Also in this playlist...
This transcript is automatically generated
That's up and up to the -- met this morning New York -- as our president Bill Dudley said that US policy makers are weighing the costs and benefits.
Of additional monetary stimulus.
Dudley telling -- small audiences Syracuse the Fed is ready to deploy any third round of quantitative easing that's by and treasuries if you well.
If necessary Scott -- it says yeah that's gonna happen.
He's chief opt out -- -- -- a hundred billion dollars and assets yields say it quite like that but yeah it's thinking that this is gonna happen you know.
Yeah I mean at look.
Doctor Bernanke is very concerned about the economy solid you know he seems to have no problem doing unorthodox things.
And the idea that we're gonna put more liquidity into the system after we get through Operation Twist at the end of June.
I think it's a foregone conclusion.
Simply because they -- at some point here -- We're at that point and in -- in the expansion where you know -- typically is a mid cycle slowdown or pause.
And I believe he'll immediately react to it that dangerous.
Ultimately it's crude it's creating a -- -- problem.
If you look at some of the data that we've looked at in relationship to determining where the overnight rate should be which is currently the zero bound.
The Taylor rule which was developed by John Taylor talked about it before.
Which the Fed uses to determine where the policy -- should be.
Based on the Fed's own productions that rate should be raised some -- the -- and actually.
And they've made a commitment -- to keep it at zero through 2014.
So but the bottom line is I think two to three years out we're gonna discover the Fed will discover that -- behind the curve there's an inflation problem and they'll start.
Having correction rates up.
Last month you were here you said short treasuries you still stand by that because we did see.
-- a spike up and interest rates and it was it was sharp enough -- -- I'm Shirley caught some individual investors off guard seeing.
You know a loss at least -- -- day today and their bond -- but then again this week below 2% -- on -- ten.
I know but you know look I always tell people breeds I think markets don't move in straight lines and the cost of being short is so small.
-- in your view you're on the hope to -- a coupon of 2%.
On the treasury to to think that you can buy an option for 2% a year.
The likelihood rates were honest when in reality I think -- Operation Twist stands.
Rates will rawness and significant way.
You know I wouldn't be surprised to see -- -- the -- between two and a half to 3%.
Which doesn't sound policy but is you know 50% higher than where we are today.
And that's -- 50% movement markets pretty big.
Going from shorting if you have a big position here individual -- have a big position treasuries should people sell absolutely.
And treasuries make no sense whatsoever that's an investment pool at this point.
You know I always believe investment should be fundamentally based on value.
There is no value in treasury securities a ten year treasury yielding 2%.
Is going to return you less than the rate of inflation over the next ten years.
And that's just not attractive.
-- the option of other categories of fixed income Versa stocks which still pick stocks which is kind of where you.
-- -- I love I I really do like stocks and I think we're in in the in the bull market still even though we're probably gonna get some kind of pause here.
In that market.
But the other place I really like and fixed income is below its operations.
-- the I really like below investment grade credit.
You're being paid a substantial premium relative to -- treasuries on credit and credit looks relatively cheap I mean if you were to buy high yield at these levels.
You could expect sort of eight to 10%.
Per year return -- talk about that with one of the managers BlackRock coming up but the Dodgers.
What say you.
If anything it's the greatest sports team in America.
Back up again -- grip of a -- had a commitment of investors who have acquired the Dodgers well I'll leave -- -- -- -- -- say much but I will say congratulation.
Thank you and I'll be making -- -- to Los Angeles in the very near future unless the beginning of baseball season and not the end of it well and look forward to going to the game with you yeah.
-- this to what many well I thought.
And I didn't go back hospital and this weekend that lay out on Saturday morning on the Fox -- -- now -- that's a very good point that I mentioned thank discussion.
Thanks so much of great stake in good -- -- terrific.
Filter by section