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...Having a hard time today swallowing a tiny .02 cent rise in the share price today. OK, the euro is tumbling. But the bourses were on fire. Could this be another case of the 2-day actual pricing-out thing we've seen elsewhere? To avoid a run on the shares?
dear Crash/Max B, equities were up just under 2% while Eur was down just about 1.6%. the rest is history. HEDJ is a hedged ETF, but then you don't have a brokerage account as i recall.
trust me, you're not alone, many others in mutual funds had tiny gains, if any, today on their european holdings, including yours truly.
This isn’t really new, though, so much as Europe’s new normal. As the Financial Times points out, €1.2 trillion, or $1.4 trillion, of eurozone debt has negative yields that mean lenders are paying borrowers. But what it is new is just how long people are willing to pay governments to borrow. At first, they only did so for 1-or-2-year bonds. Then, in a sign of how dysfunctional Europe’s economy still is, investors started paying Germany to borrow for five or six years. But now, as you can see above, Switzerland has beaten everyone else to be the first to have negative ten year borrowing costs, at -0.2 percent. And by “first,” I mean in history. This has never happened before.
IMO, this is not a time to be filling all your asset allocation boxes. If you think the U.S. is tapped out and you need to find more fertile fields, Europe looks like a bad destination. It is a mess and getting worse, and the euro is a basket case (and sterling isn't too far behind). The race to debase is on, and currency warfare is now obvious. I see no upside to converting/exchanging, directly or indirectly, my US dollars/dollar assets for something international right now, and becoming Wiley Coyote past the cliff edge in the blink of an eye.
Re: "Okay, let's get to the obvious question: why would you ever pay the government to borrow from you?"
1. To keep another government from taking it away (taxes, fees, penalties) 2. To keep others from taking it (thieves, fiduciaries, litigants) 3. To hide its existence from others. 4. To diversify among a variety of different currencies. 5. For possible appreciation of that currency in relation to others or to a "market-basket" of goods. 6. Liquidity - To have it readily available for investment in other Swiss bonds, institutions, or financial instruments when opportunities arise. 7. Because the borrower (in this case Switzerland) is viewed as more stable than any other place you can think of to store your wealth.
Comments
equities were up just under 2% while Eur was down just about 1.6%. the rest is history. HEDJ is a hedged ETF, but then you don't have a brokerage account as i recall.
trust me, you're not alone, many others in mutual funds had tiny gains, if any, today on their european holdings, including yours truly.
This lifted today from a WaPo story and posted to Barry Ritholtz's blogsite by commenter RW:
This is mind-blowing: You have to pay Switzerland to lend it money
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/21/this-is-mind-blowing-you-have-to-pay-switzerland-to-lend-it-money/
This isn’t really new, though, so much as Europe’s new normal. As the Financial Times points out, €1.2 trillion, or $1.4 trillion, of eurozone debt has negative yields that mean lenders are paying borrowers. But what it is new is just how long people are willing to pay governments to borrow. At first, they only did so for 1-or-2-year bonds. Then, in a sign of how dysfunctional Europe’s economy still is, investors started paying Germany to borrow for five or six years. But now, as you can see above, Switzerland has beaten everyone else to be the first to have negative ten year borrowing costs, at -0.2 percent. And by “first,” I mean in history. This has never happened before.
IMO, this is not a time to be filling all your asset allocation boxes. If you think the U.S. is tapped out and you need to find more fertile fields, Europe looks like a bad destination. It is a mess and getting worse, and the euro is a basket case (and sterling isn't too far behind). The race to debase is on, and currency warfare is now obvious. I see no upside to converting/exchanging, directly or indirectly, my US dollars/dollar assets for something international right now, and becoming Wiley Coyote past the cliff edge in the blink of an eye.
Re: "Okay, let's get to the obvious question: why would you ever pay the government to borrow from you?"
1. To keep another government from taking it away (taxes, fees, penalties)
2. To keep others from taking it (thieves, fiduciaries, litigants)
3. To hide its existence from others.
4. To diversify among a variety of different currencies.
5. For possible appreciation of that currency in relation to others or to a "market-basket" of goods.
6. Liquidity - To have it readily available for investment in other Swiss bonds, institutions, or financial instruments when opportunities arise.
7. Because the borrower (in this case Switzerland) is viewed as more stable than any other place you can think of to store your wealth.
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/europe-stock