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New York Times (August 9)

2018/ 08/ 11 by jd in Global News

The $30 trillion U.S. stock market hogs the attention, but “the larger domestic debt market—at around $41 trillion for the bond market alone—reveals more about our nation’s financial health. And right now, the debt market is broadcasting a dangerous message: Investors, desperate for debt instruments that pay high interest, have been overpaying for riskier and riskier obligations….  with little concern that bonds can be every bit as dangerous to own as stocks.” The mispricing of risk is still rampant and when spreads rise and defaults begin, “trillions of dollars in invested capital could be lost.” Although, we’re not necessarily “on the verge of a recession. But the corporate debt bubble inevitably will play a role in causing it.”

 

Euromoney (February Issue)

2017/ 02/ 22 by jd in Global News

“New accounting rules requiring banks to take upfront charges against possible losses through the full life of a loan promise damaging pro-cyclicality.” IFRS 9 comes into effect next January. It “will require banks to recognize expected loan losses even before borrowers miss a single interest or principal repayment.” This major change “will hit both reported earnings and capital even if a borrower manages to remain current on debt servicing.” Uncertainty abounds, but it looks like “US and Japanese banks will be subject to their own variant, current expected credit loss (CECL), under US GAAP.”

 

Wall Street Journal (June 6)

2014/ 06/ 07 by jd in Global News

Mario Draghi is again being pressed “to rescue Europe’s politicians from their own economic failures. If only the politicians would give him pro-growth economic reform in return for all of his monetary exertions.” Under Draghi’s leadership, the EU Central Bank taken additional measures to stimulate the economy, including charging banks interest on funds deposited with the central bank, in the hope that bankers will be more inclined to lend their funds to businesses and individuals.

 

Institutional Investor (May Issue)

2013/ 06/ 01 by jd in Global News

“Investors are clamoring for sell-side research as Japanese equities lead the world in gains…. For quite a long time—decades—most of the economic and financial news out of Japan was negative. Over the past six months or so, it has been overwhelmingly positive. Stock prices are up. Real gross domestic product growth is rising. Investor interest is at its highest level in years.”

 

Bloomberg (September 23)

2011/ 09/ 25 by jd in Global News

Even though the Federal Reserve has kept interest rates low in an attempt to reduce strain on the housing market, the number of households speding an excessive amount on mortage payements has continued to rise. This “persistent stress in housing” illustrates “one of the main problems with the Fed’s attempts at monetary stimulus: Many borrowers simply can’t take advantage of lower mortgage rates, because their income has fallen, they owe more than their homes are worth, or they shouldn’t have qualified for a mortgage in the first place.”Even though the Federal Reserve has kept interest rates low in an attempt to reduce strain on the housing market, the number of households speding an excessive amount on mortage payements has continued to rise. This “persistent stress in housing” illustrates “one of the main problems with the Fed’s attempts at monetary stimulus: Many borrowers simply can’t take advantage of lower mortgage rates, because their income has fallen, they owe more than their homes are worth, or they shouldn’t have qualified for a mortgage in the first place.”

 

Barron’s (May 22)

2010/ 05/ 25 by jd in Global News

Nobody should be buying 35-year U.S. Treasury bonds, which offer just a little over 4% annual interest. Yet people are. Barron’s warns that “today’s investors” will see the value of their investment dwindle because “sunny days of low inflation won’t last.”

Nobody should be buying 35-year U.S. Treasury bonds, which offer just a little over 4% annual interest. Yet people are. Barron’s warns that “today’s investors” will see the value of their investment dwindle because “sunny days of low inflation won’t last.”

 

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