{"id":48258,"date":"2019-09-05T08:58:20","date_gmt":"2019-09-05T13:58:20","guid":{"rendered":"https:\/\/olduvai.ca\/?p=48258"},"modified":"2019-09-05T08:58:25","modified_gmt":"2019-09-05T13:58:25","slug":"blains-morning-porridge-sept-5th-2019","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=48258","title":{"rendered":"Blain’s Morning Porridge – Sept 5th 2019"},"content":{"rendered":"\n

Blain’s Morning Porridge – Sept 5th 2019\u00a0<\/a><\/h3>\n\n\n\n
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\u201cSlipping down Raki and reading Maynard Keynes…\u201d<\/em><\/p>\n\n\n\n

We really should focus on the signals emanating from bond markets.  Forget the current political madness \u2013 yesterday saw a number of key moments for bond markets:  UK Chancellor Sajid Javid hitting the spend button in the UK (whether it actually happens is a moot point), another $30 bln new issuance day in the US, BAWAG launching a 10-year negative yield Covered Bond, Spain about to launch a 50 year issue at a smidge over nothing, and Christine Lagarde lecturing the European Parliament about the need for Fiscal Policy initiatives. <\/p>\n\n\n\n

It really feels like we are at something of a nexus for bonds and fiscal spending.  Central Bankers and politicians are tinkering with new ideas (ie: old ones rehashed) about Monetary policy \u2013 because nothing they tried re QE and zero rates really worked the last 10-years.  I can\u2019t help but feel it\u2019s like something out of The Walking Dead \u2013 the Neo-Keynesians have suddenly risen and now stalk the Earth. (Queue Thriller on the turntable\u2026)  <\/p>\n\n\n\n

Politicians now see low interest rates as a phenomenal opportunity to sort out the bleak mess of the last 10-years of Austerity driven under-investment, and spend economies back into growth.  It looks attractive.  And, if they\u2019d started 10-years ago.. then we\u2019d probably not be where we are today\u2026<\/p>\n\n\n\n

Of course, corporates would be mad not to take advantage of current ultra-low rates to borrow. \u00a0But what are they going to spend the money on? \u00a0More distorting stock buy-backs and dividend recharges back to private equity owners? \u00a0Should investors be worried about the growing leverage? \u00a0If the crunch comes \u2013 well, 5% of issuers might default, but the rest will be fine\u2026 ish. \u00a0Meanwhile, ultra-low rates are great for stocks. \u00a0Not because companies are inherently more profitable, but largely because low rates make stocks relatively more attractive compared to low-yielding bonds, and encourage corporate buy-backs which further push up prices!\u00a0<\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n\n\n\n

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Blain’s Morning Porridge – Sept 5th 2019\u00a0 \u201cSlipping down Raki and reading Maynard Keynes…\u201d We really should focus on the signals emanating from bond markets.  Forget the current political madness \u2013 yesterday saw a number of key moments for bond markets:  UK Chancellor Sajid Javid hitting the spend button in the UK (whether it actually […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15674,4791,124,534,22663,662],"class_list":["post-48258","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bill-blain","tag-bond-markets","tag-central-banks","tag-monetary-policy","tag-morning-porridge","tag-quantitative-easing"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48258","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48258"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48258\/revisions"}],"predecessor-version":[{"id":48259,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48258\/revisions\/48259"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48258"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48258"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48258"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}