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Peak "Reach For Yield"
By removing liquidity via massive purchases of high quality (and in some cases) low quality collateral, the impact on investors of central bank repression of interest rates around the world can be summed up in three simple words: "reach for yield." These three ever-so-simple words provide blanket excuse for 'investors' to pile head long into far riskier investments than they ever would before and considerably lower levels of compensation than they would ever have accepted before... but hey, as long as the central bankers have got their backs, there will always be a greater fool? However, as BofA notes, the mania for "yield reaching" is showing signs of fatigue with the biggest cumulative outflows since 2008...
Note: the current outflows are considerably larger than those during the Taper Tantrum
Does this mean investors have entirely given up on yield and have moved on to the more speculative non-earnings producing, negative free-cash flowing, "stocks always go up, just look at China", stocks of the new bubble? Or is derisking beginning as The Fed desperately rearranges deckchairs on the "but hiking rates is not tightening" titanic of cheap-buyback-sponsored equity exuberance?
Source: BofAML
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all of this since 2004 needs to yields millions of baskets full of heads. nothin' less.
Yield right of way. Or, said another way... "We want yield, right away!"
Whatever the cost...
"provide blanket excuse for 'investors' to pile head long into far riskier investments"
Exceptionalism has no bounds.
investors, lulz
Rex Nutting on MarketWatch says that it’s the corporate buybacks that are destroying the American middle class. He quotes William Lazonick:
“'The ‘buyback corporation’ is in large part responsible for a national economy characterized by income inequality, employment instability, and diminished innovative capacity,' wrote William Lazonick, an economics professor at the University of Massachusetts at Lowell in a new paper published by the Brookings Institution.
"Lazonick argues that corporations — which once retained a sizable share of profits to reinvest (including investing in their workforce by paying them enough to get them to stay) — have adopted a 'downsize-and-distribute' model."
Nutting also quotes CEO of BlackRock, Lawrence Fink:
“'The effects of the short-termist phenomenon are troubling both to those seeking to save for long-term goals such as retirement and for our broader economy,' Fink wrote, adding that favoring shareholders comes at the expense of investing in 'innovation, skilled work forces or essential capital expenditures necessary to sustain long-term growth.'”
Nutting’s chart shows that nonfinancial corporations have not raised any net capital in the stock market for 21 straight years.
http://www.marketwatch.com/story/how-the-stock-market-destroyed-the-middle-class-2015-04-24
3 years ago I started getting into private lending. Its worked great. Started small and now I have 3 loans that I have actively where I live in the Southwest. The interest income I get from those loans I take down to the local coin shop and recycle into PMs. There's an art to this but if I have 5 loans going at any time I will be making more than most of my friends who are pensionless, and still have everything in the market.
There is a great book on this I recommend called Making The Yield. It explains everything from start to finish. The best part is that these houses are secured and i never lend more than 65% LTV. Hell if they burn down they're insured.
Author has 5 star ratings: http://amzn.to/1VfzYFy
The ones that scare me are the bond ETFs. Not a lot of liquidity there if/when the herd panics.
This is kind of a horseshit chart, isn't it? I mean, how much /new/ gold gets mined every year, plus how much new TIPS issuance, versus the entire universe of corporate debt? For fuck's sake, TIPS have only been around in any meaningful form since 2004. And completely ignoring treas? Yeah, wonder why...
The only reaching going on is BAML's weak-ass research. Talk about some bush league rookie shit.
preferred stocks...which are not at all like stocks, but are more like junk bonds, were cut in half during the last debt drama. trouble was...there were scant shares to be had. the numbers on the screen, a mirage
What would an activist investor in GS, Blackrock or KKR advocate for? If ever a case could be made to "hollow out" an industry of its largess, it would be the cancerous canker of which these malignant parasites are a part of.
jmo.