A couple from Michael E. Lewitt who writes the really interesting monthly newsletter The Credit Strategist. Both are from the June, 2013 issue. The first, I think, does a great job of capturing the idea that I have often struggled to convey in my posts. The second offers some perspective on just how vulnerable many investors are right now with inevitability of higher rates, not to mention the companies that will suddenly confront much higher interest expenses against stagnating earnings.
“This lack of conviction in the ability of stocks to maintain current levels without the continued support of the Federal Reserve also suggests that investors remain suspicious of the veneer of market stability that monetary policy has created.”
“Recent work by Charles Gave, chairman of GaveKal Research, showed that of the world’s roughly $209 trillion of financial assets, $45 trillion is invested in government debt, $65 trillion is in loans, and $46 trillion is in corporate debt. That means that a total of $156 trillion, or 75% of the total, is invested in assets that are likely to produce negative real returns over the next five years (and probably longer).”
