Our Financial Tomorrow
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Source: https://www.treasury.gov/resource-center/
When the yield curve slopes up the expectation. is interest rates will rise. It's usually a good sign for the economy but also causes concern about future inflation. The steeper the slope, the bigger the change. Some would say we have already seen inflation in the equities markets. Meanwhile the Fed says they will keep rates low. I wonder how it's all going to work out?
December 14, 2021
According to Tony Deden:
Private equity is nothing more than regular equity that is leveraged. Because of their ability to raise money and borrow unlimited sums at little to no cost allows private equity to pay more than an opportunity may be worth, distorting the value and the market in general. What a company is worth and what it sells for are two different things. Their business is to extract substance from the businesses they buy and then to get rid of them.
Understand what can go wrong. That's how you understand what something is worth
We have a distorted economy today, so it’s difficult to know how much to pay. The cost of money is zero. Hard to assess value. Must understand the imputed risks associated with the business, the geographic location. Today the focus is almost exclusively on price.
Look for a robust sustainable revenue streaming. This is value
Scarcity -the most important law in economics. This is a natural law. There is scarcity in material goods, in resources,, and in other than visible tangible resources. There is scarcity in skill sets , and character of men. Scarcity in all of its permutations is an important ingredient in any action that deploys capital for the future.
Permanence is another important ingredient (endure, not merely grow) (You can grow and become fragile and die)
Independence. Much of what we see in the world to day is dependent on external factors, suppliers, government, competition, etc. Dependence makes a system fragile.
December 1, 2021
What's happening to the Yield Curve?
→ Short Rate & ↑ Long Rate. This is what we have seen over the past 2 years since the Fed's stance was dovish.
When storm clouds gather, investors tend to turn toward longer term bonds, regarding them as a better refuge. This drives up the bond's price and thereby lowers its yield, (price and yield move in opposite directions).
We need to keep a careful watch here based on the current language coming from the Fed indicating a quicker end to stimulus and a rising inflation threat. The longer term bonds may be getting more expensive.
According to Mary Ann Alden
Stocks look ahead 6 – 9 months. If the yield curve steepens that is a good sign for stocks. Fed wants to be slow and steady.
Look at 65 week moving average Bull markets move in phases. Inflation perking up due to all the QE
Anything can become a black swan - trade war, political tension, etc.
Dollar will continue to weaken, This is good for exports and paying down the debt. It will be good for stocks for a while but then it will not
Commodities look good.
According to Tony Deden:
Private equity is nothing more than regular equity that is leveraged. Because of their ability to raise money and borrow unlimited sums at little to no cost allows private equity to pay more than an opportunity may be worth, distorting the value and the market in general. What a company is worth and what it sells for are two different things. Their business is to extract substance from the businesses they buy and then to get rid of them.
Understand what can go wrong. That's how you understand what something is worth
We have a distorted economy today, so it’s difficult to know how much to pay. The cost of money is zero. Hard to assess value. Must understand the imputed risks associated with the business, the geographic location. Today the focus is almost exclusively on price.
Look for a robust sustainable revenue streaming. This is value
Scarcity -the most important law in economics. This is a natural law. There is scarcity in material goods, in resources,, and in other than visible tangible resources. There is scarcity in skill sets , and character of men. Scarcity in all of its permutations is an important ingredient in any action that deploys capital for the future.
Permanence is another important ingredient (endure, not merely grow) (You can grow and become fragile and die)
Independence. Much of what we see in the world to day is dependent on external factors, suppliers, government, competition, etc. Dependence makes a system fragile.
December 1, 2021
What's happening to the Yield Curve?
→ Short Rate & ↑ Long Rate. This is what we have seen over the past 2 years since the Fed's stance was dovish.
When storm clouds gather, investors tend to turn toward longer term bonds, regarding them as a better refuge. This drives up the bond's price and thereby lowers its yield, (price and yield move in opposite directions).
We need to keep a careful watch here based on the current language coming from the Fed indicating a quicker end to stimulus and a rising inflation threat. The longer term bonds may be getting more expensive.
According to Mary Ann Alden
Stocks look ahead 6 – 9 months. If the yield curve steepens that is a good sign for stocks. Fed wants to be slow and steady.
Look at 65 week moving average Bull markets move in phases. Inflation perking up due to all the QE
Anything can become a black swan - trade war, political tension, etc.
Dollar will continue to weaken, This is good for exports and paying down the debt. It will be good for stocks for a while but then it will not
Commodities look good.