02-18T17:12:11.650-08:00The yield curve may be reflecting even another rea...The yield curve may be reflecting even another reality, the amount of supply seen coming into the market causes prices to fall and yields to rise...a simple supply/demand story. <br /><br />That's why regardless of what happens, we will see another recession in short order. <br /><br />If the Fed raises rates, interest rates in the 10 and 30 yrs will skyrocket and upend the housing market UFormulahttps://www.blogger.com/profile/04465435765969271043noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-15518479232503518012010-02-18T13:00:43.705-08:002010-02-18T13:00:43.705-08:00The yield curve may also reflect another reality: ...The yield curve may also reflect another reality: Tons of investment capital waiting for a home, and parked short-term in T-bills, the non-brainer default option. <br /><br />I contend a global glut of capital is behind the long-term decline in interest rates, and will be with us for generations Savings rates in Asia and Europe are high, and huge pools of capital are formed in the US through Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com