“The current debate is not whether you are bullish, but whether there is too much short-term euphoria. At some stage valuation will matter, or at least cap the upside.”
...it’s not the company’s performance MbS is worried about. It is how much this IPO will bring the government in the form of dividends to pay for its operations...
In order to facilitate payments to its shareholders and accelerate buybacks, JPMorgan pushed more than $130BN of excess cash into bonds and cut the amount of loans it holds. Oh, and it also sparked September's repo crisis.
By lowering official rates policymakers have extended the lifespan of the business cycle, similar to that of 1998’s decision, but in doing so they probably also wrote the script for its ending.
