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Can Low Rates Keep Lifting the Stock Market?

TedTed
in Fund Discussions
FYI: (Click On Article Title At Top Of Google Search)
Call it the Kübler-Ross rally. After going through the Swiss psychiatrist’s stages of denial, anger, bargaining, and depression, portfolio managers may have reached the final one, acceptance, in dealing with the descent of interest rates to lows once thought impossible.
Regards,
Ted
https://www.google.com/#q=Can+Low+Rates+Keep+Lifting+the+Stock+Market?+Barron's

Comments

  • catch22catch22
    Yes... cheap money remains hot money. Post BREXIT, at this short point in time after the fact indicates that hot money is still hungry, eh? At least relative to the equity side of the markets. The main question being which sectors, and will big money rotate the sectors to maximize gains.

    Also, from the author: "And so, bond yields in the U.S. ended the week at record lows, while major stock averages wound up just shy of record highs. Far from irrational exuberance, many institutional investors voice resignation (or worse) to the fact that they are forced to put money to work at record low yields—1.366% for the benchmark 10-year Treasury note—since that’s better than nothing, which literally is what they earn on the estimated $11.7 trillion of global debt securities with negative yields.

    >>>The bold above indicates that a "static" 1.366% yield is in place. The written presumption is that institutions, insurance companies and pension funds placed all of their monies into the sector of bonds on this day. The writer fails to offer the fact that monies already held in a sector mix of investment grade bonds have an average of about 10% YTD returns, as of July 8. If the 10 year remained fixed from today until year end, with static price range; these folks would have a nice profit forced upon them at year end.
    Recent reports note that institutions, insurance companies and pension funds are unwinding hedge fund positions, as these have not had the expected returns; especially with the involved fees.
    So go the markets and the professionals, eh?
    Regards,
    Catch
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